When
expanding your business, explore all the strategic alternatives available to
you. Select the one that makes the most sense and then prepare a marketing plan
on how to implement that strategy. There are at least a dozen common strategies
and a variety of strategic combinations or special situations to choose from.
Expansion of
Present Location
Learn to
spot telltale signs of saturation in your present facilities. Grocery stores,
for example, keep track of abandoned carts. When a shopper fills a cart and
then leaves because the checkout line is too long, the grocer should realize
that there is a serious problem. If you are experiencing bottlenecks, think
about adding to your facilities. Determine how many additional customers you
could service by building up or out and compare the additional sales to the
cost of construction and temporary inconvenience.
Relocation
If it
appears unlikely that you can draw more customers to your present location (at
a reasonable cost), consider moving closer to your customers. A location on
Additional
Outlets
Reaching the
most customers may require opening several outlets at convenient locations
throughout your market area. In addition to the added costs of real estate and
multiple inventories, carefully analyze the cost and availability of labor and
training, and the cost of hiring a manager for each location and installing an
efficient monitoring system. Your advertising dollars may become more efficient
since your radio, TV and newspaper ads cover your entire market. The multiple
locations will make it more convenient for customers to find you.
Downward
Vertical Integration
If your
profits depend on the prices you pay for raw materials, your most profitable
growth strategy may be to buy a farm, mine or processing plant to produce your
own materials. This strategy also may make sense if your product quality is
based on a consistent supply of goods at an acceptable quality level.
Upward Vertical
Integration
Most small
manufacturing businesses that start are forced to conform to the existing
marketing channels and sell through established manufacturers' representatives,
jobbers or dealers who have access to the market. As you grow, however, it
makes sense to analyze your distribution system
to see when
you can improve your situation by hiring your own sales team, contracting with
distributors, buying a truck fleet, opening retail stores or factory outlet
stores or doing anything else you need to do to get closer to your market.
Remember, every time someone gets between you and your customer, it either
reduces your revenue or increases your operating costs. Also, it impedes the
provider-consumer communication that is essential to a good marketing program.
Exporting Goods
or Services
Literally,
there is a world of markets available to you if you are willing to learn how to
get started.
Tourists'
Business
When you are
looking for new customers, don't ignore tourists who could be attracted to your
area. Work with your local convention and visitors' bureau to determine the
impact if you cooperate with local tourist attractions or hotels and
restaurants to get more people to visit and spend money in your community.
Franchises
Franchising
as a growth strategy offers advantages if you are short of expansion capital,
yet have a concept that can be packaged and taught to people who wish to invest
in a business. The legal problems can seem overwhelming, but with a good plan
and competent advice, you can develop a franchise system that could prove
extremely profitable.
License
Agreements
If you have
a technical process or service, you may be able to find people in other markets
who would be willing to pay you a royalty for the rights to use your process.
Perhaps you could sell raw materials, secret ingredients, special tooling or
promotional materials to your license holders.
Direct Marketing
Selling
directly to your customers is one of the oldest and most effective methods of
marketing. Today, there are few door-to-door salespeople; most direct marketing
is seen in party plan selling and through mail, TV and magazines. Direct
selling requires good selection and training techniques and a commission plan
plus liberal incentives.
Telemarketing
If you have
a good list of prospective customers, telemarketing may be an effective method
of informing them about your business, qualifying them for sales follow-up or
selling your product or service to them. Professional firms can be used, or you
can set up your own telephone room. Here again, recruiting and training are
critical because only a few people can do telemarketing well.
Private Label
One method of reaching out to new markets is to sell your product under the name of your distributor or retailer. However, you cannot build customer or brand loyalty because the consumer does not know you are the producer. Another potential problem is that, should the owner of the label find a cheaper producer, you may be out of the business.
Ken Roys, CEO BTF Management Consultants Inc 866-385-1900 Toll Free 713-983-7904 Fax Ken.Roys@btfmanagement.com www.btfmanagement.com