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