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Hunt For Business: Grow Now or Be Eaten! What business model are you using to grow your business? Are you using your gut feelings or business guesses to reach the revenue goals you have for your firm? Is your current growth business model aligned with a pre-mediated growth model or market demand model? If not, you may soon be trying to sell red shoes to blue shoe buyers: In today’s hyper competitive market you must continually strive to grow your business now or you will be eaten later. Yet, sustainable year over year growth for any product or professional service business is a continuous challenge for management teams who are seeking to expand their business, and yet if it is implemented correctly it becomes a planned process not a reactive result. Successful business expansion is tied to the market model you select, the economic model you operate in, the market gap you have identified and fill and its correct alignment with one of the four growth cycles your firm currently selects. A study was conducted of growth models in over 1,000 firms during the last five years that identified 6 primary models for business growth and 14 secondary models that can be deployed to increase corporate revenue. Each of these models has both positive and negative attributes that have to be managed. Additionally, each one of the primary approaches can be applied to more than one product or service you sell within the same company using a best practices approach to benchmark your success. The key to growing your firm is based on a two step process that includes: A) determining
the market gap for what you sell.
What Is Market Gap Analysis? Market Gap Analysis focuses on using a systematic research approach to discover and uncover sales opportunities where market demand is greater than supply. Through the deployment of Market Gap Analysis, your firm can make logical strategic and tactical decisions based on market facts, not subjective opinion. Market Gap Analysis is a proactive approach to meet identified market demand. How Is Market Gap Analysis Different From Market Research? Market Research focuses on the investigation and analysis of known business model characteristics including sales, marketing, distribution and deployment techniques. Market Research does not identify new markets where demand is greater than supply. Market Research is a reactive approach to help understand how you position, sell and distribute products and services into an existing market where demand is already determined (or perceived to be determined). Why Should Your Company Use Market Gap Analysis? The key to successful top line revenue growth is to identify a demand that is unfulfilled and then create (or acquire) professional services or products that you can sell to fill this un-serviced gap. Many companies have never done market gap analysis and in fact, they are currently failing to grow their business due to this fact. Traditionally, firms use three methods to forecast growth demand which include: The percentage rule of market research method to determine revenue growth opportunities. (Take the national market statistics of an industry and/or the geography you sell into and assume that you will sell a percentage of the total market – (3% of the red shoe market in Boston…..). Market demand based on their own personal experiences. Lastly, some business principals believe the offering they have created is so great, it will just have buyers. This method is oftentimes associated with the founder’s pride or ego. In all of these examples, a firm may actually achieve some increase (a false positive gap) in growth that ultimately misguides management even further to increase their investment based on their early success. Yet, ultimately as they try to expand their business, they fail and do not understand why. When Should A Growth Directed Firm Use Market Gap Analysis? A Market Gap Analysis should be used when the firm is: Looking to forecast and confirm demand for an existing product or service; Seeking to enter a new business vertical or industry; Trying to decide on the investment needed to expand a buyer offering; Seeking to merge or acquire another firm; or Deciding to launch a new product or service business.
Market Growth Options You Can Use Market Duplication. This model focuses on paralleling your product or service offering’s pricing, features, and business program based on your direct competitor's business model. Market Variation. This model is based on the competition's model, but adjusts it to visibly offer prospects some improvement in product, feature, and price or its distribution approach. Market Symbiotic Attachment. This model is used by firms whose revenue streams are connected directly to the success or failure to other vendors or partners they work with and is often seen with channel partners, wholesalers, franchisees and licensee relationships. If your linked relationship fails – so can you. Market Consolidation. This model uses a growth process where companies buy-up or roll-up revenue by buying competitors or complementary product or service companies and their market share without using internal organic growth techniques to grow revenue by selling new prospects on their own. Market Innovation. This business growth strategy takes market variation a step further. Instead of a singular market variation on a product or service offering, this model creates a new market paradigm that changes how your targets buyers see the product or service you sell from a totally new positioning light. Often, market innovation growth models can evolve into a Market Entrepreneurial Lunch direction. Market Entrepreneurial Launch. This model of growth happens when companies use market gap analysis and identify new opportunities where market demand is greater than supply and where they create a whole new market or industry and are first to exploit this gap. It is common for businesses that are growth directed to have several products and services each with different growth options connected to them. But based on our research, to be successful, there is usually one dominant business growth attribute that has secondary influences in how the firm deploys its growth model. Each one of these 6 growth options can be used
to increase your firm's revenue as a whole or just a targeted
product or service by itself. To grow your business more
effectively, determine if a market gap exists and decide which
growth model you are going to emulate. Business growth is a
planned process – not a reactive result.
www.thecxogroup.com |
 Welcome,
In
this issue, we talk about using market
gap analysis and growth options to grow your
company. I look forward to your
comments.
Sincerely,
Rick Erling
Rick Erling is the President of The CxO Group, LLC., a management consulting firm that specializes in integrating sales, marketing, financial metrics and strategies to maximize corporate revenue growth. Located at the firms Dallas, Texas headquarters, Rick is a certified executive coach, business strategist and the firm's senior practice executive working with start-ups, privately held companies and Fortune 1000 companies in both the public and private sector. The CxO Group is a managing consulting partner of the Value Forward Network. With consulting partners in four countries, it is one of the world's largest management consulting groups focused on helping companies increase corporate revenue capture.
Using the copyrighted Value Forward method, we integrate financial metrics, marketing methodology, sales process and corporate strategy and operations into one outbound revenue capture program to help companies grow.
We advise CEOs on action steps to take to grow revenues, consultant with management staff on best practices and train sales, sales management and marketing teams on tactics and strategies that work. |
