Small Business Marketing:
How to Expand Your Market
Source:
Managing a Small Business
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 Main Street, in
a shopping mall or an industrial park may cost you more in rent, but if you gain exposure
to new customers it may be a sound investment.
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. |