Growing a business is a challenge,” says Jean-François Ouellet , associate professor in the department of entrepreneurship and innovation at HEC Montréal
Jean-François Ouellet , who is also an entrepreneur, corporate director and advisor to several companies,
Presents four ways to grow your business and what each option entails.
1. Market penetration
The first step for any business looking to increase market share is to find ways to lose fewer customers.
If you promise a specific delivery date or level of quality and fail to meet those commitments, it will breed dissatisfaction.”
The challenge is similar when it comes to attracting new customers. You need to effectively communicate what makes your business strategies to help your business grow great and deliver on that promise every time someone buys from you. This is how you will gain loyal customers who are ambassadors for your business.
It must be remarkable. People must feel that your products correspond to what is important to them, that they meet a real and deep need.
2. Market development
Your success in your existing market will eventually reach the point where your sales and marketing investments will be less and less profitable. This is when you will need to investigate other options for growth, such as expanding into another city, province, region, or country. You might also decide to target another customer segment or another demographic profile. You could also set up new distribution channels. For example, if you have an online store, you could go into retail, or if your customer base is businesses, you could start selling to individuals.
No matter what type of business you run, market research will be essential to breaking into a new market. You should explore several potential markets before narrowing down the list to two or three markets to investigate further. “You need to shortlist markets that are both attractive in terms of size, proximity and growth, but also in which you can compete,” says Jean-François Ouellet .
For Canadian markets, Statistics Canada , chambers of commerce and economic development agencies are good sources of data. Export Development Canada and the Trade Commissioner Service offer excellent resources for companies looking to export or expand abroad. Once you’ve narrowed down your choices, you may want to research your industry further by purchasing reports from specialist companies.
Jean-François Ouellet points out that each market has its own characteristics and that what works in your national market may not work in another. The US market, for example, is not a single market, but rather a collection of local markets with different laws, regulations, logistical challenges, corporate cultures and consumer tastes.
Markets that are smaller and less competitive can yield better results for your first experience, he says.
When you’ve narrowed down a few options, the professor recommends sending a team to market, led by a trusted staff member. Rather than relying on surveys or focus groups, your team should present your products to real customers and real prospects to gauge their interest.
. Otherwise, you’ll know it won’t be as easy as you thought.”
3. Product development
Another approach is to develop new products for your existing market. To successfully develop and launch a new product, it is essential to know your customers well.
Jean-François Ouellet says, “Your most valuable asset isn’t your product or your technology, it’s what you know about your customers. In general, this knowledge is in the form of data. But it is also about qualitative and informal knowledge about the wishes, needs and preferences of your customers.”
Here are some ways to develop products:
Product modification
You can increase the demand for a product by changing some of its characteristics, such as size, shape, packaging, functions and color. The purpose of these modifications is to refresh the product or to react to the offer of competing companies.
Different levels of quality
You can attract different customer segments by developing different levels of quality. For example, a lower quality product may be destined for a mass market to which it will be sold at a lower price, while a high quality product may be sold to a given market niche at a higher price.
Related products or services
You can capitalize on the popularity of a product by offering related products or services. Offering related services also allows you to establish a subscription-based customer relationship.
New products
Product creation is a challenge, but it allows you to build on the relationships you’ve had with your existing customer base while looking to acquire a new one. “It works if your existing customer base is very satisfied with your current products,” explains Jean-François Ouellet . She must be convinced that the new product will be as good as the current product.
To develop commercial success , the following process must be followed: idea generation, research, prototype development, market study, then launch. Since each step has potential costs and pitfalls, careful planning is a good idea.
When you develop products, it is important that they are in line with what you currently offer. For a restaurant, this may be a line of packaged food products; for a manufacturer of suitcases, it can be backpacks or briefcases .
Jean-François Ouellet points out that many companies move their product development team to a separate location. This takes team members away from day-to-day business issues.
Diversification
Selling new products to new customers is another strategy. This can help generate a new revenue stream, especially if your industry or region is experiencing low growth or decline. For example, companies active in traditional sectors may begin to take a closer look at emerging sectors in order to find a market there.
When adopting one of the four strategies described above , you can choose to expand your existing business – this is called organic growth – or accelerate the process by acquiring one or more companies.