A Four-Part Framework for Reaching Out to New Markets
A Four-Part Framework for Reaching Out to New Markets
To prove this case, let’s cover the four possible scenarios for growing a business, based on current or new products, and current or new markets:
First, a business might introduce new products to new markets. This option is clearly expensive and risky. You have to come up with new solutions to the problems of a market you don’t know well, and that also doesn’t know you. Odds of success are not high, and the costs to reach this new market and develop new products will be high.
Second, a business might continue to focus on its current products to its current customers. In this case, there are no additional product development costs, except perhaps to improve existing offerings. The market knows you, and you already have a solid foundation with prospects and customers. While this is not the most exciting option, it is the least risky and – so long as the market is growing and you have room to grow within it – has high potential.
Third, you might introduce your current products to a new market. While exciting, this option can be costly and risky. You have to reach into a market that doesn’t know you, and this can take time and money. Also, you may have to change your products to fit the specific needs of the new market. If you pursue this strategy, it is important to test slowly and at low cost to establish whether demand exists or not.
Fourth, you might introduce a new product to your current customers. This option ends up being less risky and expensive than introducing your current products to new markets. That’s because your market knows you, and so you have a ready list of current customers and prospects that are open to hearing about your new solution and that should be easy to reach. In this option your main risk is in the costs of testing and developing a new product.
To rank order your risk/return, businesses have the most potential with current products offered to current markets, followed by introducing new products to current markets. Reaching out to new markets, whether with existing products or completely new solutions, is the most risky with high costs and no guarantee of returns. Careful, low-cost testing is the smartest way to approach these latter strategies – assuming the business owner wants the distraction and potential loss of focus on current customers.
A FourPart Framework for Reaching Out to New Markets - To learn more about this author, visit Andrew Neitlich's Website.
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Many businesses enjoy the glamour of trying to penetrate new markets. However, as the framework in this article shows, the lowest-risk and highest-return strategy is to continue to serve your current, receptive markets.
To prove this case, let’s cover the four possible scenarios for growing a business, based on current or new products, and current or new markets:
First, a business might introduce new products to new markets. This option is clearly expensive and risky. You have to come up with new solutions to the problems of a market you don’t know well, and that also doesn’t know you. Odds of success are not high, and the costs to reach this new market and develop new products will be high.
Second, a business might continue to focus on its current products to its current customers. In this case, there are no additional product development costs, except perhaps to improve existing offerings. The market knows you, and you already have a solid foundation with prospects and customers. While this is not the most exciting option, it is the least risky and – so long as the market is growing and you have room to grow within it – has high potential.
Third, you might introduce your current products to a new market. While exciting, this option can be costly and risky. You have to reach into a market that doesn’t know you, and this can take time and money. Also, you may have to change your products to fit the specific needs of the new market. If you pursue this strategy, it is important to test slowly and at low cost to establish whether demand exists or not.
Fourth, you might introduce a new product to your current customers. This option ends up being less risky and expensive than introducing your current products to new markets. That’s because your market knows you, and so you have a ready list of current customers and prospects that are open to hearing about your new solution and that should be easy to reach. In this option your main risk is in the costs of testing and developing a new product.
To rank order your risk/return, businesses have the most potential with current products offered to current markets, followed by introducing new products to current markets. Reaching out to new markets, whether with existing products or completely new solutions, is the most risky with high costs and no guarantee of returns. Careful, low-cost testing is the smartest way to approach these latter strategies – assuming the business owner wants the distraction and potential loss of focus on current customers.
A FourPart Framework for Reaching Out to New Markets - To learn more about this author, visit Andrew Neitlich's Website.
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John BrennanJohn Brennan Ed.D. Dr. Brennan is President of Interpersonal Development, LLC, a training and development firm. Interpersonal Development has provided sales training and coaching to more than 3,000 sales reps from over 100 companies. A native of Australia, Dr. Brennan received his doctorate from the University of Rochester. His dissertation researched the effectiveness of Behavioral Modeling Technology in training people in interpersonal skills. While he has spent most of his career designing or delivering training, he was also a Vice-President of Sales of a training and development franchise with operations in 25 markets. Dr. Brennan has designed and delivered sales training in North America, Asia, Europe, Australia and the Middle East. He has been a guest speaker at numerous national and regional professional conferences. When Microsoft wanted Best Practices articles on sales for their web site, they called Dr. Brennan. The results are at http://office.microsoft.com/en-us/FX011387391033.aspx His firm’s clients have included Volvo, The Prudential, Merrill Lynch, Eastman Kodak, Gannett, Equifax Europe, the Economist Group and countless small businesses. - Visit John Brennan's Website |
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