Which Direction Will You Grow?
by Chad Rueffert


The objective of a marketing plan is almost always to increase sales and revenues in one form or another. In other words: To grow your company.  But there are many different ways to grow, and deciding which direction your company will grow is the first step in creating the plan for that growth.  The available strategies for accomplishing growth through marketing are actually few and simple.

 

        Get current customers to buy more.

2         Get current customers to buy more often.

3         Get more customers by expanding the market.

4         Get more customers by taking market share from my competitors.

5         Sell a new line of products to a new type of customer.

 

These are your POTENTIAL GROWTH STRATEGIES.  No matter how aggressive your growth goal, you must identify one or more of the above ways as your strategic approach to accomplishing that goal.  Choosing one of these strategies then allows you pick and choose between all the various ways to communicate with your prospect and create a marketing action plan.  Here’s a little more detail on each of the five strategies.

 

1         Growing revenues through increasing the average sale.  Getting each of your customers to spend more money with your company can be accomplished through T creative financing options, through sales person training, through point of purchase displays, or through pricing strategies and in-store promotions.  The customers you already have are a somewhat captive audience, and often more receptive to marketing than prospects who have no existing relationship to your company.

2         Increase revenues by increasing the frequency with which current customers buy.  This strategy requires keeping a database of past purchasers and using that information to generate additional sales.  You can communicate with them through direct mail, through couponing at the time of sale, through special events and pricing for “VIP customers” and in a variety of other ways.  Again, these people already have a relationship to you and should be easier to communicate to than other target markets.

        Increase revenues by expanding the market for your product or service.  This is a strategy for a situation with a relatively new product where the current user base is small, the potential user base is large, and there is little competition.  For example, can you find a way to sell mattresses to homebuilders as cheap insulation?  You’ve just expanded the market for home furnishings.  This is a difficult strategy for mature markets, but if you can achieve it, it can be very lucrative.  A good example is the taxi system in some cities.  As ridership fell, taxi drivers expanded their market by offering quick package courier service.  They expanded their revenues by expanding the market for their services.

4        Increase market share by stealing customers from your competition.  If you have a competitor who is twice as large as you, you need only steal 5 percent of their customers to reach your goal of a 10% increase.  Stealing market share almost always requires “positioning.”  You need to identify what your competition does poorly and then dramatize that shortcoming while simultaneously convincing the prospect that you don’t have that problem.  Does your competitor close at 6 pm?  Trying staying open until 10. Alternatively, you could try pinpoint targeting certain demographics.  Have you ever tried marketing directly to college kids, or newlyweds?  Maybe you could create a bridal registry or design a marketing approach specifically for single people. Identifying underserved markets is a challenging way to go about increasing your sales, but it can often be a way to differentiate yourselves and corner a particular niche.  Stealing market share is often the most obvious way to grow your business in a mature category, but it is also often the most difficult.  Targeted media, direct mail, event sponsorship and cross- promotional marketing are often good tactics for this strategy.  Stealing market share requires a solid budget for advertising and media expenses.  You’ve got to reach your audience multiple times before they’ll begin to understand your message.  Building market share takes additional time and money because it is a two-step process.  You have to develop a consumer’s need for the product and then convince them to purchase it from you rather than the competition.  Of course, you could just buy out your competition and get their market share that way:  An effective but expensive way to increase market share.

        Increase sales by offering a whole new product line.  If you’ve always sold living room furniture, you could start offering a line of couches, or bedding, or mattresses.  Keep in mind, though, that if you’ve always been considered the expert in couches, that will not necessarily translate into good sales for mattresses.  Customers like to know what to expect from you and changing those expectations almost always has a negative effect.  Who would want to buy coffee from Pepsi when there is already a Starbucks?  It would only muddy the brand image of Pepsi, and it would be trying to break into a market that is already well served.  If you do choose this approach, you must be willing to commit to increasing your marketing budget significantly to break into this new market.

Determining a growth goal is only the first step in planning for that growth.  You must also determine which DIRECTION you company should grow.  From that strategy you can then decide what creative approach to use, what media to buy, which companies to partner with, and how to allocate your budget.  Take the time to take this extra step and your marketing will be that much more effective.