GUIDE: GROW YOUR BUSINESS | STEP ONE:
Discover New Markets
In today’s business environment, sustaining growth and profitability is never a guarantee. Technological and scientific advances shorten life cycles of products and services, business models change and new competitors appear from outside the industry. This constant instability makes it necessary to seek new business opportunities. Consider the following when searching for a new market to enter:
There are two variables to consider when looking at customer segmentation. First, there are Hard variables, such as age, gender, where they live, their education level, job, and even income. Hard variables can help estimate the number of potential customers a business can have. Soft variables would include the customer’s lifestyle, value, and purchasing habits. Soft variables can help identify motivations that lead to purchasing decisions including price, prestige, convenience, durability and design.
Purchase Situation Analysis
Just because you have a great idea for a market you’d like to enter, it doesn’t mean it is the right time or place to go all in. Consider the following: When would people buy your product or service? Is it when they need it? Where do people make the purchase? How do they pay? Reference our Innovation Guide to discover if your product or service is worth pursuing.
Direct Competition Analysis
Knowing the existing players in the market where you are competing or going to compete is important when evaluating opportunities. Relevant questions in this case are: What are the products and brands of our industry that are growing more significantly and why? What is their value proposition? What competitive advantage do we have over them?
Indirect Competition Analysis
As a business, you should be constantly monitoring other companies, and their performance, within their respective industry. For example, airlines research how people travel long distances via bus and train. Things they might consider would be cost for their tickets, occupation rates, which routes are most in demand, etc. This type of analysis helps an airline establish competitive advantages, and offers additional insight into opportunities for growth.
Analysis of Complementary Products and Services
Companies should monitor the performance of other companies’ products, which are complementary to their own. For instance, a packaging company should monitor sales of products that it could potentially package, while a company producing coffee machines should gather insights on the evolution of different types of coffee sales. Trends in complementary markets should be taken into account when making investment decisions.
Market opportunities can also be identified by an analysis of changes in the environment with technological and scientific developments generating new business opportunities. For example, the growth of the Internet and smartphones’ penetration has enabled the arrival of companies with new business models such as Airbnb and Uber. What technologies are just around the corner you can create a new business model for?
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GUIDE: GROW A BUSINESS
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