“Of course, we want to grow. We know our markets and we know which buttons to push” – this is a typical reaction of owners and managers of small and medium-sized companies when it comes to the planned development of their own company. After all, entrepreneurial success up to now has been based precisely on knowledge of the markets and has often been successfully implemented in the niche. But what happens when the company is faced with growth options that hold as many opportunities as risks?
The right strategy is crucial for success
The look back and the empirical values are valuable. They unfold their full potential in combination with an agile sales strategy. Product requirements, customer wishes, competitors, laws – everything is changing and markets are constantly changing. A company that wants to grow profitably should constantly turn its gaze to markets with potential; with an analytical view from the outside and with a regular check-up of industry and competition-relevant facts and figures. For example, a company for which we have been working for years has historically grown in the medical technology sector via the trade. The retail brand and the relationship with wholesalers was the cornerstone of the company’s success in the first phase. In a second phase, the company, working closely with us, recognized an opportunity to fill a whole new niche and decided to develop competencies and experience in the environmental and process technology segment. In this course, it reorganized its market approach. Long-term development projects are now carried out with customers. Sales engineers take over the sales work and handle technically demanding and complex projects. Trade does not play an important role in these markets. Developing new customers and new, highly qualified employees was extremely demanding – but led to the goal. The success: Customized supplier products are created via the project business and go directly into the end product. There, they take over a core technical competence for the end product that is very difficult to replace. By selling the end products in growth sectors such as renewable energy and environmental technology, our customer is now also growing strongly. Today, about 70% of our customer’s total business is through project business. The margins and growth opportunities are significantly higher than in the original trading business.
Turning off or continuing straight ahead? The forward-looking market development strategy
In the project example, it was right for the company to turn off. The company’s management only saw this clearly when it drew up a new strategy that was adapted to the current and new requirements of the market. When deciding which path is the right one for a company, there are essential points that need to be clarified: Which markets can the company serve today and tomorrow? In which niche does it have the greatest opportunities for growth? How will the sales channels be set up? Does the company operate a dual strategy or does it only use one distribution channel? In order to be successful in the selected business areas, the company must invest, train new employees and develop customer relationships.
Constant and vigilant growth: The company’s own market cultivation strategy
The danger of taking a wrong turn somewhere is always there. A long-term market development strategy must therefore provide concrete answers to the following questions:
- How large is the total addressable market?
- Which segment in the overall market can I address with my product portfolio and do I fulfill the purchase-deciding factors of my customers in this market?
- How fast is the market growing? Does the pace suit my business? For example, if the market grows by 10% a year and my company grows by 6%, then competitors are taking market share from me.
- What margins can I generate?
- Do the technical requirements and future expectations of our customers match our current and future service portfolio?
What is the competitive structure like? Are there barriers to market entry?
Do we have access to the important customers in the market through our sales channel? If not, how long will it take to do so?
The experts of THE MAK’ED TEAM support small and medium-sized companies in identifying and developing attractive market segments and in implementing a market development strategy. This enables you to grow sustainably – in the sense of value-oriented corporate development.