12 Ways To Expand Your Marketplace
When expanding your business, you should explore all the strategic alternatives available to you. Select the one that makes the most sense and then prepare a plan on how to implement that strategy. There are at least a dozen common strategies and a variety of strategic combinations or special situations to choose from. We present some of those alternatives below.
Expansion of Present Location
Learn to spot telltale signs of saturation in your present facilities. Grocery stores, for example, keep track of abandoned carts. When a shopper fills a cart and then leaves because the checkout line is too long, the grocer should realize that there is a serious problem. If you are experiencing bottlenecks, think about adding to your facilities. Determine how many additional customers you could service by building up or out and compare the additional sales to the cost of construction and temporary inconvenience.
If it appears unlikely that you can draw more customers to your present location (at a reasonable cost), consider moving closer to your customers. A location on Main Street, in a shopping mall or an industrial park may cost you more in rent, but if you gain exposure to new customers it may be a sound investment.
Reaching the most customers may require opening several outlets at convenient locations throughout your market area. In addition to the added costs of real estate and multiple inventories, carefully analyze the cost and availability of labor and training, and the cost of hiring a manager for each location and installing an efficient monitoring system. Your advertising dollars may become more efficient since your radio, TV and newspaper ads cover your entire market. The multiple locations will make it more convenient for customers to find you.
Downward Vertical Integration
If your profits depend on the prices you pay for raw materials, your most profitable growth strategy may be to buy a farm, mine or processing plant to produce your own materials. This strategy also may make sense if your product quality is based on a consistent supply of goods at an acceptable quality level.
Upward Vertical Integration
Most small manufacturing businesses that start are forced to conform to the existing marketing channels and sell through established manufacturers’ representatives, jobbers or dealers who have access to the market.
As you grow, however, it makes sense to analyze your distribution system to see when you can improve your situation by hiring your own sales team, contracting with distributors, buying a truck fleet, opening retail stores or factory outlet stores or doing anything else you need to do to get closer to your market.
Remember, every time someone gets between you and your customer, it either reduces your revenue or increases your operating costs. Also, it impedes the provider- consumer communication that is essential to a good marketing program.