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Summary: Mastered your market? Nearly nine in ten respondents say that in the past five years, their companies have either pursued at least one activity in a new category, have considered it, or plan to do so in the next five years according to a McKinsey Global Survey. So we know it’s happening, but how does one execute it successfully? This article will help by listing ways to expand your business outside of your core industry.
What can you learn from a humble chicken nugget about expanding your business? Maybe more than a nibble’s worth of information, so hop in the sales and marketing time machine.
Today, bite-sized chicken bits embraced by a crispy breading seem normal. Forty years ago, they were a tasty novelty offered up by McDonald’s. Thanks to their portability and unique flavor profile, they took off with hungry consumers. In fact, they became a new star on the fast food giant’s menu.
But why did McDonald’s, known primarily for burger-like sandwiches and irresistible shoestring fries take this plunge? The answer: Nuggets were a natural extension of their core industry. After all, they catered to people craving quick, salty, hot meals. The nugget seemed an attractive way to draw in more consumers, especially the younger set and beef-eschewers.
The lesson in the McNugget journey is one your company can take to the bank. By diversifying their basic portfolio, McDonald’s hit the deep-fried jackpot. This type of expansion is possible at any business, including the one you lead.
Of course, developing successful offshoots of your product line can be tricky. If you’re planning to take this plunge, you’ll want to keep a few tips in mind to avoid preventable missteps.
1. View your differentiators from a new vantage point.
Think about what your team does better than the competition. Is it a novel customer service approach? Perhaps a unique feature of your signature bestseller. Once you identify your differentiator, use it as a springboard for other offerings.
For law firm Anidjar & Levine, their differentiator was the ability to bring their marketing in-house. Their willingness to in-source, rather than outsource, the marketing function brought them better leads and shaved their advertising spend. It also showed them a potential avenue to expand their function by offering marketing to other firms.
As Marc Anidjar notes, the team’s been prudent about the premise of moving into the advertising realm. He explains, “While we always want to share success with our partners, we have to be cognizant of the fact that not everyone has your best interest at heart.” Still, the firm has struck out with a move that’s both innovative and bold for its field.
TL;DR takeaway: Build upon your organization’s strengths. Treat them as stepping stones to earn more market share and refresh your brand.
2. Look for “off-label” uses for your products or services.
In the pharmaceutical industry, medicines often have off-label uses. For instance, the ADHD drug Ritalin has been prescribed to help cancer patients ward off extreme tiredness. This allows the medication to benefit a different population than was originally intended. (Full disclosure: Whether or whether not off-label is wise in healthcare is debatable and beyond the scope of this article. The phenomenon is meant for analogy purposes only.)
Your current customers may have off-label uses for what you sell. Let’s say you sell thoughtfully imprinted bandanas for GenZ consumers. With plateauing sales, you know that your product has reached the maturity stage. So you enter into a few focus groups and send out digital surveys.
Through your marketing research, you discover that many of your customers aren’t part of GenZ. To the contrary, they’re older “pet parents” who want cute, young-seeming bandanas for their pooches. This gives you the idea to add new SKUs to your lineup, advertising some of your bandanas as perfect for pups.
TL;DR takeaway: Increasing your profits may be as simple as finding out how customers are really using your products. Prepare to be surprised by consumers’ innovativeness. Oh, and get ready to refresh your website content to pull in off-labelers.
3. Partner with a company that’s not in your industry.
Another way to break in with new buyers is to position your company alongside another one. Look for a non-competitor. Otherwise, you’ll end up trying to sell to the same crowd you already own.
Forming loose or formal partnerships takes time, effort, and trust. However, if you can find the right fit, you’re almost certain to invigorate your sales. And the process could be less arduous than you might have thought. Who would have imagined that EVA Air and Hello Kitty would be a sky-high, stellar match? Yet their relationship has allowed both brands to soar their sales.
It doesn’t matter if you sell widgets or experiences, either. The more creatively you’re willing to think, the more partnering opportunities you’ll find. Just remember that any partnership needs to have a win-win theme. Otherwise, one of the parties will eventually drop out.
TL;DR takeaway: Breaking into uncharted waters is simpler when you have a friend by your side. Find another company to befriend and take on new markets as a team.
4. Give existing customers something else they need.
Pain points. They’re uncomfortable for customers—and potential goldmines for inventive companies. You’ll want to go beyond scratching the surface to discover what keeps your customer base up at night. Then, you can work with your employees on a solution.
Don’t assume you already know all the pain points that your customers face, either. Yes, you can come up with hypotheses. Just make sure you go the extra mile and test them. Otherwise, you might assume pain points that don’t exist. At the same time, you could miss glaring pain points that you’re perfectly positioned to solve.
A good way to uncover pain points is to conduct in-person or Zoom interviews with a statistically significant amount of customers. Find out how they’re using your product or service. Ask them what they wish they could do. If you’re not confident that you can dig inappropriately, hire a market research firm. The money will be well spent and get you closer to an attractive ROI.
TL;DR takeaway: Go ahead and play doctor by healing your customers’ nagging pains with feature expansions or new products.
Scaling any business can seem like a daunting prospect, but it could be less challenging than you think. Even if you believe that you’ve done all you can to boost profits and sales, take a second look. There are plenty of ways to expand your company’s footprint selectively, proactively, and economically. You just have to be willing to think outside the nugget.
This article, “4 Ways to Expand Your Business Outside of Your Core Industry” was first published on Small Business Trends