Posts tagged ‘market sizing’

Your business’ secret to success: do one thing and do it right

Colonel Sanders was a master of business. He took a product that virtually everyone in the south made for themselves — fried chicken — and decided to sell his own version. The Kentucky Colonel outfit, the secret recipe, the bucket, and his self-promotion all contributed to his uniqueness and aura. However, his true secret to success was a simple philosophy: do one thing and do it right. He made better fried chicken than anyone else, and he focused all his efforts on building the business around his flagship product. His plan was to start small, gain a reputation, and establish a toehold in his local Kentucky community. From there, he wanted to conquer the fried chicken world, and use his market dominance as a springboard for other complementary products. Of course, we all know the rest of the story; his plan worked to perfection and the chicken industry has never been the same.

What’s the lesson that other companies can learn from the Colonel? Determine what your biggest strength is and focus your efforts on that. Perfect your product/service, establish a great reputation, use your revenues to invest in the company, and build your empire. Many companies try to become jacks-of-all-trades, but instead become masters-of-none. This mistake goes back to a previous discussion about market sizing vs. market segementation. It’s better to dominate a small market and branch out into other markets in time, rather than become a bit player in a larger, more competitive market. This approach will focus your internal resources in the places that maximize your profit potential, put your marketing communications plan on a path towards great success, and send a message to competitors that you have your priorities straight.

Don’t let the goatee fool you… Colonel Sanders was a brilliant businessman and a master marketer. Now go out there, focus on the one thing at which you’re best, and fry the competition!

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June 22, 2009 at 12:23 am 1 comment

Success is not defined as the absence of failure

Recessions can bring out the best in people. I know many successful entrepreneurs that started their businesses during recessions, and they said it’s the best decision they ever made. Some have developed companies that generate hundreds of millions of dollars in revenue. Admittedly, though, a lot of those people say their companies are surviving, but not thriving. Many will chalk it up to the economy, or changes in the marketplace, or the cost of raw materials, or increased competition. Some of these factors may be true, but after consulting for several of them I realize that there are reasons why they haven’t achieved the level of success they wanted. Here are some of those reasons:

  1. Not knowing your limitations. We cannot know everything, nor can we do everything. Realize that you have a well-honed set of core skills, and focus your efforts to take advantage of them. Here’s an analogy that all you baseball fans will instantly understand: have you ever seen a National League pitcher try to swing a bat? It’s one of the more painful sights you’ll ever see, because it’s beyond the pitcher’s limitations. Let your batters do the batting for you while you focus on your pitching.
  2. Not understanding the difference between market sizing and market segmentation. In other words, don’t bite off more than you can chew. You can read all about this from my previous blog entry on the subject. Business is hard enough without trying to conquer the whole world all at once.
  3. Not seeking help from experts. Whether it’s a marketing company like Aximum Marketing, or a full-time employee, recognizing the need for a particular skill that your company doesn’t have is not a sign of weakness or ignorance. Not only can experts give great advice and a different point of view, but they can free you to do what you do best. Again, whether you buy a piece of equipment, or office space, or specialized experts, they will all maximize your return on investment.
  4. Not avoiding the temptation to act in haste. It’s easy to get ‘happy feet’ when you’re not achieving the results you want. However, it will be best to fully think it through before pulling the trigger. Having fellow experts (see #3 above) can act as sounding boards, enabling you to make better decisions.
  5. Not understanding that marketing is an investment, rather than a cost. “I can’t afford to spend money on marketing right now.” If I had a nickel for every time I heard this, I’d have a boatload of nickels. I’ve spoken to many clients who initially look at marketing as a cost, but after I help them focus on their goals and run some numbers with them, they soon realize that all quality marketing activities have an expected, measurable, positive ROI. If you could invest $100 on marketing activities, and receive $1,000 in revenue, how much would you be willing to invest? Every penny you can get your hands on? That’s the beauty of an investment.

Success is most assuredly not defined as the absence of failure. We all work hard, and we deserve to maximize the reward for the effort we put forth. If you avoid the five pitfalls listed above (and I’m sure there are many others you can think of), you’ll unleash your potential and take your business to new heights, whether it’s a startup, a small business, or a multinational corporation. Aximum has some great success stories that illustrate this point very well, and we’ll be happy to help you thrive, too.

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May 26, 2009 at 1:42 am Leave a comment

Market sizing vs. market segmentation

tape-measure

Does size really matter?

Get your mind out of the gutter. I’m talking, of course, about market sizing, a common and deceptively unproductive exercise. Let me explain… how many times have you heard someone say something like this:

“We’re looking at expanding our business into the Blah Blah industry because it’s currently a $78 Billion market and expected to grow 10% this year. If we could only get 0.04% of the new market, we could add another $3.12 Million to our revenue stream with almost no effort at all!

You’re currently nodding your head and saying, “yup, I’ve heard that before.” Or perhaps you’re saying, “yup, that’s me.

As you know, this approach can be very challenging for many reasons. By jumping into the big pool, you’re joining the countless competitors that are doing the same thing. This results in lots of companies chasing after the same dollars, with very little chance of getting them. In all reality, only the biggest companies in your industry have a chance of winning most of that business, and you’ll unfortunately spend a lot of time, money, and energy with little to show for it. Another disadvantage with this approach is that it’s very broad and unfocused, which means you’ll need to spread your resources very thinly across many different marketplaces, demographics, price points, and time frames.

To answer the question, “does size really matter?”, the answer is yes, to a degree. It’s the first half of a great solution to help you expand your business and increase your revenue. The second half of the solution is market segmentation, which will be your very best friend when it comes to new business development. Market segmentation makes the numbers derived from market sizing realistic, attainable and, above all, more focused on customers that play to your company’s strengths while reducing the amount of competition.

Let’s take the Blah Blah industry as an example. Suppose you did a little more research and determined that focusing on customers

  • in the southwest
  • that are female
  • between the ages of 24-40
  • with median incomes of $61,000
  • that like the color fuchsia

presents a current market of $46 Million, which is expected to grow 30% this year. Yes, this is way less than the $78 Billion mother lode, but there are only 3 competitors in this entire micro-market and one of them is probably going out of business this year. That means that you are competing with one other company for almost $14 Million worth of new business, and $60 Million in total. This approach allows you to ignore 99% percent of the overall market, most of the competitors, and a majority of the business development efforts, while providing over four times the revenue potential.

Ah, the magic of market segmentation, the less popular, often misunderstood, and regularly underutilized little brother of market sizing. If you do your homework and spend a little more time and resources on good market research, the results can be amazing. If you need some guidance with this, talk to us. We’d love to help you.

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May 10, 2009 at 11:55 pm 3 comments


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