Hunt For Business: Grow Now or Be Eaten!
By Paul DiModica
What business model are you using to grow your business? Are you using
your gut feelings or business guesses to reach the revenue goals you
have for your firm? Is
your current growth business model aligned with a pre-mediated growth
model or market demand model? If not, you may soon be trying to sell
red shoes to blue shoe buyers: In today’s hyper competitive market
you must continually strive to grow your business now or you will be
sustainable year over year growth for any product or professional
service business is a continuous challenge for management teams who
are seeking to expand their business, and yet if it is implemented
correctly it becomes a planned process not a reactive result.
Successful business expansion is tied to the market model you select,
the economic model you operate in, the market gap you have identified
and fill and its correct alignment with one of the four growth cycles
your firm currently selects.
study was conducted of growth models in over 1,000 firms during the
last five years that identified 6 primary models for business growth
and 14 secondary models that can be deployed to increase corporate
revenue. Each of these models has both positive and negative
attributes that have to be managed. Additionally, each one of the
primary approaches can be applied to more than one product or service
you sell within the same company using a best practices approach to
benchmark your success.
key to growing your firm is based on a two step process that includes:
A) determining the market gap for what you sell and B) selecting a
growth model that fits your needs.
Step 1- Identify the Market Gap
Is Market Gap Analysis? Market Gap Analysis focuses on using a
systematic research approach to discover and uncover sales
opportunities where market
demand is greater than supply. Through the deployment of Market
Gap Analysis, your firm can make logical strategic and tactical
decisions based on market facts, not subjective opinion. Market
Gap Analysis is a proactive approach to meet identified market demand.
Is Market Gap Analysis Different From Market Research?
Market Research focuses on the
investigation and analysis of known business model characteristics
including sales, marketing, distribution and deployment techniques.
Research does not identify new markets where demand is greater than
supply. Market Research is a reactive approach to help understand how
you position, sell and distribute products and services into an
existing market where demand is already determined (or perceived to be
Should Your Company Use Market Gap Analysis? The key to successful top line revenue growth is
to identify a demand that is unfulfilled and then create (or acquire)
professional services or products that you can sell to fill this
un-serviced gap. Many
companies have never done market gap analysis and in fact, they are
currently failing to grow their business due to this fact.
firms use three methods to forecast growth demand which include:
The percentage rule of market research method to
determine revenue growth opportunities. (Take the national market
statistics of an industry and/or the geography you sell into and
assume that you will sell a percentage of the total market – (3%
of the red shoe market in Boston…..).
Market demand based on their own personal
Lastly, some business principals believe the
offering they have created is so great, it will just have buyers.
This method is oftentimes associated with the founder’s pride or
all of these examples, a firm may actually achieve some increase (a
false positive gap) in growth that ultimately misguides management
even further to increase their investment based on their early
success. Yet, ultimately
as they try to expand their business, they fail and do not understand
Should A Growth Directed Firm Use Market Gap Analysis? A Market Gap Analysis should be used
when the firm is:
Looking to forecast and confirm demand for an
existing product or service;
Seeking to enter a new business vertical or
Trying to decide on the investment needed to
expand a buyer offering;
Seeking to merge or acquire another firm; or
Deciding to launch a new product or service
Growth Step 2 – Pick Your Growth Model:
Growth Options You Can Use
Market Duplication. This model
focuses on paralleling your product or service offering’s
pricing, features, and business program based on your direct
competitor's business model.
Market Variation. This model is
based on the competition's model, but adjusts it to visibly offer
prospects some improvement in product, feature, and price or its
Market Symbiotic Attachment. This
model is used by firms whose revenue streams are connected
directly to the success or failure to other vendors or partners
they work with and is often seen with channel partners,
wholesalers, franchisees and licensee relationships. If your
linked relationship fails – so can you.
Market Consolidation. This model
uses a growth process where companies buy-up or roll-up revenue by
buying competitors or complementary product or service companies
and their market share without using internal organic growth
techniques to grow revenue by selling new prospects on their own.
Market Innovation. This business
growth strategy takes market variation a step further. Instead of
a singular market variation on a product or service offering, this
model creates a new market paradigm that changes how your targets
buyers see the product or service you sell from a totally new
positioning light. Often, market innovation growth models can
evolve into a Market Entrepreneurial Lunch direction.
Market Entrepreneurial Launch.
This model of growth happens when companies use market gap
analysis and identify new opportunities where market demand is
greater than supply and where they create a whole new market or
industry and are first to exploit this gap.
common for businesses that are growth directed to have several
products and services each with different growth options connected to
them. But based on our research, to be successful, there is usually
one dominant business growth attribute that has secondary influences
in how the firm deploys its growth model.
one of these 6 growth options can be used to increase your firm's
revenue as a whole or just a targeted product or service by itself. To
grow your business more effectively, determine if a market gap exists
and decide which growth model you are going to emulate. Business
growth is a planned process – not a reactive result.
Read other articles and learn more
about Paul DiModica.
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