Developing your growth strategy
As the southern hemisphere heads into summer and people flock to the beach it is tempting to think that the GFC was a just bump in the road. In some ways it was – at least for Australia. We seemed to have ducked the worst of the GFC. But that perception ignores the major changes that the GFC has produced. One of these changes concerns the way brands discover and talk to their markets. The GFC accelerated the rise of social networking and decline in popularity of mass media to produce a tectonic shift. This shift will have far reaching implications.
This new environment has enabled a quite different approach to growing markets and winning market share. Technology has both facilitated the fracture of markets into special interest groups and provided the wherewithal to identify and communicate with these groups – in real time. Its time to get granular!
Stop guessing and start knowing
Not many companies have been able to turn the massive amounts of data that social networks create into profit. This is because they lack the ability or simply do not have the courage to make the steps necessary. In fact, the vast majority of companies have not managed to develop a management structure and marketing strategy that is in line with the fracturing of the market place they play in. Many are still guessing their way through mass media insights and market research based on small sample sizes extrapolated out to the entire population.
This will change very quickly in the coming months. As Hal Varian, the chief economist of Google, recently stated in the McKinsey Quarterly, I keep saying the sexy job in the next ten years will be statisticians. People think I’m joking, but who would’ve guessed that computer engineers would’ve been the sexy job of the 1990s?.
Companies develop far better growth strategies if they choose to focus on granular information – in both identifying and attacking new market segments and in cutting costs.
The concept in practice
The Harvard Business Review recently explored the ramifications of exploring granular data. In that article they discussed how Amazon leverages its virtual and low cost supply chain to efficiently indulge the tastes of narrow customer segments, literally down to the individual buyer, at very low marginal cost.
The article went on to discuss how the strongest contribution to performance comes, not necessarily from focusing on acquiring overall market share, but identifying and investing in markets with the most vitality. The example they illustrated was that of a construction and services business face near zero growth. The company used granular data to divide its world into geographic, customer and product segments. They quickly discovered that they had very weak market share in the fastest growing market spaces revealing over $10 billion in potential that could be tapped into.
Steps to take
So here is what you need to do:
- Accept that a fundamental change in communication is taking place and be prepared to adapt
- Allocate budget towards methods and technologies that can gather relevant data
- Use this data to identify new market opportunities, the strongest growth areas will be apparent quickly
- Invest in these new segments and be prepared to ditch low growth market segments, and
- Develop a method for managing the multiple market segments you may now be playing in
Lifes a beach
In the good times its easy to be complacent as customers come to you easily – like all of those people flocking to the beach this summer. But in the wintry phase the world economy is currently going through understanding the needs and wants of the micro-markets you can have most influence over is a winning strategy – its is easy to scale up when things begin to warm back up.
Nows the time to get out your microscope and look carefully at the grains of data you have available to you.