The period after a recession is not only a time for licking wounds. It is a time for tracking down new business niches and opportunities.
Following is a checklist by business expert Robert Craven.
- Neglected markets where, say, customer needs have outpaced provision, e.g. importing organic wines
- Unfilled need, e.g. work away from office creates a demand for laptop computers and better mobile phone technology
- Disadvantages in existing products, e.g. caffeine in coffee leads to decaffeinated coffee, short-life of cut flowers leads to demand for sachets containing long-life crystals for flower water
- Omission in otherwise well-served markets, e.g. outdoor workers require robust mobile phones and laptops
- Extensions or new formats for proven lines, e.g. T-shirts, scarves, and sweatshirts for Rugby Supporters’ Club
- Technological breakthroughs, e.g. e-mail-driven mentoring and business support, special covers for reducing mobile phone radiation, bagless vacuum cleaners
- Transferable success from other markets, e.g. yo-yo from Hawaii, Tapas bar from Spain
- More economical ways of satisfying wants now being met expensively, temporary office accommodation, freelance IT managers that you bring in for a day or a month
- Less economical ways of satisfying wants that are being met only adequately, Ben & Jerry’s ice-cream
- Copy substitutes, copy the competitive offerings, e.g. Wild Oats copied theme pubs and made board games and newspapers available in the restaurant, local delicatessen starts sandwich delivery to maintain sales
- Do the opposite of traditional industry norms to emphasis the difference, adopt a pen-and-ink approach to all communications in the face of database-driven and computer communications; chef Andreas Honore, himself, serves all meals to the tables of his restaurant guests
- Change the product appeal and/or reinventing yourself, e.g. Lucozade changes itself from being a sick person’s drink to being a healthy persons fitness drink
- Change the use of the product, e.g. isopropyl alcohol branded as video tape head cleaner and sold at ten times higher price; bicarbonate of soda packaged and branded as refrigerator deodorizer
- Add complimentary products or services, e.g. CD shops selling books and merchandise to complement CDs, dentist selling general and specialty toothbrushes
How not to…a case study
A California-based retail computer company that specialized in selling PCs to the home market attempted to sell very expensive mainframe computers to large corporate organizations. Within three months it was in the insolvency courts. The company simply did not realize how different the new offering was from the old one.
Because both groups use computers, the company incorrectly assumed that the same skills would be required to sell them – but the types of buyers and their needs were totally different, as was the product and its features. The diversification effort sustained severe losses because the company was not prepared for the demands of the new situation.
Diversification often looks like the sexy new option, the silver bullet we all looking for. Just be careful. Do your research and do the numbers. Don’t just assume that it will work!
Reprinted from our sister site, businesszone.co.uk.