SCY Welcomes You To
#GuforGrowth
Managing the Risks of Business
Growth
Paul Kelley
Phill McTaggart
SCY Business Mentors
3 Minute Exercise
What are the chief risks your business faces
for growth?
Market Segmentation and Customer
Profiling
Paul Kelley
Major Risks to Growth
Two ways to go out of business fast:
Running out of cash
Trying to be all things to all people
What is Segmentation?
A market segment is a cluster of
individuals or businesses that share
similar characteristics which make them
have relatively similar product/
service needs
What is Profiling?
A customer profile is a way of describing
individual customers/clients by using a set of
characteristics that can be linked to their
predicted buying behaviour.
Benefits from both
Provides business focus
Develops your products/services
Informs pricing
Directs marketing activities
Clarifies true competition
Increases sales
Market example: websites
Blue chips to SME start-ups
£99 to £250,000 +
Private sector/public sector
E-commerce
International
Design and functionality
Market segments should be…
Large enough to be profitable
Too large = too imprecise
Accessible
Measurable
Stable
Methods of profiling : consumers
Demographics – age, gender, family
Socio economic – income, occupation
Geographic – address, region
Behavioural – purchase occasion, benefits sought,
brand loyalty
Methods of profiling : businesses
Size – employees, turnover ….
Sectors – healthcare, retail, IT ….
Geographic – local, regional, national, global
Budget size
Buying complexity
Alchemy - data into gold
Data you already hold on customers and
their markets
Data you could readily capture
normal business processes (via orders,
contracts, deliveries, etc)
Extra data easily captured via normal business
processes
Additional insights - ask, surveys
Learn from the Professionals
‘people who bought this also bought these’
corporate/conferences/breaks/weddings
convenience/no frills
Exercise
List your current top 3-5 market segments
Describe your top 3-5 clients by key
characteristics
…back at the ranch…
Dig for gold nuggets – check your own data
afresh
Think segments, think customer
characteristics
Identify and target the most attractive.
Using Ansoff Matrix
To manage risk
Phill McTaggart
Background
Ansoff Matrix represents the different options
open to a manager when considering new
opportunities for sales growth.
Variables in the matrix
In terms of the market, managers have two
options:


Remain in the existing market
Enter new ones
In terms of the product, the two options are:

Selling existing products

Developing new ones
Exercise
On the sheet of paper provided make a list of
your existing services/products and which
markets you sell these in.
Example: An Accountant
- Year End Accounts for SMEs
- Payroll Services for IT Contractors
- Monthly Management Accounts for social enterprises
- Companies House Filings for SMEs
Exercise
List of existing Products/Services & Markets
Products/Services
to Market Sector
Existing
PRODUCTS
INCREASING RISK
New
New
1. MARKET
PENETRATION
Existing
Sell more in existing
markets
INCREASING RISK
MARKETS
Market Penetration
This is the objective of higher market share in
existing markets
Selling more of the same to the same people
Difficult to grow if market is saturated
In flat market have to grow by taking business from
competition
Risks are low but so are prospects of success unless there's
strong market growth
Market Penetration Strategies
Increase usage by existing customers
Attract customers away from rivals
Encourage greater frequency in transactions by customers
Encourage non buyers to buy
When to use Market
Penetration Strategies
When the market is not saturated
When there is growth in the market
When competitors share is falling
When increased volumes can lead to economies of scale
When there is scope for selling more to customers
Existing
PRODUCTS
INCREASING RISK
New
2. MARKET
DEVELOPMENT
MARKETS
1. MARKET
PENETRATION
Sell more in existing
markets
INCREASING RISK
Sell existing products
in new markets
Existing
New
Market Development
This is the strategy of selling an existing product
to new markets. This could involve selling to an
overseas market or a new market segment
Market development will need changes to distribution
channels, pricing and promotion strategy
When to use Market
Development Strategies
When an untapped market has been identified
When you have excess capacity
When there are attractive channels to access new markets
(This is a moderate risk strategy as you already know the
product but are unfamiliar with the customers)
Existing
PRODUCTS
INCREASING RISK
New
New
2. MARKET
DEVELOPMENT
MARKETS
1. MARKET
PENETRATION
Existing
Sell more in existing
markets
3. PRODUCT
DEVELOPMENT
Sell new products in
existing markets
INCREASING RISK
Sell existing products
in new markets
Product Development
This involves developing new products or services
for existing markets
This can:
Be time consuming
Involve an amount of research
Require a degree of trialling and testing to ensure the
new products/services deliver the expected
outcomes
or functionality
Need revisiting after the initial process (iterative)
Product Development
Strategies
New, innovative products
Product improvements (fixes or customer feedback)
Product line extensions
New products to complement existing products
Introduce different quality levels to existing products
When to use Product
Development Strategies
When you have good R&D capabilities
When the market is growing
When there is rapid change in the market
When you can build on existing brands
When competitors have better products
(New product development can be costly and involves
moderate risks for the business)
Existing
PRODUCTS
INCREASING RISK
New
2. MARKET
DEVELOPMENT
4. DIVERSIFICATION
Sell new products in
new markets
MARKETS
1. MARKET
PENETRATION
Existing
Sell more in existing
markets
3. PRODUCT
DEVELOPMENT
Sell new products in
existing markets
INCREASING RISK
Sell existing products
in new markets
New
Diversification
This is the process of selling new products to new
customers or new products to new markets.
Because there two unknowns this is the most
risky of all four strategies.
Related Diversification
This is where the development remains within the
confines of the sector, often harnessing existing
product knowledge. This closeness to an
existing product/service reduces the risk.
(i.e. banks developing insurance products – it is
still a financial product)
Summary
Growth risks can differ substantially
The matrix identifies different strategic areas in
which your business COULD expand
Managers need to then asses the costs, potential
gains and risks associated with the other options
Using Ansoff
You can adopt more than one strategy – perhaps
by segment?
Keep a balance between the strategies
Don't overcommit and try and do all!
Exercise
Complete an Ansoff Matrix for your
organisation
Existing
PRODUCTS
INCREASING RISK
New
2. MARKET
DEVELOPMENT
New
4. DIVERSIFICATION
1. MARKET
PENETRATION
Existing
3. PRODUCT
DEVELOPMENT
INCREASING RISK
MARKETS
Q&A
An opportunity to put your questions to the
Business Mentors
Next Session - 5pm
Keynote Speech
James Averdieck
Founder
GÜ Puds
Lakehouse, Ron Cooke Hub