Changing tack and making changes in your market

We all know that from time to time that a market in which we are very strong has its problems, and this can in some cases seriously undermine one's business.

At the present time I can think of people who are heavily reliant on the public sector or who are closely linked to volatile industries such as arms and commodities. So the question is, what do you do if you’re looking at a situation where a substantial part of your current turnover could be lost?

Clearly, the most obvious thing to do is cut costs and rationalise wherever possible, but at the end of the day these are things that most prudent businessmen would do in any case, and you certainly don’t need me to lecture you on how to achieve this.

No, I was thinking about something that a number of my companies are beginning to do quite successfully, and that is enter into new markets.

For example, one of my companies is heavily reliant on the public sector, so not surprisingly we are trying to diversify into the private sector.

The first thing is that, although your product is positioned for the needs of the public sector, there is probably a very good chance that it can be rebranded in order to enter another market.

In the case of software this may be as simple as changing the user interface, switching on certain features and adding a few new ones. This could apply to products across a range of industries.

You may think at this stage that you’ve cracked it and that all you need to do is reposition your sales force, but you would be wrong.

Public versus Private

Staying with my public to private sector analogy, selling to the public sector is in the first case all about complying with relatively onerous conditions that all public bodies have to use in the tendering process.

In the public sector, repeated phone calls to the purchaser are probably not effective as the tender will be decided based upon the criteria set out in the laid-down procurement procedures.  

In the private sector, there is no set compliance procedure other than those used by the company internally. So here the flexibility of your sales force to make deals, understand the customer and develop a firm relationship built on trust is absolutely key.

This may sound obvious but in many cases it is very difficult to change the attitude of a sales force that has been used to selling one way and is now forced to sell in a totally different way.

Another important consideration is to name your product. I don’t mean changing the name of the company, but in most cases products have names that may be appropriate for one sector but misleading in another.

So if you are making changes in your market, you would be well advised to come up with a new name for the new market you are attempting to sell into. I am reminded of David Goldman at the Sage Group who introduced charging customers for service in the early 1980s – very innovative at the time.

David called it Sage Cover, thereby creating a sub-brand. I genuinely believe that it gave this part of the business an entity, which has gone from strength to strength.

It is also interesting to see whether you can advertise yourself out of a problem and gain access to other markets in this way. I always remember talking to the highly successful entrepreneur Nick Jenkins, who started online greeting card company Moonpig and recenlty sold the business for £120 million.

He said that their major breakthrough came when they started advertising on TV. What determines whether a company can make the transition from one market to another is innovation, product positioning and marketing.

Related Topics

Business strategy