By Pat Hinds
When I work with customers on improving market share I use the Ansoff Product-Market Growth Matrix to explain the area of the business I want to make more measurable and automated; the model consists of four strategies.
Market Penetration – Directed towards selling existing products to existing customers primarily through well known markets and products;
Market Development – Selling existing products to new customers;
Product Development – Introducing new products to existing customers;
Diversification – Marketing new products to new markets and requires acquiring experience in both sectors.
I am seeing a trend in the business market: companies that have focused efforts on market penetration and market development are prospering in the current economic environment versus companies that focus on product development and diversification as the primary strategy. In a recent article in the Calgary Herald called, Oilpatch experts receive award, it chronicles a company called Packers Plus Energy Services that received the Ernst & Young 2009 Prairies Entrepreneur of the Year Award.
Pakers Plus technology application simplified pressure pumping operations and improved completion times to maximize production from tight rock formations and mature oilfields. Currently, Packers Plus technology is being used in Canada, the United States, the Middle East, West Africa, China, Europe, Mexico and Argentina. Among its fan club are Crescent Point Energy Trust and Petrobank Energy, which recently attributed Packers Plus’s technology for expected high returns.
The two quotes in the article that stood out for me are:
“The men purposely stuck to a small slate of products when the industry trend was to diversify, and have seen their efforts bear profitable fruit.”
“That was our vision, to be very high-end, and high-value and to be really, really good in a couple of things,” Themig said. “We’ve always focused on being excellent in the few things that we do work in. It’s proven that you don’t have to be all things to all people. You can decide what you want to be.”
In the “New Normal” economy of reduced customer spending and increased competition, companies need to ask, “are we maximizing the spend of our existing customers in our product segment” and, “What is our market share of our existing products and what are we doing to improve the market share”. If you cannot answer these questions you should consider taking the Packers Plus approach and buck the trend of product diversification and focus on maximizing the investment made on existing products.
Topics: Sales Consulting