A 2011 McKinsey Quarterly study "Drawing a new road map for growth" found that most businesses achieve more revenue growth through developing the market rather than winning market share. This is very clear in the auto repair industry. Those that started their businesses as the only auto repair shop, or the only specialist in the local market tend to control large amounts of market share. Entering a market segment as a newcomer presents challenges that can be insurmountable.
Can a revenue growth be developed within a mature market segment that allows you to bypass existing competitors?
Since the inception of the franchised dealership model the auto repair industry has been controlled by the manufacturers. The general mechanic had little competitive advantage in offering the level of service or amount of expertise that this factory connected retailer had. The Independent Specialty repair shop created a new market segment that differentiated a business from the general repair shop. These specialty shops competed with the dealerships for a much larger market share with far fewer competitors than they could have as generic repair shops.
The Independent repair shop market segment has since matured. In many populated cities there are now multiple independent specialty repair shops focused on the same brands, competing for the same share of the market, alongside the dealerships. Can these already saturated markets be segmented again to give a business some competitive advantage? Can a business enter into an existing market segment to produce additional revenue growth?
Developing your market further is possible, but the road is truly the road less traveled. Focusing on your existing customers and understanding what is driving your current revenues allows you to build a picture of your ideal customer. Specific types of customers drive revenue growth, not customers in general. Your marketing is directly connected to these types of customers. Through an effective marketing strategy, businesses can gather the data required to drive new sales. Without a holistic relationship between marketing and sales, a business can be driving with blinders on.Are you managing your marketing like a stock portfolio- collecting data, analyzing trends and forecasting for revenue growth?
