Expanding Beyond Your Core Business Model

History is laden with examples of businesses that have broadened their repertoire of products and services, yielding both remarkable successes and monumental failures. On the other hand, there is really no such thing as “playing it safe.” Just as many companies have foundered by deviating too far, too fast from their traditional business model, others have lost their edge by hewing too closely to convention, like old dogs that failed to learn new tricks. A famous example of the latter is Smith-Corona, which by the 1980s had firmly established itself as the world’s premier manufacturer of typewriters, only to watch its signal technology fade into obsolescence due to the advancement of the personal computer.

Of course, the prospect of expanding a business model is daunting, and the temptation of risk-aversion is strong. But the choice to “stick with the core” entails its own risks. There are no guarantees. But there are strategies companies can employ that will enhance the probability of a successful transition or expansion.

Assess your current capabilities. Where does your business excel? What can you do better?

If you’re running a profitable business already, it’s a sign that your clientele values what you have to offer. Take the time to realistically determine your strengths and weaknesses as an organization, and where they stack up against your major competitors. Equally important, stay abreast of any new techniques, technologies, and business opportunities that your competitors may be exploring.

In his influential book Understanding Media, cultural analyst Marshall McLuhan advanced the thesis that technology—including tools, vehicles, and furniture (which he broadly defines as “media”)—are effective extensions of the human body and mind, geared toward a particular purpose. Using this concept as a framework for analysis, we can infer that a successful transition from one medium to another requires organizations to first recognize a distinction between what they provide, and the means (media) by which they provide it.

For example, the best restaurants are not exclusively in the business of serving food; they afford customers a social, environmental, and gastronomic experience. The technology corporation IBM is not merely a manufacturer of computers and software; its primary purpose is to facilitate the storage and transfer of vast amounts of information. Computers are a medium which serves that end.

Think about the primary purpose of your business, and the experience you would like your customers to have. Are there easier, more efficient, or more cost-effective ways to achieve that goal? What are the tools, or media, at your disposal?

Seek out windows of opportunity.

Once you have a clear idea of the raison d’être of your business, you can think about broadening the range of products and services on offer. Amazon, which began as an online book retailer, now distributes DVDs, music, and even fashion accessories. Netflix, once a mail-order DVD rental service that came close to bankruptcy, is now a highly profitable video-on-demand website with an increasingly global customer base. Both companies recognized that they were in the business not only of moving product, but of catering to the lifestyles of busy professionals by providing easy, convenient gateways for shopping and entertainment.

Do your research first.

 

Occasionally, the opportunity to open up a niche or neglected market presents itself, if you are fortunate or imaginative enough to find prospective customers who are underserved, or to devise a technique that hasn’t been tried yet. But in most transitions or expansions to new markets, you’ll find an established group of firms with a strong foothold. Invariably, those competitors will tenaciously resist your attempts to siphon away their clientele, and will have the advantages of experience, skill, infrastructure, existing relationships, and inside knowledge on their side.

This is why advance research is so important. Before you embark upon a new endeavour, survey the terrain. Get to know your prospective customers and their needs and habits. Identify and examine the most prominent incumbents in the industry, and understand why they are successful.

If you’ve done your homework, feel confident that you can offer a better deal than what’s already on the table in your target market, have a viable business plan, and have secured the capital and cash flow you need, then you’re ready to make a move.

The Power of Affiliate Marketing

A savvy entrepreneur is always looking for alternative sources of revenue and affiliate marketing can be a powerful way of generating income while cutting through a lot of the time consuming legwork of manufacturing, branding, and developing marketing strategies. At its core, affiliate marketing involves bringing a particular product to the attention of your consumers and sharing the revenue generated from the sale of that product through you, with whoever supplied the product.

Affiliate Marketing in Real Time

As an example, in order to provide context, imagine that Happy X is a supplier of natural supplements. GrowNatural is a health food store that deals with naturally sourced products. Happy X is trying to promote its launch of a brand new supplement designed to help people get more essential vitamins and nutrients. All sales are done online and delivered by Happy X’s supply system through their warehouse in order to keep shipments centralized and all revenue streams traveling through Happy X. Happy X has a strong history of delivering a great product but are looking to expand their reach, so they approach GrowNatural in hopes that they will help sell their product as an affiliate. GrowNatural also has a strong base of loyal customers, some of who may not be familiar with Happy X. Should GrowNatural make any sales through their clientele of Happy X’s product, they then share the profit.

Responsibilities of, and Benefits to, the Supplier

As the manufacturer of the product, Happy X’s responsibilities to GrowNatural is to provide them with all the materials required to sell the product. Happy X provides GrowNatural with all the necessary copy and links that they can post on their website with all the revenue sharing streams and stat tracking in place. In the short term, although Happy X loses money to GrowNatural in direct sales, Happy X regards any sales through GrowNatural as sales that would not have otherwise been made. In the long term, although the return on investment may be less than through a direct sale, Happy X now has the attention of the customer and has widened the base of its clientele.

Responsibilities of, and Benefits to, the Affiliate

Affiliate marketing is really the lazy man’s approach to making sales. Ultimately, the more effort an affiliate makes to push a particular product the more sales they can expect to make. It is the affiliate’s responsibility to make their customer base aware of a particular product and then back that product with their seal of approval. Any new product opens up a new revenue stream for the affiliate. In this case, Happy X has done all the work in developing the product and making it available to the consumer. GrowNatural, as the affiliate, is tasked with merely making their following aware that this product is available. How they go about this is completely up to them, but can involve any marketing strategy under the sun. It can be as simple as a banner on their website or as an involved as an email blast to everyone on their list. Affiliates that communicate regularly and are in tune with their audience tend to be the most successful.

Some Do’s and Don’ts

There are some very salesy people out in the world who generate their entire income through affiliate marketing. There are even websites and hubs where you can sign on as an affiliate to sell just about anything. However, it’s usually preferable to find a niche and stick with it. If you have a particular talent for something, or consider yourself an expert in any subject, it is advisable to market products that are closely related to that subject so that you can justify being an authority on things related to the product.

Don’t ever market a product you don’t actually believe in. Although it can be tempting to strike out and begin to market anything that can make you money, remember that anyone who purchases through is considered part of your following. They go through you because they trust you and suddenly providing them with an inferior product can result in losing their trust and the income that they generate.

The Most Underrated Marketing Tool in Your Arsenal

If the barometer of success for any marketing strategy boils down to ROI, it’s time to consider the PDF file as one of the most overlooked ways to get the word out about your product or your service. If you consider the myriad of ways to draw potential clients to your business, few are as easy to put together, as cheap, or as effective.

Simple Tools That Are All in the Box

Imagine you’re unveiling a new product line at your store. One of the most conventional ways to draw attention, and promote your new product, has been the leaflet. In the digital age the leaflet has to now be regarded as one of the more ineffective ways of driving business. Consider all the steps involved and who needs to be employed:

• A graphic designer needs to be employed to handle the layout.
• A completely separate company needs to be hired just to handle the printing.
• Finished leaflets then need to be distributed.

Now consider how those steps can be refined and made more cost effective with a PDF file.

• Virtually any word processor or design tool can be converted into a PDF file.
• No printing necessary.
• A final PDF can be distributed with a single click of a button in an email blast, or via per click advertising on almost any social networking site.

With a PDF no materials are wasted and no leaflets get unceremoniously tossed in the garbage. Save a tree.

So Many Options

PDFs can assume a variety of forms that may be useful in driving people to your business. Here are a few ideas:

Catalogues – PDFs are specifically designed to integrate images with text. They are quite literally the digital gold standard for delivering professional looking, unalterable, designs modeled after traditional print publications for the digital age.

Informational Material – For service companies, educating your client base on what you provide can help establish trust and offer them a reminder that they may be in need of your service. A well-targeted PDF tutorial, offering something as simple as a quick tip, can often spark in the minds of your clients a number of ways that they can use your service.

Promotional Video – With easy-to-use screencasting software such as Camtasia and Screenflow, it’s simple to turn a PDF file into a promotional video that can be quickly embedded onto your website or on various social networking sites.

The total cost for all of these methods are a fraction of the costs associated with conventional print materials, billboards, radio, and television advertising, and by using social media, the reach is even greater.

Other Benefits of PDFs

By now it should be clear that the PDF is able to profit from the fact that it can travel digitally and has a demonstrable versatility. But there are still a few more points that make PDFs so handy.

They’re Unalterable – No matter what design tool you’re using whether it’s Microsoft Word, Adobe InDesign, Photoshop, it doesn’t matter, converting to PDF places the final stamp on a design and makes it final. When it goes to the world it can not be imported and have it’s design components altered, leaving copyright and design control in the hands of you and your company.

They’re Universal – Unless you’re dusting off your old Amiga, chances are your PDF will be read by any device from a PC to an iPad. It will always look just the way it was intended and never suffer from corruption by crossing platforms.

They’re Light Weight and Cheap – No heavy boxes to move around and, in fact, PDFs require minimal amounts of space on your hard drive. Just about every software tool under the sun has a “save as PDF” option. Total cost: $0.

Pricing Tips That Work

The right price for your product or service will make all the difference between using red ink or black ink on your accounting books. Unless you have a smart pricing strategy all your hard work of getting your business up and running could collapse.

Here are some tips for how you should approach your own pricing methods:

Not All Prices Should Be the Same

A research study conducted at Yale University found that when two of the same type of products were priced exactly the same customers shied away from making a purchase as opposed to when the items were priced differently. This doesn't mean you should mix up your prices on the same products. Just understand the mind of the consumer. Perhaps it's more about changing the pricing with an item that has a noticeable variant like size or design. This idea also comes into play when stacking your product line up against competitors. You should always keep an eye on competitive prices.

Try Price Anchoring

Price anchoring taps into our tendency to exclusively factor the first price we see when it is set against a second higher price. Restaurants will use this tip when they are selling expensive items together. The $50 lobster looks pretty good compared to the $75 Kobe steak. The result? More lobsters are sold. The basic premise is that you're creating a sense of value for your customer. In other words, give them something to compare to.

To Make a Sale, Decrease the Sticker Shock

What sounds more like a bargain: a subscription for wine of the month club at $50 a month or $600 a year? They are actually the same price, but the consumer thinks the monthly cost is more affordable. This is the approach you should take in your sales campaign. A fee attached to a product should be a "small fee." Bundle products together into a single "great bargain package." Appeal to the grander solution of a problem.  

Use the Number 9

The number 9 has become so ingrained on the shopper's mind that it actually holds appeal. You can reduce a product from $80 to $60 but it might be stronger to go down to $59. It works every time!

Test Your Prices

There is a trial and error when it comes to finding the sweet spot of pricing. You might have to experiment with different price points to see what works best for your product. If you start a new campaign with a lower price point, make sure you get your marketing up to speed so all your customers will know.