Growth and Expansion Strategy
So you want to pursue a growth and expansion strategy? How should you divide your efforts and resources between your existing products and services, and the ones you anticipate offering?
At Marriott Consulting, we have found that a good rule of thumb is that your existing core business should carry 60 to 70 percent of the financial load in such a strategy, with new products and services providing the remainder by the end of the plan period. Concentrating too much, too early, on new products may not bring the desired results, while at the same time drawing customer attention away from established, profitable lines.
Consider the case of Gillette. Long considered one of the world's great marketing companies, Gillette is synonymous with razors and razor blades. It also owns the Duracell line of batteries. But for a time recently, Gillette promoted new lines too heavily at the expense of its bread-and-butter ones. The results have been disastrous — leading recently the abandonment of several product lines, the loss of 3,300 jobs, and the departure of its executive management.
According to a recent Financial Times article, "Analysts have criticized the group for focusing too much on innovation while avoiding basic branding and financial management. Mr. Kilts said he would lengthen the innovation cycle to get "maximum payback" from previous products.
"The company had over-reached on Ultra, its premium battery brand," the article continues. "While the product was a success, it came at the cost of a traumatic market share loss at the mid-tier. Gillette will refocus on its non-premium Coppertop brand. The story has been similar in razors and blades, where the success of the three-blade Mach 3 and Venus has been overshadowed by market share losses in disposable blades and razors." So when you are considering an aggressive, forward-moving strategy into new product lines or markets, remember to "keep dancing with who you came with."