+1 613 - 592 - 0544
For its first 80 years Austin Church and John Dwight’s Arm and Hammer bicarbonate of soda was promoted as an essential item for bakers. In 1860 they even published their mini-cookbooks "Valuable Recipes". Bicarbonate of soda (or baking soda), if you are curious, is an alkaline compound that, when combined with an acid, will produce carbon dioxide gas bubbles which become trapped in batter, causing it to inflate, or rise.
Bicarbonate of soda is an interesting product and has many uses beyond baking. Around 1922 Church and Dwight decided to tap into new segments, “Whether for bath, body or teeth, it seems there's no limit to the powers of this product.” And now of course you see it everywhere – fridge deodorizer, laundry care and it was even used to gently clean the Statue of Liberty in New York.
So how hard was it to move from the baking segment to the fresh fridge or household cleaner segments? As it turns out it was quite easy. The clients were largely the same, the brand was well known in the new segments, the grocery store sales channels were the same, the packaging was identical. But this is not always the case. Sometimes it works, sometimes it doesn’t. So, you are interested in expanding to adjacent market segments. What should you consider?
Credibility. You will want to move quickly. Will your current testimonials and credibility story work in the new market? If not, how will you build credibility quickly?
Brand. Different from credibility, brand is how you are already known, or not known, in the new segment. And does the way that segment brands you fit with what you want to sell to them?
Channels to Market. Customer intimacy is key to fast and effective sales growth. Do your current channels (company sales people, resellers, distributers and of course digital channels) have the right connections in the new segment? Will you have to design and build new channels?
Logistics. Depending on your product or service, you may need to design and build new logistics processes - shipping, customs brokerage, packaging etc.
Administration. Can you use the current invoicing and receivable experience in the new segment? A common issue is that higher transaction counts yield smaller dollars and greater receivables.
Support. Will the new customers require the same level of support? Moving from professional users to amateur users can result in a huge increase in demand for support. Failure to provide it can pull the whole brand down.
Competitive power. As with any market move, it is prudent to consider what the incumbents in that segment might do. If you end up waking a sleeping giant, can you respond effectively?
In some cases expansion to a new segment is a slam dunk. In others, even though it’s the same product, you are effectively building a brand-new business unit which will require a lot more thought. I suggest you review the seven factors above, determine what you’ll need to adapt or create to participate. And then test the market to get real feedback against the above factors.
So next time you spot that famous Arm and Hammer logo, think about which segments you can expand into.
Thanks for reading,
And oil tycoon Armand Hammer ..... no, he didn’t start Arm and Hammer but in 1986 he bought into the Church & Dwight Company Inc, which did start Arm and Hammer, and joined its board.
Let us know what you think. Questions, comments, complaints and suggestions are always welcome!
If you, or someone you know, would like to move faster this year follow this link.