07 Sep How businesses can target new markets in a recession
COVID-19 has produced many challenges for small businesses. But even in a downturn, there are opportunities to develop products and target new customers to drive business growth.
Business planning specialist Suzanne Laidlaw, author of What’s Your Plan?, explains understanding the problems your product or service solves is one of the crucial success factors you businesses are targeting new markets.
“Regardless of whether it’s an existing or new product or service, marketing is about identifying your target market’s pain point and creating a message that lets them know how your product or service can solve their problems,” she recommends.
Online coffee marketplace and subscription service Barker St. is one small business that has grown through the pandemic, in part because of the actions taken by co-founder Costa Aarvanitopoulos and his team early on.
“In February when the corona virus became a talking point, we put a plan together if we had to go into lockdown,” he says.
“Regardless of whether it’s an existing or new product or service, marketing
is about identifying your target market’s pain point”
This involved investing in marketing, which delivered results. “Around 65 per cent of our revenue during the pandemic came organically through Google searches. The other 35 per cent came through a targeted Google ads and Facebook and Instagram retargeting campaign,” he says.
The retargeting campaign involved showing Barker St. ads to people who visited the business’ web site or searched for similar products. It’s an approach that’s designed to lift sales conversions from people who have already shown an interest in the product.
Aarvanitopoulos split his Google ad campaign budget, with 40 per cent of the spend going towards promoting his coffee marketplace and 60 per cent spent on growing his subscription service. “We thought people would find a subscription service more useful during a lockdown and this proved to be correct once we looked at the analytics.”
Additionally, he grew his business by switching from being an e-commerce site that only sold coffee beans to a site that sells everything to do with coffee. “We now offer capsules and drip bags. This range will also expand in the coming weeks and months. We also increased the number of roasters we have onboard, a decision that was driven from customer feedback.”
Any business that is pursuing a growth strategy also needs to ensure its insurance cover remains appropriate. Talk to your Steadfast broker if you are expanding to ensure your liability and other business insurance can cover any new initiatives.
The importance of research
Doing research is critical when markets change, such as during economic downturns. It helps businesses to understand how customers’ preferences have changed, the features they require in a product and even the price point they are prepared to pay.
Here are some options for conducting research:
- Appoint a market research company to do focus groups.
- Use social media to go directly to your target market and directly ask them questions. Competitions and polls are a great option to interact with and engage your followers.
- Ask clients you know and trust to give you honest feedback about your strengths and areas in which you can improve.
- Identify publically-available information, such as census data and industry trend reports available through the Australian Bureau of Statistics and trade organisations.
- Request industry benchmarking reports from your accountant.
Even in a downturn, there are opportunities for growth. It’s an idea to use the data you have collected during your research stage to pinpoint markets you can target.
- In-demand businesses can capitalise on the need for their product or service by investing in marketing to grow market share.
- Other businesses can use the downtime to improve, change or adapt their offering. “
Regardless of their circumstances, every business should pursue ongoing learning and business development. Focus on positive improvements, be a great leader to your team and regularly communicate with clients. Emphasise what you can do, not what you can’t,” says Laidlaw.
Aarvanitopoulos’ advice to other businesses to make the most of a downturn is to concentrate on what the business does better than others in the market. “Put 100 per cent of your effort into the one thing your business does well and you’ll reap the rewards,” he recommends.
Important note – the information provided here is general advice only and has been prepared without taking in account your objectives, financial situation or needs. Steadfast Life Pty Ltd (ABN 81 111 380 388, AFSL 421904)
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Source: – https://www.steadfast.com.au/well-covered/insurance-for-starting-out-business/targeting-new-markets-in-a-recession