FINDING BUSINESS GROWTH THROUGH MARKET SEGMENTATION
When House of Flowers noticed floral sales had stagnated, they knew they would have to get creative to find a solution. So they began looking for an opportunity to do something new. While still maintaining its usual business, House of Flowers expanded into an area that was closely related to its business model.Couture Events allows them to rent items like candles and decorations for parties and other special events, which has helped the business expand during a time it would have otherwise stagnated.
House of Flowers is a perfect example of how a business can find new ways to grow. Every business specializes in something, but often there are new business models that are a good fit. The key is to focus on the business’s customer base and find the perfect match. Ideally a business will expand into a market with rapid growth. For any business considering expansion, market segmentation may offer lucrative possibilities.
Segmenting the Market
Entering a new market segment can be tricky, especially if a business owner takes on an unfamiliar area. A doughnut shop that suddenly decides to add pizza delivery as one of its services could find itself outside its comfort zone. For House of Flowers, renting items for events was a natural choice, since that business type already caters to customers who are planning events. A bride planning her upcoming wedding day could see that the floral shop rents decorations and decide to add those to her bill.
With market segmentation, a business focuses its growth strategy on a specific portion of its customer base and tailors new offerings or marketing efforts in that direction. For example, a car manufacturer may discover that teenagers are purchasing a certain type of vehicle as a first car and find a way to reach out to the parents of those teens to ignite growth.
Developing a Strategy
Identifying the market segment is an important first step. Businesses should learn as much as possible about its target group and formulate a plan that addresses those customers. Defining a market segmentoften begins by listing out the different types of customers who interact with a brand and then noting significant differences between those groups. Which customers are more likely to buy? How can a business uniquely reach out to those customers?
Once a business has identified its best market segment for growth, that business should assess what competitors offer those customers and find ways to fill any gaps. House of Flowers discovered a demand for event rentals and stepped in to address it. Businesses often get a head start in that area because they’re already interacting with customers who ask for those services or complain that they aren’t available.
There are many ways for a business to grow, but when it seems that its current offerings have stagnated, expansion may involve moving into different directions. By getting to know customers and identifying ideal market segments, businesses can discover how to best reach those customers, whether through marketing or offering new products or services.
This post was written in partnership with Progressive Insurance. I have been compensated, but the thoughts and ideas are my own. For additional small business tips, check out Progressive’s Small business Big Dreams program.