What’s the most unusual boat you’ve ever seen? For me, it wasn’t a boat on the water — it was one in the sky. Spanning the top of three 55-story towers in Singapore, it’s a boat-shaped SkyPark, which boasts a restaurant, gardens, a pool and an observation deck.
This amazing environment serves as a jaw-dropping crown to the spectacular Marina Bay Sands resort, which opened in April of 2010. The resort has more than 2,500 rooms, a casino and more. My recent visit to my son in Singapore included an evening on the boat — er, in the SkyPark — taking in the incredible view of the city.
What does this boat-formed architectural feat have to do with you? For the Las Vegas Sands, which was the winning bidder, it meant a massive expansion into a new, faraway frontier. After a few hiccups, they’re producing at least $1 billion in annual profits from the casino alone.
Now bring this high-level (pun intended) growth idea closer to where you dock your boat, and you’re starting to entertain new market thinking. This represents a broadened frame of mind toward fresh opportunities essential to sustaining and extending your business as market conditions evolve.
When it comes to new markets, what’s the best approach to take without sticking your neck out too far? As with any business endeavor, find out what people want and need, gather competitive detail, walk before you run to mitigate risk and get started.
For your first-pass assessment, take a look at this easy, back-of-the-envelope Five P Formula I’ve developed to help you remember what to consider when evaluating growth opportunities: potential, product, positioning, profits and probability for success.
Potential: What’s the revenue potential for your new market? Potential includes existing demand or demand you generate by virtue of the value the new product delivers. Your expanded market potential can be a combination of new and current patrons and products.
Let’s say the need from your side of the boat deck is replacing your retiring baby-boomer patrons with the up-and-coming generation of customers in their 20s and 30s. What does this fresh crop of buyers prefer and need in the boating arena, and what’s their potential buying power? Take a look at industry data to cross-check your personal knowledge and research. Neither source of information should be your single source of truth. Consciously consider multiple data inputs (as you know the Marina Bay Sands investors did).
Product: With a first-cut look at potential and the desire to attract the next generation of customers, you must determine what products or types of boats will fill the requirements this young market brings to the water. The products you provide should satisfy a need or solve a problem. Look into the top three to five products your young market would buy.
Don’t know what those products are? Ask consumers to tell you! Conduct surveys of current clients on your website, on Facebook and in your store, entering them in a drawing for a prize. Produce a similar survey with everyone who visits your watercraft at the next boat show. Select the products that make it affordable for these youthful buyers to get started and hooked into a lifelong water recreation habit. Paddleboard, fishing boat, or what?
Positioning: Position products for new markets that fulfill customer needs you determined earlier while fine tuning your approach to match buyers’ income, spending and financing capabilities. Input from those earlier-mentioned surveys will come in handy here. Do they want to own a boat, rent for the weekend, or do they prefer co-op ownership? Are they interested in purchasing new or used or a combination of the above?
Many younger buyers find that their first purchase is a used boat under 30 feet. Others may want a multi-generational boat or a more affordable pontoon, and still others may be looking to trade in an older boat they inherited from their parents and buy something smaller and easier to maintain. Pull in the first two P’s above — potential and product — and position these in a way that responds to what your next-gen prospects want. Offer test rides too, of course.
Profits: As you prepare to venture into new markets you’ll be running the numbers and getting a realistic view of the profits you’ll likely produce. How much are you willing to invest, and what is the amount of risk you can reasonably absorb while keeping profits humming? How much experience do you have to manage any unexpected bumps along the way? Do you have a fail-fast strategy if things don’t go well? Can you gear up quickly and expand if things take off? What’s your staying power? With any new products, start small with a test segment, make adjustments and then get going. Walk before you run and know what your exit strategy is before you have to use it.
Probability for success: Now that you’ve considered potential, product, positioning and profits, what’s the probability that you’ll succeed in your new market? Don’t forget that your competitors are doing the same thing you are — looking for their latest big revenue opportunity.
If they get there first, will there be room for you, too? If you get there first, will you be vulnerable to competitors swooping in and stealing your hard-won clients? What are the barriers to market entry that could slow competitors and allow you to get a head start? Will you go it alone or form a partnership?
Take into account timing, customer loyalty and long-term buyer retention programs as you craft your growth market strategy. Your savvy approach includes increasing your probability for success by knowing your buyers and building relationships that make them less likely to jump ship (pun intended again) and purchase elsewhere.
In addition to the cursory Five P Formula provided above, also consider what Stephen Wunker of the Ivey Business Journal said of new markets: “Like any good venture capitalist, an established company pursuing new markets needs a portfolio of investments. … The secret to success is to fail quickly and cheaply, and then to double down on the winners. To do so, a fund needs a portfolio of opportunities that balance varying types of risks and maturity. … In established markets, companies can carefully pick a few shots, but in new markets humility matters. Despite the best preparations … there will always be surprises.” (November/December 2011, iveybusinessjournal.com)
As you strategically create your plan for exploring new markets, be open to buyer input and to opportunities you haven’t considered. Your plan might not involve a multibillion-dollar resort with a boat-shaped SkyPark 55 stories high, but be flexible to what may be a novel prospect for you. Your latest venture can produce great potential for success if you start by incorporating the Five P Formula and pursue what customers need — not simply what you want to give them.
The ability to prosper long-term depends on judicious new approaches to evolving markets and your willingness to go forth and flourish in your next fresh frontier.
Mary Elston has spent more than 20 years in management in the transportation, consulting and technology industries. She is a member of the National Speakers Association and author of the book, “Master Your Middle Management Universe, How to Succeed with Moga Moga Management Using 3 Easy Steps.” Contact her at firstname.lastname@example.org.
This article originally appeared in the July 2014 issue.