Episode Transcript
Speaker 0 00:00:00 By this point, if you've been following us on this series, you'll know that you want to grow your business and yourself, whether that be due to personal ambition or due to an opportunity that is a arisen, you've also ensured that you won't be standing in the business' way and your mind is focused on achieving this growth. So how are you actually going to do it in this episode? I'm joined by Josh curs partner here at a 4g. Talk to us about the practical considerations of how you actually go about choosing a strategy for growth. We also have guest speaker Simon Thompson from relish research, joining us to share his insight into how knowing your ideal customer is key to fitting into your growth plans. Hello, and welcome to this week's episode of let's get down to business before, introduce our guest today. I just wanted to remind you that if you've not yet, got your hands on a copy of Malcolm Palmer's new book, please go to www.accidentalmini.co UK, or amazon.co at UK and search accidental minis to get yours today. It is now available on Kindle two
Speaker 0 00:00:58 With me today. It is Josh Curtiss partner at a G, but before we speak to Josh, I thought it'd be good to talk to an expert in this area who can give us a little background and insight into what growth strategies actually are and why you need one. Simon Thompson is a managing director of relish research, a company dedicated to helping their clients develop strong growth strategies and ensure they have a richer understanding of their customers. They've worked with some very well known household brands, and I thought it be great if we could get his insight into this topic. Hi Simon, how are you this morning?
Speaker 2 00:01:26 Good. Thank you, Simon. How are you?
Speaker 0 00:01:28 I'm very well, thank you. Well, before we kick off today, it would just be great. If you could give our listeners a brief background into who you are and what you do.
Speaker 2 00:01:36 Sure. Um, so I'm, uh, managing director of relish. We're an agency and consumer inside agency with about 24 staff, uh, and turnovers around three and a half million pounds with, um, we've, we've been through a number of phases of growth ourselves over the last few years, but we're on the right trajectory at the moment. So, um, a really interesting topic and, and quite time is to be talking about it to you today.
Speaker 0 00:02:01 Brilliant. Well, we'll talk a bit about the theory behind choosing a growth strategy later, but before we do that, I thought it'd be really great to get your thoughts about where a business owner should start before heading on, you know, heading off onto this growth journey. As in reality, they, they should really be, be defining who their ideal customers and their consumers are, cuz actually there's, if you agree, some there's a subtle difference between the two I E you could be a parent purchasing, which is the customer an item for their child, which is the consumer. So, you know, how would our listeners maybe go about doing or thinking about thinking about that sort of thing?
Speaker 2 00:02:36 Sure. I, I, I think the, the first start, uh, first part of this process, I mean, you need to look inward, uh, as to what it is that you're actually offering the market to get a better definition of who, uh, you should be trying to connect with and speak to and engage with. Um, and it's often something that's overlooked, uh, by businesses. We spend a lot of time ourselves when we get briefs from major footsy, 100 companies coming through, uh, asking questions around fundamentals of exactly what it is that their, their product or service is trying to deliver, um, to get a better understanding of, of who we should be speaking to from an insight perspective, to give them, to give them what they need. Um, the, I think it's a bit about understanding what makes, what you want, uh, to make you famous, uh, in regards to the offer or service that you've got.
Speaker 2 00:03:24 Um, and then, uh, planning from there. It sounds very simple. Um, but it's really done from small businesses right. Through to much larger, uh, organizations. Uh, and, and if you don't do it, you end up in some sort of existential crisis and trying to figure out out who and where you should be turning next. Um, but getting the, getting the basics right around around what it is that you do. And from there, figuring out who potentially could be someone that would be interested in your product or service, I think is a, is a really good place to start
Speaker 0 00:03:52 Brilliant. And I like that bit of advice, keep it simple. I think sometimes we can overcomplicate things and actually just coming back, right it down to the basics, what are our key, you know, drivers, what is our key reason that we do this? You know, who is our ideal customer? I think keeping that simple. I like that, um, another big question we know business owners should be asking themselves are, you know, what are my markets, not only now, but in the future, because I think that will also allow them to think of their ideal customer and how they fit into that market.
Speaker 2 00:04:21 Exactly, exactly. I think it builds nicely on what we've just been talking about. Um, in fact, the future is very difficult to predict and there's a lot of, uh, so Sayers out there that will tell us what's coming in the, in the, in the future. But if you wind back to March, 2020, um, there was no way we could have predicted what was gonna come next, uh, and how markets adapted and evolved and how businesses have evolved, uh, off the back of that. And that's possibly why we're seeing such growth and insight is because people are realizing well, businesses are realizing they don't actually know what's coming next. Uh, and, and, and speaking and engaging with customers and prospect customers, um, is a huge, I guess, competitive advantage to their can get, um, to help them plan for the, for the future. Um, I think if you, if we go back to what we was just talking about with the, um, understanding of what your business offers, if you ground everything in some of those, so core business principles of what it is that you are trying to do, or you're delivering, or your product or your service, um, you get a better sense of who is your target right now, but also potentially who's your target, uh, in the future and where you can, I guess, adapt and evolve, whether you wanna go sideways, whether you want to go more mass market rather than niche, um, all of those sorts of things come back to really properly understanding and getting to grips with your offer and, uh, you know, your competitors, uh, and then ultimately your audience from there.
Speaker 0 00:05:45 Yeah. And I think that's quite interesting because, you know, there is big change and you can't predict everything, but if you really do know what the market is now and who your ideal customer is now within that market, I think that gives you a good place to start, and then you can adapt from there. But obviously once we know those things, how does a business actually gain market advantage? And, and by this, I mean, how can we find out how many more customers are out there within our market? Because even if they're already in, within a certain market, or they're looking to move into it now are either way we really want to be performing better than our competitors. Don't we
Speaker 2 00:06:21 Exactly. And I think this is you blowing our own trumpet. This is where we come in. Um, particularly for these organizations that are so large, that they don't necessarily have the nimbleness or capacity to monitor everything in front of them. I mean, there's, there's no shortage of data that's, uh, available. Um, I think the biggest problem, uh, that we face not so much is, is getting a hold of data is actually what to do with it. Mm. Um, and it's how you look and interrogate what's in front of you, what you currently have. Um, what's freely available on sites like Google, and also whether you wanna go into primary research, which is, uh, our, our sort of core offer, uh, the, the, the lens of which you look at that data is, is really important. And I think if you focus more on, I guess, jobs to be done, then there's a big theory around, uh, around that.
Speaker 2 00:07:11 But I think it's quite important to, to look at what, what sort of, what do people want your, why are, why are they hiring or into your product or service? And I think there's a, there's a quote, um, around people don't want a quarter inch drill. They want a quarter inch hole. Yeah. <laugh>. And if you start moving away from that quarter inch drill to thinking about how many people actually want a quarter inch hole, there's a lot of people that want that. Um, and then ultimately your, your view of the market becomes much bigger. Um, and how you position your offer for that sort of, uh, job or tasks to be done, um, how to sell your offer, how to communicate it. And ultimately, you know, what is the price that people are willing to pay? What's the maximum I can charge for that, um, offer a service in this case, a, a quarter inch hole, those things can be packaged up, um, and sold across different channels, um, through, through, through sort of different markets, you know, local, uh, UK based global markets, all sorts of things open up, um, by, by getting back to, to, to looking really at what the, um, what the problem is and what, what your product is designed to do and, and how people wanna engage with that.
Speaker 0 00:08:13 That's brilliant. I think, you know, how effectively we're actually gonna match the products or the services we provide, who our customers need, like you said, is pretty crucial, you know, as presumably like, presumably like you've said, you know, this drives what strategy we choose. For example, if we know where the demand is, we can then just take these to the new markets. But if we dunno this though, I know you've touched on it. How can a business owner really go about getting the answers to those questions?
Speaker 2 00:08:38 Um, this is really what we do, and, and we try aim to do it very well for, for our clients. We have a combination of, of tools and research tools that I won't bore you with, um, to, to dig into what customer needs are. Um, but fundamentally it comes down to, um, conversations and, uh, immersion with, uh, audiences. So to understand what, what customers' needs are from, um, from talking and having dialogue. And, uh, other times it's about observation, um, and that is watching from afar and seeing how people interact and behave within certain environments and how the context of an environment shapes the shape behaviors. Um, sometimes it's, it's using data from, uh, behavioral data survey data, any other data we can get our hands on to, to identify the, the, the trends, but it's about pulling together multiple threads of insight to better understand what's going on.
Speaker 2 00:09:30 Um, so there's, there's a, there's a claim around, um, having a single source of truth, and it's very difficult, uh, for, for any business to try and validate. Uh, and I certainly know for the clients that we work with who are enormous, mm-hmm, <affirmative> single source of truth doesn't exist. Um, so it's a nice thing to talk about, but in reality, it doesn't, uh, it doesn't hold up to any sort of scrutiny or interrogation. Um, so I think, you know, in some, in some ways the whole process is a little bit boring. It's about incrementally improving things, um, rather than overhauling. So combination of, um, short term gains and, and wins and, and, and driving things from that perspective, but a lot of consistency and repetition, um, over time, uh, egos, a long way to, to making, uh, an impact, particularly from a, from a growth perspective. So we see our clients, um, spend a lot of time planning two to five years in advance, and then giving things time, uh, in order to, to, to grow, uh, and deliver the results that they need. And often that's, that's why they're so big. Um, it's because they they've got the city to do it. I realize it's not always possible if you're a smaller business, but, um, giving things time and trusting the strategy, um, is a, is a huge, uh, common commonality across sustainable and winning brands.
Speaker 0 00:10:48 Yeah. And I like that. And I think also our listeners out there, if they're looking at growing the business and choosing a great sta strategy, I know you reference it was, is a little bit boring, but if you do the right things over and over and over again, you will get the, you know, the right results. Um, and I think that's really important to remember it is consistency in anything you choose from your growth strategy, marketing strategy, anything you do with your customers, yourselves, every little thing that you do, you wanna be doing one step one, step, one step. Um, and just in the right direct, I mean, have you got any practical advice or case studies, if you can share them, you know, where you've addressed or supported a client, or even your own business, you know, through choosing the right growth strategy for them?
Speaker 2 00:11:29 Um, yeah, absolutely. There's, there's, I think there's only so much detail we can go into, um, but that's, um, but certainly we've helped brands identify the right audiences for them to focus their, their offer on, um, there's, there is a lot of interesting information around mass targeting and, you know, preparing your offer for absolutely everyone and then equally there's, um, data and insight out there that suggests that, um, for example, only 5% of B2B buyers are in the market to buy at any particular one time. So, um, there's a lot of wastage that comes with that. So I think a lot of the, the work that we do from an insight perspective is a help is not only to help support growth, but to, to all also, I guess, minimize some of that wastage and help people target, um, audiences with, um, with specific offers for better results, which we can test and learn, um, through the, through the various methodologies that we've got.
Speaker 2 00:12:24 Um, but equally, you know, we've, we've helped businesses loosen their focus on niche, sort of segment thinking and, and begin to think about much broader audiences as potential buyers of their, their offer, which has changed the way that they've thought about their, their proposition, but, you know, qualitative, quantitative research, um, behavioral data. There's a lot of, um, uh, work that looks at from a neurological perspective from behavioral science perspective, um, things behavioral eye tracking will work all of that blends together, um, to give people really clear insights around what's going on. So often these businesses and, and, and they do have a strategy in place and, and, and more often than not, we're bored in as the voice of common sense, um, which is sometimes lacking, um, and a lot of boardrooms across, across the world. So it's a, it's quite a nice position to, to be in sometimes.
Speaker 0 00:13:15 Well, brilliant Simon, thank you so much. I mean, I mean, if someone has heard, um, something in their light sound of today from me, where can they get, um, in touch with you,
Speaker 2 00:13:23 Um, our website, which is we are relish, uh, dot com, uh, through there, you can find out a little bit more about the products and services that we've, uh, got available and how we help, uh, businesses. We've got some case studies up there as well. Um, and then contact, contact us through that website. And we've also got a great LinkedIn page, uh, as well. It gives you a little bit of insight, not only to the work that we do, but the type of company we are as well, like to have a lot of fun while we do things
Speaker 0 00:13:47 Oh, who doesn't Simon and who doesn't <laugh> well, that's, you'll need fun. Exactly. I completely agree. Well, fantastic. Thank you so much. And for your insight today, it's definitely given me some food thought and, um, thank you for your time.
Speaker 2 00:13:58 Thank you, SHA
Speaker 0 00:13:59 Thanks, Simon.
Speaker 0 00:14:01 Brilliant. So we've now heard from relish. Who've given their insight into the sort of things we need to be thinking about. Um, you know, so Josh, let's just kick off, you know, how, how would we start talking about growth with our clients? Because, you know, we've already, you know, just discussed knowing what our customers, what, and so then it'd be proven sort of find out which of our products and service they're actually buying, which are ones are successful. So how, how we could maybe, you know, it might be a good idea here for our listeners to maybe just to sit for a minute and just think about what products or services they are supplying, you know, for the next 15, 20 minutes, we are gonna be talking in depth about those, how you can analyze them. So it'd be nice to have, um, for you to have them in your mind's eye, um, as we talk through these things, but in terms of like analyzing what products or services are working and what they're not working, how, you know, is there a way that we can use a model perhaps to, to, to assess them essentially?
Speaker 3 00:14:54 Absolutely. Um, now I have to put my hands up and say, I'm, I'm a bit of a geek when it comes to these sort of models that are used for, for different sorts of business strategy. Um, but as much as I like the, these general models and find them really fascinating on a, on a sort of an DEIC level is really important to take these general rules and general thoughts to, to generate practical discussion. Um, so yeah, uh, we can discuss them here. And then what I would say is rather than us going through specific examples here, um, have in mind how these would apply to you because as I go through them, I always have my mind at various different examples, but obviously if I've just got a client in mind, I can't say all of the details of that client for confidentiality, but, um, where I can find examples, I, that, that are, um, you know, don't breach confidentiality.
Speaker 3 00:15:44 I, I will try and give those examples. And I think you, you touched upon it, Charlotte. I think the starting point is if you're looking to grow is to look at where you are now first, um, you know, all growth comes from a starting point. And, um, I found it really interesting that Simon said about, um, work out what makes you famous. Um, you know, if I were to apply that to, to the, the way, the model, then another way of looking at what makes you famous is to look at what's your unique selling point, what makes you stand out in the market? Um, and then you can then apply that to actually say, okay, if that's what we are picturing as our, that's what our culture and our marketing and our delivery of good source services, that's what we're giving. How do we actually review that into how that's actually delivering profit and turnover for our business?
Speaker 3 00:16:40 So the first model that I usually turn to is a model called the BCG matrix. If you Google BCG matrix, you can get long, all sorts of really easy to understand graphics. But what that basically tries to do is breakdown product into one of four categories. The four, four categories are easy to remember, cause they've got really easy to remember names and you can put a nice graphic to it. So that's why it's all over the internet, but effectively you've got four different types of product or service. You can have a high growth, high cash, um, product. So that's where the product is selling more and more in each period that you review it. You're always selling more in the next period than you were the previous, but it's also generating high cash. So it's, it's either got good profit margins or it's got good profit margins and the people who buy that service of product pay well. So, you know, a star is usually what want in business. You want that because it's, it's exciting. It's a product that, that in inspires, you inspires your team, but it's also bringing in cash, um, which is always, uh, you've got win, win there.
Speaker 0 00:17:47 Yeah. And these are the ones that you, you know, you should be investing in. They've got high future potential, you know, that's, you know, for the
Speaker 3 00:17:53 Business's that's right, they're going up, the, these are the, these are the things that excite you. Um, you know, so you, you do have a risk though with those as well, because how, how high does it rise before it starts to go down? That's always the question. Now, in theory, a star will reach a point where the growth starts to tail off. And at that point it becomes the next catch, which is a cash cow. And really in my mind, maybe it's because I'm a, an accountant. And by nature, I have some sort of prudence in the back of my head, but a cash cow. They are your, your ultimate ones because you haven't got that high growth. You haven't got the pain of trying to expand the business all the time. You haven't got the, the problems with trying to keep building a higher staff base or dealing with higher and higher amounts of goods coming in and out or production issues. You've actually got a sustainable, um, delivery model, cuz the growth is now low, but it has previously grown to this point. You still have a very high profit and cash position. So cash cows really are. Um, they're what everyone desires to have because you haven't gotta put too much effort into it anymore, but it is gonna be generating a load of cash and, and margin for the business. Yeah,
Speaker 0 00:19:08 You, you got, you got a high market share how you takes less, less cash to run. And I quite like the analogy, you know, you wanna milk the cows for the cash to reinvest in your other things like your stars.
Speaker 3 00:19:18 Exactly. And that's it. And it, once you've got a cash cow by, by standing back and you know, we probably should have said at the beginning that the important thing is to spend time, not in the business, but working on the business, uh, um, if you want to grow you, don't, you, you need to have time to be able to actually assess using data and ways of thinking about it where you're not just in the, the nitty gritty to actually say, well, hang on. Where are we? And where do we need to go? And part of that is actually, you could be doing something day in, day out, day in, day out. You can see the money coming in from it up. You might not be observing that actually the growth has tailed off on this product or this service that you're providing. Yes, it's still providing the cash, which in a day to day basis still is very motivating and like, yep, no it's bringing in money. We're doing really well. But actually the growth is now tailed off. Is that service and is, or is that product going to keep your business going for the foreseeable future? Because the next stage, um, of the business cycle is that, um, you then have a cat called dog, which is unfair to dogs, I think, but this is where you have.
Speaker 0 00:20:24 Is it pet is the PC term? I think these days
Speaker 3 00:20:26 <laugh> yeah, I think, I think I, when I picture this, I picture a stray dog. <laugh> this is where you have a product that is now in low growth or is it is essentially in decline. So, you know, every month you might be selling slightly less and you could also be in a position where actually, because of that, it's no longer really providing as much cash as it was before. Actually the cash generator from the servicer product is declining over time. Um, and that's really hard to identify unless you're standing back and observing it. Cause if you are, if you are in the, the thrust of business, mm-hmm <affirmative>, you might not be able to identify these trends because they might be quite it's subtle. And sometimes if it's generating, if it's still generating cash, but actually there's, there's a decline in the leads say that are leading to that product.
Speaker 3 00:21:14 You might not be able to see it so clearly. Um, but yeah, a dog is where, you know, there are some products that actually, um, they can survive as a dog for a very, very long time. But if you are aware that that product is now in that position, you need to then be saying, okay, we now need to use the cash available in the business to investigate if there is, um, other products that might have better future potential. And that's when the final category that, um, is in the matrix is the question mark. And the question marks are where you potentially have high growth, but you have low cash. Cause if you think a new product is gonna soak up cash like MADD, as you develop that product, or you develop a new range of product, uh, products or services that you want to sell to the market, you've gotta do all the marketing.
Speaker 3 00:22:04 You've gotta get the team in place. You might have to increase technical skill in that area. You might have to change your production methods. Um, the way you deliver that service might be different. All these things create huge upheaval for the business, but it has this potential for high growth. Now, obviously if you, um, if a product sold nothing one month, then the next month you sell one of them, that's actually an infinite amount of growth. Um, so high growth is quite easy to get when the product is new to the market, but actually in the grand scheme of the products you sell, that growth might steal the, the volume that's going through might be quite low. But actually these question marks, you wanna have a range of question marks mm-hmm <affirmative> when you have a range of products or services you like actually yet we've got five projects on these. Any of these could take off and become the new, big, big project for the, for the business. But actually we don't know which one it's gonna be yet.
Speaker 0 00:22:52 No. And that's where I think you decide whether which ones you invest in or which ones you discarded or put to one side, just depending on their chance of them becoming those stars.
Speaker 3 00:23:00 Absolutely. And that's where you want, you know, ideally you want all of those question marks to become stars mm-hmm <affirmative> um, and I think that having, you know, I often to use this model to go beyond just looking at services and products. Sometimes you can actually, if you've got you're in a position where actually you've got, um, several businesses under your control that do different things, you can actually assess your businesses in the same sort of model. And, and this is why I like it as a thought exercise. It's like, you've got these categories, you've got your definitions now, how can we use use that, um, to assess a whole range of things. And that allows you to sort of pin things in, obviously, you know, people don't like being, um, categorized and put into a box, but, um, in terms of thinking about where are we to inform where we're gonna go? I think it's a really good starting point.
Speaker 0 00:23:47 Absolutely. And I think once we've analyzed our products and services then, and you know, what sort of impact they have on the business, I guess the next logical step would be for us to consider the life cycles of these products and services. Obviously we've touched on that before about growth and things like that. You know, if we've got like, if we've got like a, in the it's growth phase and it takes a lot of resources and our, but our cash may be slipping into the decline stage, you know, we want to see how, I mean, I'm jumping the gun here of, of the life cycle, but maybe we should chat through, through a product's life cycle. Absolutely. And then how that would link back to what we've just spoke about with each product or service one by one.
Speaker 3 00:24:23 That's it. So if you, if you imagine a graph where you've got along the bottom, you've got time and, um, going up on the Y axis, you've got, um, sales volume, let's say it could be sales volume, it could be, um, margin. It could be gross profit. Um, any, any, what's the most important metric for your business to assess, but let's just say for now it's turnover. So you could, you've got your question, your marks, these are your projects that you're working on. You don't know what they're gonna do. You don't know if they're gonna succeed there at the start of this. You've you've not had very much time with that product. Um, and, and its volume isn't very high yet, but you'll reach a point with one or two of them that they will then start to grow even faster in their volume of, of profit, um, or turnover, cash.
Speaker 3 00:25:06 Whichever metric we want to use really starts to have an impact. This point, they turn into stars. They're the, they're the rising product. These are the ones where you're like, this is feeling good. We're onto something good here. Let's, let's keep this going. Um, some of the question marks will quickly go from a question mark to a dog and then disappear, um, because they, they never reach the volume or, um, contribution to the business that you really need them to make to warrant the investment, or you might just stop them dead in their tracks. Um, so then you've got your stars. They're rising up to over time. As time is ticking on you're generating more and more turnover from these products or services. And then at some point that starts to plateau. And at which point they become your cash cow. So they, at this point, the growth is tailing off, but they're still providing good level turnover that in turn is generating good cash, um, and margins for the business.
Speaker 3 00:25:57 Of course, if at this point, the growth is tailing off, but they're not really generating much in the way of cash or contribution. Actually, you might be thinking that they're a cash cow, but they're not a cash cow. If they're not generating cash or profits for the business, which case they've gone straight from a star to a dog, and you have to be very aware of that to say, well, hang on. If we are assessing this product, it's not actually generating much. It it's covering the costs of delivery, but it's not contributing anything to the overheads or profits to the business. Do we really need this product? Is this actually contribution? Now some products you might have a, this is where a loss leader might come in. You might have a product that everyone comes to you for this product. It doesn't really generate much profit for you, but it then is an access point for people to buy other things from you.
Speaker 3 00:26:45 Um, and in which case, it might be very useful to have this dog product still there. Um, and then, you know, many cash cow products will eventually start to tail off where actually they do go into decline and you end up with a product that's a dog. Um, and with dogs, I, I think this is an interesting one, cuz can probably, if you think about as a consumer things that you buy and see in the shops, you can often identify products on the supermarket shelf that you're like, hang on. You can actually use this model and start to say, oh, these things are all these different, um, products. Now when I was, um, studying all this back many years ago now <laugh>, um, one of the we used to use as a dog was Brasso because there aren't many competitors to Brasso. So the company that produces Brasso, it's an ancient product.
Speaker 3 00:27:34 It's not really experiencing growth, but it's decline is so slow because it has market domination. You know, if you need to, if you need to Polish some silverware, you may not have very much of it, but you'll have a pot of Brasso somewhere to do it. Um, and actually this, this dog product is worth keeping because it doesn't involve any investment. As long as we can produce it EF efficiently mm-hmm <affirmative> we once will keep that as we have market dominance. So it actually does still produce some cash for that business. So, and there, there are plenty of other products that you can look at at one point electric toothbrushes must have been a question, mark, you know, why would someone buy something? They have to put a battery in or charge up to brush their teeth. And then all of a sudden it starts taking off and becomes a, a high, uh, you know, a, a star.
Speaker 3 00:28:22 So it's getting higher growth. And, and probably the, the electric toothbrush market now is probably a cash cow because it's not really experiencing that much growth. Um, and it's just sort of producing a lot of money for those who produce them. And now they don't have batteries in people like ju cell can't be making even more money outta them. But I find it's a really, if you are, if you're not ready to put these models to, to, to, um, to, to your own business practice by just walking around the supermarket and saying, where is this product in the matrix and where is it in its life cycle? Mm-hmm um, and, and if you do it on a business level, you know, often I can remember, um, you know, you walk down the high street and, and, you know, I was thinking, hang on, how is, how is Debenham staying I alive? And then all of a sudden, obviously it, it starts to collapse and you think, yeah, I, I, I sort of, if I didn't quite put it in the matrix, but you can sort of see how it might be becoming a dog in the marketplace mm-hmm <affirmative> um, and you know, there there'll be businesses out there that you interact with that you have allocated to these categories subconsciously without even no, these categories potentially.
Speaker 0 00:29:28 Yeah, exactly. I love some of those analogies and that's just interesting, like, you know, actually practically going around and just starting to apply this, you know, apply these, these thoughts to other businesses and then, and then your own, or even your competitors. Yeah,
Speaker 3 00:29:40 Absolutely. I think that's a great summary of it. Um, and I think the next step is really once you've got, once you've spent some time thinking in those lines and having that sort of exercise of discussion, which is often good to have, if you've got people in your business who you can bounce ideas off and have those discussions, then you can end up generating more thoughts and ideas and, and get alignment on, on, on what you think about those products. And then the next step is to say, well, yeah, okay, great. We've categorized our services and products. We know where they are in the cycle. Well, what do we do now? Because the product life cycle is probably the key there because once you know where you are, each product is in that life cycle and you've it somewhere as I charted it, you've written it down on a piece of paper and, you know, roughly where each is <laugh>, um, you wanna, your, a mature business should have a, a group of products in each category, so that as the products flow through that life cycle, you've spread your bets across different services and products.
Speaker 3 00:30:38 So that you've got some that are growing some that might come to nothing, some that are in decline, but are still worthwhile for you. And you just wanna manage that. You've spread your bets really it's about having a, a, um, a, an balance
Speaker 0 00:30:51 Portfolio.
Speaker 3 00:30:52 Exactly. A that's that's what I was looking for balance portfolio. Yeah. And then, and then the next step is, is to say, where do we go now with this information? And that's when some other models, um, start to come into play.
Speaker 0 00:31:06 Yeah. And I think you're right. I think the next thing is that strategic thinking process, isn't it? You know, um, we are gonna talk about, um, what is described by Mark Porter in his, I believe it's 1979 Harvard business review is the five forces, just as a side note. I think we can probably pop some links here to detail theory if our listeners wanna know more. Um, but you know, the five forces essentially a framework for analyzing your business' competitive environment, and you can just measure your competition's intensity, the attractiveness and the profitability of the industry or market. So, you know, do you wanna kick us off starting?
Speaker 3 00:31:40 Yeah. This one I'm gonna, my I'm all, I do have a habit of trying to get into the academics of things, but I'm gonna try and avoid that. Try and stay on topic, but effectively Porter five forces is a list of five things. So this is when you are having an analysis about, um, a business or products, or, you know, you can use this as a structure for a discussion. So you can take each of your products and say, right, where what's the future of this product. And you can apply these five questions to start coming up with, um, you know, how you might forecast how that might perform over the coming years. So the five questions or five forces that he talks about are rivalry amongst competitors. So that's, who are your current competitors in that marketplace? Mm-hmm <affirmative> and what impact does the, that have on the product or business that you are looking at?
Speaker 3 00:32:27 Then the second one is, um, the threat of new entrants. So how likely is it that someone else will come and start competing with you in that marketplace and create an even harder, um, rivalry or, you know, competition in the marketplace? The third is the bargaining power of buyers. So it's about, um, you know, are your customers, how much power do they have over you? If there's lots of products in the environment then, and actually the there's a downward trend on price to the buy, have more power over you for, for demanding, you know, that price, how, how much do they need to have loyalty with that product or that service or that business? The fourth item is the threat of substitute products. So yes, you are providing this product or service, but could they go and get something that does the same job just in a different way from someone else?
Speaker 3 00:33:22 Um, and then the final force is the bargaining power of suppliers. So how much does your, if your suppliers were to squeeze you on price, if they were to diminish the quality of their product, how would that then impact your business or your product or your service? Um, so these are five questions. So I think, should we go through each one in a little bit more detail, I think, and I'll try and put some examples to it. There'll probably be big, uh, examples, but you can apply these rules on a very small level, um, to try and work out and what you're basically doing. It sounds, I always think when you look at these questions, they sort of sound negative. Cause all of them are a very much an attack on the product you are reviewing. Yeah. But I think you, you have to be able to say, what, what are the areas that you are? What makes you famous as Simon put it? How does that help you compete against these forces? And it's about sort of seeing which ones of these actually you have the power in your business or product to actually keep bashing through and, and it will ultimately help you sort of assess in a, in a clearheaded way or as clearheaded as possible where you think the future of that product or service might go.
Speaker 0 00:34:33 Yeah, exactly. And I think, you know, even if you take that first one, you know, like your rivalry, you know, just break it down. How many competitors do you have? How many qui equivalent like products and services do they offer? Because the bigger, this number, the lesser power your business has, um, in the marketplace, you know, suppliers and customers, customers, then we're seeking out your competition to find that better deal or the lower price. You know, if competition's low, you actually have greater power to charge higher prices. You can set better deals, you know, which generate higher sales and profits for you. And I like the link of, of this model back to the life cycle of the product, you know, in the introduction stage, this might be where you don't have many competitors, you're just introducing a new product to the market. There's not really anyone else out there doing it. And you can probably Gar um, you know, potentially high prices. And I think that's where you, we're not gonna talk on that today, but you would look at pricing strategies, but when you're in the growth stage where I said before, about there be more competitors in the marketing space, this will, this will become more difficult to navigate, won't it?
Speaker 3 00:35:33 Yeah. And, and you raised the example earlier of, um, Apple's iPhone and, and it's, if we, I'm not an expert on apple, so anyone out there who reads an apple geek, I'm very sorry. I'm probably about to, to cause lots of anguish, but if you think of apple were more a computer company before the iPhone came out. Yes, they'd got the, um, the iPod. Um, but when I think it was two and seven, 2006, when they first released the first iPhone, but that was them venturing into a new market effectively. It was a new product. It was a question, mark, is this venture going to succeed? This is us. You know, apple had a lot of rivals at that time where there were lots of cheap MP3 player manufacturers, anyone who could remember MP3 players, I can mm-hmm <affirmative> yep. Um, the apple computer whilst has a lot of unique selling points.
Speaker 3 00:36:24 You know, the Macintosh, the Mac, um, you still had, it was neat. There were lots of rivals and lots of substitute products available. So they went into a market, the smartphone, they were the first to produce a commercially available smartphone. And they were very quickly growing. It became a, a star very quickly. And if you assess it against these five forces at the point where they released the iPhone, there's no rivalry because no one else has one commercially available on the market. The threat of new entrant is quite low because they've got this technology and no one else had at that time, yes.
Speaker 0 00:36:57 A strong barrier to entry. Wasn't it at that
Speaker 3 00:36:59 Time, exactly. The bargaining power of buyers. Well, there's, there's not much bargaining power because they, they, they want to get this new product. They can, you know, want to buy into this product. There are no competitors that they could actually start shouting you against and therefore your price sensitivity, you know, they could charge what they wanted for the iPhone as long was it was such that it allowed buyers to actually buy in so that it was, you had a big enough demographic demographic to buy it for the, for the volume needed substitute products. Now that did exist cuz you still had, you know, regular mobile phones. But um, the Blackberry probably was the closest. Um, I'm trying to think when the Blackberry came in, whether that's the iPhone or not, but you know, that's a substitute product. It wasn't quite at the level of an iPhone and then the bargaining power of suppliers.
Speaker 3 00:37:47 Okay. They did have that. Um, but, and, and ultimately, this is what I think if I remember correctly, they had it being manufactured. Samsung were building parts of the iPhone. Yeah. And then, and then you roll on a few years and that's when you get threat of new entrants, actually Samsung now have the technology cuz they've been making it and they've got enough changes so they can get their own patents on their own stuff. And then suddenly you've got R so if you were assessing the market, you say, oh, should we venture? We, you know, our product is going into decline. Should we invest in this question, mark product, that's gonna go into the smartphone market. Well, you go hang on the smartphone market. There are lots of rivals new entrants is if you've got the ability to get the suppliers, to build the product and design the product, actually it's not as hard as it was to get into the market.
Speaker 3 00:38:37 Buyers have got a lot of choice and a lot of power in demanding what they want as features and benefits and how much they want to pay. Um, substitutes. I would probably argue, there's not a huge range of substitute products for a smartphone. No. Um, and then bargain power of suppliers. You've got so many suppliers. Um, well we've seen it recently with the, the chip shortage. You know, I don't think it's hit the smartphone market, but you've got actually, when it comes down to some of the very specific chips, the production of batteries, the production of key chips in the product, actually, there are only a few lies that can do these really small components that actually without that small component, everything else doesn't work. You look at the production of cars where actually the one factory going down in Japan has caused car production across the world to slow down. Um, so that's the bargaining power of a supplier. They that supplier, once they're back up and running, probably charge high
Speaker 0 00:39:36 Prices, fewer suppliers,
Speaker 3 00:39:38 They go, oh, actually people can't operate without us. Our product probably is under undervalued. Um, so obviously I think most of our clients aren't looking at entering the smartphone market, but it's just sort of using these five areas to go, right? This product is a question, mark, this product is a cash. This product is a star applying these forces and saying, right, which of these can we compete on?
Speaker 0 00:40:02 Yeah.
Speaker 3 00:40:03 Cause you might say, yeah, I've got all these rivals, but I know that if I'm sat in front of, um, a potential customer, I can explain why our product beats our rivals products. And I'm confident that we can do that then in which case you go, okay. Yeah, we've got all these rivals, but our hero, you know, why, why we are famous. We can, we can prove that we can actually compete within that rival that's there and you go tick. Okay, great. That's not a barrier to us. Okay. Let's move on to the next force. Yeah. Look at new entrants. Exactly.
Speaker 0 00:40:34 And then that's what I think it all just leads back, you know, around that unique selling point, that product differentiation getting your branding, right. Your pricing, right. It's all interlinked with each other. Um, you know, everything feeds off another, you know, there's, we've already talked, you know, a number of different models here, you know, we could adopt with regards to growth. Um, and the, but one of the most common ones that we, you know, we probably actually use with our clients, probably not in the, the terms of the actual model. Um, but is the Ansoft model, you know, where we is comprised of two Xes with products in the market. So this is essentially how you would take your products and where you would put them in markets very simply. Um, so you know, now we've got our products and services. We know what's threatening, uh, threatening them in terms of our competition, where are we gonna take them next? Are we going to take our, you know, uh, question marks, um, as new, you know, new products, where are we gonna position them in our current market or, or an exist, um, or a new market? Um, so maybe we could just chat around around that, that sort of the four it's another, um, uh, axes. I can't, I can't think of the word.
Speaker 3 00:41:48 Yeah. It's another, it's another, I think port forces doesn't lend itself too well to, to graphics, but Ansoft is another one. That's, it's a classic, you know, in business you can prove anything with a quadrant, I think is <laugh> the rule I go with an Ansoft is a quadrant where you have an access that is increasing risk and another access, uh, sorry, an access where it's either an existing product or new product and another access where it's existing markets or new. Now the difference thing with Ansoft is both of the X and Y actually are about risk mm-hmm <affirmative>. One is about market risk and one is about product risk. Um, so this can be an interesting exercise. So let's say you've got your, your key management team together. You've gone through where you currently are. You've got your, all your products and services listed out.
Speaker 3 00:42:31 So right. We know how we categorize. We know where they are in the life cycle for each one, we've looked at all the five forces. We know the risks that are involved. We now go, okay, well, where do we go from here? Well, actually the Ansoft model is, is one way you are looking at how do you grow your business? Um, and how do those risk factors then impact your general strategy? So if we start in the bottom left hand corner of the, um, the graphic that if you, if you Google the Ansoft matrix and look at Google images, you'll, you'll get the quadrants instantly. So if you are looking at, okay, you've got your CA your, your current products and services, you've got your I list of ideas. You're gonna go, okay. The ideas that we've got, there's this idea pull on existing products that we have marketing to existing markets. So if we look at, you know, iPhone 50 or whatever it is now, that is a existing product, it's an iPhone into an existing market, the smartphone market, one you are already operating. So that is about market penetration, that you are reducing a new product to try and get your market share up, to try and get more value out of that market.
Speaker 0 00:43:41 Yeah. And I mean, how, how do you do that? You know, what, you know, could decrease your prices, increase your promotion of that product. You could even buy a competitor maybe in that, in that, um, you know, to, to, to penetrate the market more,
Speaker 3 00:43:54 You could do. Yeah. It's whether you, you update the promotion of the, the product or service, whether you update the, um, the benefits, whether you give a nuance on how you deliver it, you know, like people used to say that there, there was some point with the iPhone, with all they did was change the color each year. And actually that was the way they tried to penetra the market, cuz it allowed them to market it. But actually the under, I know the technicals of the underlying, um, stuff, but you know, that's where you look at your current products and how do you refresh the product effectively to, to allow it, to continue to, um, compete in the existing market. So it's an existing product, existing market. You just need to refresh it. And you know, often that might be enough to turn a, uh, a dog into a cash cow or something like that. Mm-hmm <affirmative> if you, you basically view it as a new product and put it at the beginning of the line again.
Speaker 0 00:44:43 Yeah. It's relatively low risk as well. Probably
Speaker 3 00:44:45 Exactly. That's the lowest risk. So most businesses will look at that. This is what we do. This is what makes is famous. This is how we can use that to, um, to, without taking too much risk, try and push for further market share. The probably is if that you are looking at a product that is a dog and you're looking at your five forces and actually all the five questions you've asked you are like, well, I'm a bit nervous about all five of these forces that are acting against the product. Then although it's a lower risk for you in terms of investment, is it going to pay off mm-hmm <affirmative> and that's when you then start to say, okay, in which area am I, you know, most happy, maybe not the right term least scared of increasing the risk for our business. Do you in investigate new products?
Speaker 3 00:45:33 So you're selling to the same market. So in terms of, um, you know, marketing, the people you are already marketing to will want this other product that you might do. So that's, you know, sometimes you could view that as, okay. That's, that's quite easy because we've already got the, you know, the people who we, we want to sell it to customers. We've already got them. Yep. We just need to find something else they want. So let's go and let's go and see, um, what new products we can develop, new services we can develop and say, oh, do you want this as well? We do this as well, by the way now mm-hmm <affirmative> um, and you can then start to increase your, um, sales volume based on selling an extra item to the people you already sell to. Uh, so you've, you've got low risk in the market because it's people you already deal with. You have got risks that you are now doing something that you've not done before. So you have the risk of, can you deliver on that?
Speaker 0 00:46:23 Mm-hmm <affirmative>
Speaker 3 00:46:25 Um, the other way. So if you go, actually I'm a bit, I'm a bit nervous. I don't want to get my, my operational team to start delivering something they're not comfortable with, or I don't want to have to rekit the entire factory to produce this new product. Um, what can we do to take the products and services we already provide, but go and see if they can be used in a different market. And in which case you're taking, you don't have to invest in the, the service or operational side, but you do then have a much bigger marketing, um, operation that you need to put in into place because you, you can't just rely on your existing customers to, um, to buy this, this, this new thing, cause they're already buying it. You're now trying to get more people to buy it, who wouldn't normally have thought of buying your product and effectively, this is where you are becoming a substitute product in sub else is borders five forces.
Speaker 0 00:47:16 Yeah. And I think this links a little bit back back, you know, back to what Simon said in, in terms of then catering to your different customer segment of finding out where your customers are, you know, is it a new domestic market like regionally expanding or do you need to go into a foreign market internationally?
Speaker 3 00:47:30 Exactly, exactly. That's exactly what it is, you know? Yeah. We've, we've completely saturated the market in the Southeast. Should we now go and sell this product in the Southwest?
Speaker 0 00:47:42 And again, it, it's probably, it's potentially a medium risk move as well. You know, if you, you know, you existing products already sell, it's just finding new customers in new markets.
Speaker 3 00:47:52 That's it. If you're confident in the product, you've just gotta be confident in your marketing team.
Speaker 0 00:47:56 <laugh> <laugh> um, what was the last one? It's diversification, isn't it?
Speaker 3 00:48:01 That's right. So this is the, the highest risk you can take. But I would argue if you get it right, it can probably have the most significant rewards. So diversification is where you go, right? I'm gonna develop a new product and I'm gonna sell it to a new market. Um, because obviously you're now taking the risk that you're doing something you'd ever done before, and you're also selling it to people you've not sold to before. So you, everything is new to your business. And this is where you knowing your, your business's ability to invest in such a product, but also knowing your risk appetite as a business, whether that's, you know, if you are a one owner, actually, you probably need buy-in from management to know that this is the case and they'll be going, oh, they've got mad. Um, but, but diversification can be a huge fit.
Speaker 3 00:48:50 It can be a huge risk and it can become a, you know, I've seen over the years, many times when someone's gone, right, this is the product I'm gonna do, and I'm going to, um, it it's completely new. We'll set up a new business and that will run it and it doesn't get anywhere. But likewise, I've also seen people who have done that and actually that has them over are taken their original business. So in a huge way, that diversification has really broken out of the, the, the product lifestyle life cycle that they've currently got with things that are very, have a very low differentiation between them. And all of a sudden they've got this completely diverse product has its own, um, life cycle going on. And actually that then opens so many doors in other products. And now, you know, we talked about having a balanced portfolio.
Speaker 3 00:49:38 Diversification is the best way to balance your portfolio because if you've got, um, if you're selling two things in completely different markets and they're completely different products, your business has got, um, you know, potentially a bit more stability, you always have that argument that is classic. When, when you're studying finance, they say, okay, you have an ice cream salesperson. And they're also an umbrella salesperson. Yeah. Because they've diversified the products because the people who want umbrellas are completely different to the people who want ice cream cuz and the products are of completely different as well. But actually they, they actually, um, as a business, um, do compliment each other because well the scenes when it's cold and rain, <laugh> people don't want an ice cream. And when it's, um, yeah,
Speaker 0 00:50:25 I could argue that. I could argue that with kids though. Maybe <laugh> they always want ice cream.
Speaker 3 00:50:29 They always want ice cream. And to be honest, when it's really sunny, you might still want a ice cream, uh, might want an umbrella, sorry, you definitely want an ice cream <laugh> so, but, but they're peripheral things. I think the main thing is you go well, demand for umbrellas is up when it's cold and rainy and demand for ice creams up when it's warm and sunny, these are complete opposite markets, opposite products, but they compliment each other. And that's where taking that risk can really pay off because it can actually change. You know, if we go back to, when we used to talk about, uh, breakeven analysis and things like that, it can really change the seasonality of your sales and make a huge difference on the contribution to, to your business even
Speaker 0 00:51:07 In them out. And I think that, you know, there is lower risk diversification. Yeah. If you've got synergies in your existing products or market to your new products or new markets, you know, for example, I know like a leather shoe company introduces a line of leather, wallets and accessories. There are different products and different people want them, but there, you know, there synergies are between them. So there's a lesser risk of data diversifying your product, but you might have something where there's no synergies like that. Leather shoe company starts manufacturing phones, which is complete, doesn't make any sense. Or I, I thought one of the ones I was thinking of was the Dyson I think was predominantly a vacuum cleaner. Now they produce hairstylist. I mean, you could argue there is synergies in the technology within the styling machine over vacuum cleaner. I don't know, but it does feel like very new product in a new market, but probably a diversification that's paying off for them. Well,
Speaker 3 00:51:57 One of the ones, I mean, this is usually where you get in, in with the, with the larger companies, you get acquisitions, I'm trying to re like if you look at Unilever, um, or Mars, they are own so many companies in such diverse areas, um, that, you know, they sort of balance out their portfolio of businesses. I think it's um, oh, I might be wrong here and I might need to be fact checked, but um, <laugh>, I'm sure it was Mars own. Do they own Dulux or someone like that? They own basical they're in, you know, we always think of Mars as being the provider of chocolate bars, but actually they own so many other businesses behind the scenes that are completely different. Yeah. You know, you think of someone who buys paint may also want to buy a Mars bar, but <laugh>
Speaker 0 00:52:43 Well, you do, it's a hard job as Neil paint decorating.
Speaker 3 00:52:46 Exactly. You need the energy. Yeah.
Speaker 0 00:52:48 Well I think in reality know most business owners and most of our listeners, they're probably already thinking about these things or thought about these things without maybe applying the model. So I think you just give them a nice structure for like that thinking exercise and you know, we've touched on and we're, we're always touching on with how you grow your business. It is working on it, not in it. And these strategic times that you take for your business, you know, just that hour that you're putting aside that day or that week. And having a look at these, you know, one of these models and starting just think about your business and, and how, where it is now and where you want it to go. I think it'll just help, you know, later on when, when you choose your marketing strategy, your financing options, we're gonna come onto that over the next couple of months, you know, have you got anything Josh, just to summarize sort of what we've said today, you know, any more practical advice just to where a client might go to, you know, to support them through choosing this growth strategy and analyzing, you know, what we've discussed today?
Speaker 3 00:53:44 Yeah. I mean, I, I think it's the thing I'd say is it's good to, to discuss these things. I think all of these models you could easily say, oh, it's all a load of academic rubbish. Um, but I think if you've got these questions in your head, even if you don't think of it, in terms of the models, just have what, pull out a couple of questions from these models that they give you and discuss it with the people in your business, cuz everyone will have ideas about different things. And actually you can start to build a picture of, of, you know, what are our threats to our products? Is this AC is this product actually generating as much growth as it was and as much cash as it was. Um, is there a need to diversify the business? Um, and you know, one of the things that I would say is actually put, get the graphics from Google and, and put them on the wall somewhere so that you think about them, then the next step go and think about them when you go to the supermarket and just sort of play around with it.
Speaker 3 00:54:39 Or if you are reading the news and you're reading about companies like, you know, P and O in the news at this time, while recording and you think, well, hang on where a P and O in the life cycle of their business. And once you've started practicing it with these inconsequential, well, hopefully, you know, most of the time inconsequential examples by nature, you'll then start looking at your own business and products and it will become something you are just doing and actually will help you then be more strategic. Even if you haven't got the time to go, right. I'm gonna have two hours out with my management team to just thrash out all these discussions.
Speaker 0 00:55:11 Yeah. Brilliant. Well, um, thank you so much for joining us today, Josh. Um, I think it's been a very interesting discussion.
Speaker 3 00:55:18 <laugh> pleasure.
Speaker 0 00:55:19 Thank you. I think the key thing to take away from today is whether you know who your ideal customer is, whether you know how your products are to sit within the markets you intend to go into. And what do you now need to do off the back of this podcast? If you do not know these answers next week, we are joined by Malcolm Palmer who were discussing how to build your marketing strategy for growth. Thank you for listening today. I hope you enjoy the episode. We are a 4g and you can find us on Facebook, Twitter, and LinkedIn at a 4g chartered counts. Alternatively, check out our website, www dot eight, 4g hyp.uk, which is full of free talks guide and plenty of food for thought to help support you with running your successful business. I've been your host today, Charlotte, and this is let's get down to business.
Speaker 2 00:56:13 Yeah. Which is, which is often drilled into us. Um, by Malcolm, when we speak to him, he just looks at things and he's like, what are you guys trying to do? Just, just dial it back a bit. Yeah. And make really clear decisions. And, and that's what we, you know, where we come back to why we've been with ag for so long is a, it's just that type of advice. It's like, look at what's going on. Just, just think sensibly. And you know, this, this is how this is, you know, all of accounting has all of these great, um, uh, sort of, uh, equations and fine financial sort of modeling things that give you the clear picture that you need. And, and people who ignore that and the ones that go wrong, the ones who look at it and use it for, to help them steer the direction and prove that they're going in the right place, the right way. Yeah. Not the ones that that do really well. So yeah, I could have given a shout out for a 4g and dunno if you wanna, if you wanna cut this in, later on, in.
