Market growth strategy

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Overview

Most good companies are constantly exploring organic growth, acquisition targets, new product launches or innovations, new geographies and adjacent markets to fuel top-line growth. DPO&Co helps clients grow in the areas with the most attractive profit pools, and avoid growing just for growth's sake. We have helped clients both avoid costly expansions into dead ends and focus investment in areas that added substantial value to the enterprise.

CASE EXAMPLE

12-Week Project: Identified $350M accretive revenue ($50-$80M profit) potential for heavy industrial client by assessing profitable adjacent markets, also advising against pursuing six shortlisted products


Situation

  • Due to changes in technology and consumer preference, economists forecasted client was poised to lose ~$250M in revenue and ~$100M in profit 
  • Given client's core engineering capabilities, they were considering ten growth opportunities they felt could fill the void from the loss in this business
  • Expansion appeared to be a logical expansion of a very profitable business, but we were skeptical of the client's sources of differentiation 

Approach

  • Developed fact base by segmenting the market into OEMs that had strong sources of differentiation and generic manufacturers
    • Conducted public desk research to determine OEMs generate ~4x profit than generic manufacturer
    • Established hypothesis that brand, distribution, engineering expertise and IP access drive profit
  • Created robust framework to analyze client capabilities on these four metrics
  • Leveraged public desk research to calculate overall profit pool and potential market share by comparing client on these metrics
  • Ranked opportunities by value at stake and highlighed one strong opportunity, several moderate opportunities and several negative economic profit pools
  • Identified several other operational efficiencies within the business that could fill profit gap using information captured organically during client interview phase 

Impact and Results

  • Client received actionable plan for pursuing the highest value at stake opportunity, worth $200M in new revenue and $30-60M profit
  • Management had significant evidence contrary to initial internal hypotheses, which drove the decision to not pursue growth that would destroy stakeholder value
  • Key stakeholders were aligned and trained to use framework to evaluate future adjacent market growth opportunities