Marketing Leaders Look to Existing Markets for Growth in 2021
How will businesses drive growth in 2021? Data from Gartner’s 2020 CMO Spend Survey suggest that most marketing leaders (79%) will look to existing markets to drive growth in the year ahead. This includes:
- Increasing Sales of Existing Products to Existing Markets. This is a bet on better pricing, distribution and partnerships.
- Introducing New Products to Existing Markets. This is a bet on a better mousetrap.
Intuitively, the direction makes sense. 2020 sapped corporate tolerance for risk forcing a majority of marketers (69%) to adopt a relatively conservative set of priorities. However, this status-quo-seeking posture belies what will happen in practice. Even in a risk-averse environment, marketers will still need to think big to achieve their growth objectives.
What Do These Growth Strategies Look Like in the Real World?
Over the holidays there were a number of headlines and corporate announcements that showed how companies were looking to existing markets to drive growth. I’ve shared a couple of these examples below.
Peloton – Keeping Wrenches Out of the Flywheel
By all accounts, 2020 was an incredible year for Peloton. Amidst gym closures and quarantine orders, people flocked to the lifestyle brand’s connected fitness machines to stay in shape aboard Spaceship Home. As a result, the company’s revenue growth doubled in the 12 months ending June 2020.
But, to paraphrase Peloton instructor Alex Toussaint, “It’s a privilege to bike to nowhere.” Today the big-wheeling brand that changed the way we think about at-home fitness faces threats from a number of competitors, like Apple and Mirror, that want to give consumers another platform to dance, box, lift, yoga, bike and run in place.
Facing challenges to its dominance on the leaderboard, Peloton made several maneuvers to stay ahead of the pack. What is the team doing that illustrates the idea of growth in existing markets? The company is –
- Going all in on engagement through the introduction of new classes and new platform features (i.e. community tags and humble brags on Instagram). This should help increase the velocity with which current users cycle through and share content with other platform members.
- Pursuing marquee partnerships with sports and entertainment industry heavy weights, like ESPN and Beyoncé. The latter has led to a new foray into music production. Peloton users want – and will probably keep paying for – a great show.
- Expanding manufacturing and distribution capacity through its $420 million purchase of commercial fitness equipment provider Precor. This will help the company work through its backlog of orders and get more equipment into homes…and commercial gyms when they reopen.
McCormick & Co. – Still Selling Tickets to Flavortown
At the beginning of the pandemic, consumers were a little more liberal with their eating habits (thank you Uncle Chips). Now healthy eating goals have come back into the picture (Gartner clients, read: How CMOs Should Respond to Pandemic-Related Consumer Changes in Food and Beverage). This is good news for McCormick, whose offerings let home and professional chefs serve healthy food and still kick things up a notch.
Like Peloton, the company also faces some headwinds to growth. Outside of the pandemic, its biggest competitors, like Mondelez, are also hungry for a bite of the healthy food and flavor pie. Yesterday, Mondelez indicated that it was nearing a deal to buy the rest of Paleo chocolate bar maker, Hu. But McCormick has plans of its own. As 2020 came to a close, the maker of virtually every ingredient in my spice drawer, announced that it had acquired natural flavors supplier, FONA International for $710 million.
How does this illustrate the idea of growth in existing markets? This example shows a company that is –
- Expanding manufacturing capacity and increasing economies of scale. Have you looked at the spice section in your local grocery store lately? Pretty slim pickings. This will help the company meet demand, especially as North America hunkers down for a cold, long winter.
- Adding depth and breadth across several critical categories, including health and wellness. This shows intent and foresight to keep spice blends, sauces, and meal kits aligned to evolving global flavor profiles.
- Enhancing its portfolio offering to its commercial customers, like food manufacturers, brewers, and quick serve restaurants (where business is booming). For example, this could help existing customers bring more allergen-free food and beverage products to market.
The Bottom Line
It’s easy to assume that marketing’s more guarded outlook towards 2021 favors a business-as-usual approach to growth. Yet, even in times of uncertainty, these examples show that it’s generally a good idea to:
- Continue to invest in the technology, processes and human resources, that strengthen your ability to meet consumer and customer needs. Mergers and acquisitions aren’t the only way to achieve growth.
- Keep product, service and programming portfolios fresh to keep users happy and coming back for more.
- Pursue partnerships (Peloton is to Beyoncé as McCormick is to Eli Manning) that accelerate brand appeal to core consumer and customer segments.