Exploring Adjacent Business

For companies whose growth ambitions exceed attainable revenues in their market, we can help to define the appropriate boundaries for growing the business, by considering:

Vertical vs. horizontal extensions
Within horizontal extensions, growth through new:
- Products and services
- Customer segments
- Channels
- Geographies

Explore Adjacent Markets: Capturing New Sales with Acquisition and Expansion

For this consumer products company, we helped identify ~$500MM of revenue opportunity from organic and acquisition-based entry into multiple new product markets.

The Situation: We demonstrated to our client that despite their extraordinarily trusted brand name, they commanded a very small portion of their respective product markets when viewed from the standpoint of the relevant consumer franchise.

Our Approach: We analyzed product markets worth over $100 billion of revenues through a four-step process. Our first step was to significantly broaden the client’s definition of related markets by looking at products and services both along the dimension of shared costs (what else can I make?) and along the dimension of shared customer value (what else would this consumer buy from me?). The second step was to narrow the markets we analyzed by applying broad screens of market attractiveness (size, profit, growth) and fit with our client’s business. The third step was to work with the management team in establishing and weighting a scheme of criteria that would be used to evaluate each opportunity. Our final step was to perform a more comprehensive assessment of all the remaining opportunities, using the set criteria to prioritize those markets best-suited for our client to enter.

The Deliverable: We provided the client with a list of 10-20 attractive market entry opportunities, along with detailed information regarding the current competitive set (and therefore possible acquisitions). The spreadsheet of the weighted criteria also became a central tool in their ongoing Licensing and Acquisition process.

The Result: There were four key results from this work. The most immediate result was halting several in-process acquisition efforts and accelerating a handful of others based on the new and objective lens around what markets should be pursued. The second result was to fuel several key organic market expansions of existing brands, leading, in the most spectacular case, to a 50% increase in revenues within a year. The third result was the decision to enter a handful of the recommended markets through acquisition. And the final outcome was a major shift in how the organization evaluated growth opportunities, by creating a permanent shift to a more consistent and quantitative approach.

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