5 Choices for Market Segment

Market segments fall into categories such as cash cow, dog, star, etc. Once you’ve identified where your market falls in these categories, you have five different options in taking action. Not every market you are currently involved in should have a strategy to grow and expand, in fact, some markets after close analysis might be best to completely leave. Select one market segment you currently serve and decide which of the following approaches you want to take.

1. Expand

Analysis of the selected market segments indicates this market has great net income growth potential, or could be an under served area with minimal competition. When you decide to expand you want to take an aggressive approach to market share growth and penetration. Expansion in a market means you want to grow your share of the market more so than the growth of the market itself. For example, your market share for this exercise is college students for the university you serve. You have determined that there is great opportunity to grow in good income generating products in this market even though the student enrollment at the university is expected to be stable. The market itself is not growing significantly, but your presence and number of members served can expand significantly.

2. Maintain
   

Maintaining market share does not mean ignore it and hope everything stays the same. In fact, market share maintenance might take a vigorous defense strategy if a new competitor has entered the market, if the market segment is shrinking, or if due to lack of effort in previous years your name in the market place isn’t top in the minds of the members. The goal for this approach is to expect to hold steady the current position in the market and at least grow at the same pace as the market is growing.

3. Contract
   

Credit unions at times offer products and services with minimal benefits to the credit union or the membership as a whole. To contract would be to shrink product offerings yet maintaining more profitable products and services while increasing new income from the market. Selectively eliminating those products and serves is a scaling back yet still growing in net income.

4. Milk
   

To milk a market segment is to say you have reached your maximum growth potential, have a solid return on your investment in serving the market and you simply want to have minimal investment of resources while continuing to maximize your returns. Some markets that have been served for a long time and are going through the maturing process are best served by milking.

5. Withdraw
   

Withdrawing from a market is exactly what you think; pulling away completely over a period of time. If you are involved in a market that no longer fits your credit union profile, has no growth potential, or is shrinking fast then the best strategy is to look in a different area and begin the process of getting out. Credit unions are not required to go down with the ship, so to speak, and it is the wise leader who knows when its time to make a choice to withdraw before any significant damage is done to the credit union.

-- Russell