STRATEGYMonths to result

Increasing Scope of Purchases Framework

Expand sales to existing customers

Problem it solves

unclear strategic direction

Best for

Mature industries with existing customer base

Not ideal for

New or growing industries with limited customer base

Overview

Why this framework exists

This framework involves increasing sales to existing customers by supplying peripheral equipment and services, upgrading product lines, and widening product offerings. It can be a cost-effective strategy to increase revenue and market share.

Core principles

3 total
  1. Focus on existing customers to increase sales
  2. Expand product and service offerings to meet customer needs
  3. Upgrade and widen product lines to increase revenue

Steps

2 steps
  1. Identify Existing Customer Base
    Analyze existing customer base to identify opportunities for increasing sales.
    Pro tipUse customer data and feedback to inform product and service expansion
    WarningBe cautious not to over-expand and lose focus on core products and services
  2. Expand Product and Service Offerings
    Develop and introduce new products and services that meet customer needs and increase revenue.
    Pro tipConduct market research to identify gaps in the market and opportunities for expansion
    WarningEnsure new products and services align with company mission and values

Checklist

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Examples

2 cases
Southland Corp.

Southland Corp. expanded its product offerings to include fast food, self-service gas, and pinball machines, increasing revenue and market share.

OutcomeIncreased revenue and market share
Household Finance Corporation

Household Finance Corporation expanded its services to include tax preparation, larger loans, and banking, increasing customer retention and revenue.

OutcomeIncreased customer retention and revenue

Common mistakes

2 traps
Over-Expansion
Expanding product and service offerings too quickly or widely, leading to loss of focus and decreased quality
Lack of Customer Focus
Failing to prioritize customer needs and preferences when expanding product and service offerings

Origin story

How this framework came to be

This strategy has been successfully practiced by companies such as Southland Corp., Household Finance Corporation, and Gerber Products, which have expanded their product and service offerings to existing customers.

Source

Traced to primary
Source · BOOK
Competitive Strategy
Michael E. Porter · 1980
Open source →

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