Segment Expansion

Projected growth in the market segment went from less than $1 million to nearly $30 million per year in three years

A leading provider of hardware and software had grown both organically and through acquisition. After 30+ acquisitions the company had achieved a dominant market share and a rich product family - but found itself with a disjointed product portfolio. Revenue growth was unsatisfactory.

A new management team was brought in by the Board and tasked to organize the company and increase profits. The new team set out to leverage their acquisitions by expanding into new market segments, and Rubicon was brought in to help develop that strategy.

The Challenge

The company identified a market segment where it currently had little presence, and was also untapped by the competition. It would be important to analyze, plan, and execute quickly to capitalize on the opportunity. However…

The Board had no tolerance for risky business ventures
The priority placed on profitability by management also necessitated a go-to-market plan with controlled costs to ensure that any market entry effort would be profitable. The board demanded a thorough business case from the new management team before committing any investment. They insisted that any strategy identify the size of the market, and assess its relevancy to the company’s other assets.

Unsure of appropriate product mix to maximize profitability
Because of their recent acquisitions, the company had over 30 product lines to take to the new market. Every product line manager was lobbying for their products to be selected. Everyone had an opinion, but there were few facts to go on.

The Rubicon Solution: Model, Market, Strategy

Rubicon provided both market expertise and a methodology to make sure the business case was valid, properly sized, and low risk. Our tasks included:

Developing a credible opportunity-sizing model to select the right product lines for the segment. In this case, a Total Available Market (TAM) model was developed using both primary and secondary data that included in-depth interviews of market leaders, as well as government and analyst data.
Identifying key sub-segments for the company to focus on to achieve a sustainable competitive advantage. Developing a go-to-market plan and investment model. All tactics used to address the selected market segments had to be mapped against realistic revenue targets.
The go-to-market activation plan included: specific product offer, unit price, volume discounts, as well as a licensing model and channel strategy. Rubicon aided in detailed roll out plan development and execution consultation.

The Results

The CEO and Board of Directors adopted the Rubicon recommendations, with projected growth in the market segment from less than $1 million to nearly $30 million per year in three years.