Multimillion Dollar Company Navigates Auto Industry Opportunities
There are many strategies a company can employ to drive growth. One of the most commonly used growth strategy frameworks is the Ansoff Matrix.
The Ansoff Matrix identifies four growth strategies:
- Market Penetration: Offering existing products in existing markets
- Market Development: Offering existing products in new markets
- Product Development: Offering new products in existing markets
- Diversification: Offering new product in new markets
Depending on the maturity of the company, some of these strategies might be riskier than others. Generally, Diversification is the riskiest as it requires entering new markets with new products. Whereas, Market Penetration is the least risky.
WeatherTech is a Chicagoland company that launched in 1989. Today, it is a $500 MM business with over 1,000 employees and 11 factories. Below is a deeper look at how they used Market Development and Product Development strategies at different times to drive double digit growth.
Growth Strategy Framework Application: WeatherTech Market Development Strategy
When WeatherTech launched in 1989, its founder and CEO David MacNeil imported high-quality automotive floor mats produced in Europe to sell in the United States. While the company is known for “Made in America,” it was actually not until 2007 that WeatherTech’s manufacturing operations moved to the United States.
For the beginning of the company’s lifecycle, WeatherTech focused on taking an existing product available in Europe and developing after-market demand for it in the United States (new market). This in itself is no easy endeavor and required significant marketing investment. While WeatherTech does not disclose advertising spend, it is estimated that they spend over $70 MM annually across print, digital and TV advertising.
WeatherTech also carved-out a new market by partnering with German and Korean carmakers to build a private-label business, which now accounts for 30% of their overall sales.
WeatherTech’s overall focus on developing the automotive floor mats market has clearly paid off. Today, they are considered the market leader in that space.
Growth Strategy Framework Application: WeatherTech Product Development Strategy
Over the last 10 years, WeatherTech has employed a product development strategy expanding their product offerings to include truck liners, mud flaps, cup holders and even pet feeding systems. These products are sold online and via their current distribution channels. They leverage WeatherTech’s laser cut technology for precision fit and have grown to be a formidable businesses. CupFone alone – a sub-brand of portable cell phone holders – reached over $100 MM in sales within two years of launch. By expanding their custom fit automotive offerings to existing markets, WeatherTech has been able to continue growing.
According to CEO David MacNiel the key to any new products strategy is quality:
“It’s pretty simple. If you deliver a technologically advanced, high-quality product, your business will grow–if the customer is happy with the product.”
WeatherTech is just one example of a company that has used both Market Development and Product Development Strategies at different times to successfully drive long-term growth.