If your company utilizes specialty oils in product formulations or in specialized product manufacturing, you’ve no doubt eyed opportunities to cross over into other industries. If you’re interested in entering a new market, read on.
Whatever your industry:
- Rubbers and thermoplastics
- Food manufacturing
- Agricultural products
- Personal care products
- Pharmaceuticals
- Household products
- Automotive lubricants
- Or one of many others that specialty oil suppliers serve
You’ve developed an intimate knowledge of the markets you currently serve. You know the precise product formulations, profit margins, supply and demand economics, and operational considerations.
But how likely is it that you will see success when entering a new market based on that knowledge alone? What else might you need to consider?
Entering a New Market: 5 Things to Consider
According to Stephen Wunker of international consulting firm New Markets Advisors, these are the five key questions to ask before entering a new market.
- Quick or Slow (How quickly will this market grow?)
- First or Later (When is it best to move into this market?)
- Gaining a Foothold (Which customers should you target first?)
- Superhighway vs. Country Road (How should you break in?)
- Markets Next Door (Where is the best opportunity?)
Using these five questions as a guide, let’s walk through key considerations for you.
1. How quickly will this market grow?
No investor wants to hear after you’ve entered a new market that you’re now overleveraged or underfunded because you misjudged the opportunity. Naturally, you’ll consider several factors to put together a reliable market forecast.
Drawing from a unique perspective on industry trends, your specialty oil supplier can help you assess the state of the market you want to enter.
For example, as a rubber process oil supplier, Renkert Oil is keeping close tabs on the rubber and thermoplastic elastomers sector.
One of the most influential factors on the expected growth of this industry is the state of the supply chain that these markets depend upon.
Your specialty oil supplier can help you understand whether market growth is expected to slow due to supply chain problems, or potentially accelerate as logistics innovations begin to solve today’s critical problems.
2. When is it best to move into this market?
Even if you’ve determined that a new market represents an exciting opportunity, being among the first to move into a market requires somewhat of a leap of faith.
But it’s best for that faith to be informed – with as clear an idea as possible of the production costs involved.
Most of the industries we serve operate within well-established markets. But there are certainly opportunities to take the lead within established product categories.
Take pharmaceuticals, for example. This continues to be a growing industry that’s expected to produce about 2.6 million jobs over the next seven years.
Food-grade white oil is a key ingredient in many medical formulations, making your specialty oil supplier a key resource in calculating the cost of mass production.
As a global white mineral oil supplier*, Renkert Oil consultants can help you determine your readiness to enter this market – whether as a new product pioneer or late adopter.
3. Which customers should you target first?
In our experience, the largest market does not necessarily hold the greatest potential for profit, or at least not in the short term. Wunker agrees:
“Going after the big market first may excite top management, but it may not yield success, because big markets are often difficult to access, take a long time to crack, and are risk-averse, highly competitive, and quite demanding of any new offering.”
The best opportunities are often in smaller markets that you’re in a unique position to serve. In our case, that has meant finding niches within larger markets (such as agriculture) and working with those customers to develop products around their needs.
Because of the breadth of the industries we serve, your specialty oil supplier should have unique insights into your target customer base.
We love to partner with companies that are eager to work with us to fulfill customer needs in innovative ways.
4. How should you break in?
This question concerns the channels by which you enter the market – well-traveled methods most companies use (via the “superhighway”) vs. finding your own way (via the “country roads”).
The superhighway is paved with upfront investments in marketing to educate the target customer base followed by sales efforts to convert and manage leads.
In contrast, “traveling by country roads” means mobilizing a direct sales team with a mission to educate the market through personal outreach, thought leadership, etc.
Wunker believes that new markets often require a “country road” approach. Customers need a lot of convincing and hand-holding on a personal level to recognize you as a new leader in this market.
Again, your specialty oil supplier serves multiple industries. The primary services we provide go beyond specialty oil product selection, supply security, and logistics.
Given our cross-industry experience, we can also provide valuable insights into how your product rollout will be received in the market you want to break into.
We can help you determine whether your approach should be more “superhighway” or “country road.”
5. Where is the best opportunity?
Whether entering an adjacent market or breaking new ground, you’ll have to assess both potential opportunities and threats.
(Please note: The following examples are for illustrative purposes only, not an endorsement based on actual market research.)
Opportunities
The adjacent-market approach – say, adding a line of industrial oils when your company has long specialized in passenger car motor oils – may seem the safer choice. From industrial infrastructure to marketing, sales, and distribution, many of the pieces are already in place.
On the other hand, you may be drawn to breaking new ground – maybe adding a food manufacturing division to your long-standing core motor oil operations – because you see greater growth opportunities there than in adjacent markets.
Threats
Adjacent markets may seem deceptively simple to enter. Using the example of consumer vs. industrial oils, you’ll need to make several strategic adjustments that you may not anticipate.
“If you have no advantage in an adjacent market except for what you consider to be in-house expertise, that’s a sign you may be in for some surprises. You don’t know what you don’t know, and your expertise might not be as extensive as you think.”
(Your base oil supplier can certainly help!)
And of course, without sufficient research, a brand new product line that seems destined to succeed can easily become a trap in which the cost-benefit equation tips the wrong way.
According to Wunker, the best opportunity is wherever you see customer demand and recognize you’re in a position to fulfill it, regardless of whether it’s in an adjacent market.
That’s always been our approach: find the need, and then build your product development plan around the vision of fulfilling it – wherever that vision takes you.
Before Entering a New Market that We Serve, Consult Renkert Oil
Whether the transition seems simple, like your household products company is adding a new household product – or complex, like your rubber manufacturing company is entering the pharmaceuticals market – the common thread is your specialty oil supplier.
Renkert Oil serves nearly every industry and has a wealth of experience which we are willing to share. Your success will become our success.
Renkert Oil supplies key ingredients and production aids for a wide variety of products. We can tell you from experience how dramatically your specialty oil product selection can influence the quality, safety, cost margins, and ultimately the successful rollout of your new product lines.
As added benefits, we draw from our cross-industry relationships to give you valuable insights on what to expect when entering any market that we already serve.
And when you’re ready, we draw from our logistics expertise to ensure you have a consistent supply of the right product in the exact amounts you need.
So talk to us before entering a new market. Let Renkert Oil be a key resource in helping you plan your company’s next exciting chapter.
*Renkert Oil has simplified your operations by registering Renoil USP white mineral oils with REACH (Registration, Evaluation, Authorisation, and Restriction of Chemicals). This allows legal export of your products containing our WMO to the EU, UK, and Korea. Our registration covers the REACH requirements.