How to expand into new market segments without sacrificing core products

October 1st, 2017 / By: / Feature

Oklahoma Custom Canvas Products manufactured and installed three canopies using black Sunbrella® fabric for a Tulsa-based independent church that serves troubled teens and adults. Photo: Oklahoma Custom Canvas Products.

For many custom fabricators, diversification is the name of the game. Recognizing—and seizing—opportunities to venture into new market segments can mean the difference between staying in business or (perish the thought) going under. But companies can also become too diversified, to the point where potential clients don’t have a clear idea of what’s being made or what a custom manufacturer’s capabilities and strengths are. By letting clients drive new ventures, starting small, balancing core markets with new endeavors and creating targeted marketing, custom manufacturers can dip their toes into new waters—and reap the rewards of diversification.

Customer driven

According to Ken Robinson, president of Mobile, Ala.-based Engineered Textile Products (ETP), the best way to enter a new market is by paying attention to the needs and desires of customers. “It’s very difficult to look at a market and say, ‘We’re going to enter that market from scratch,’” Robinson says. “It’s much easier if you have at least one customer asking you to expand into a market—especially a customer who’s rooting for you because they view you as an important supplier of their needs.”

ETP opened its doors in 1877 serving the cotton market, but for the past 50 years has been known for manufacturing tarps and geomembrane liners. Like most custom manufacturers, the company also makes products outside its core markets, which most recently included broadening its scope in the track and field cover arena. “We had a base market of about four local customers in that market, and one of them kept insisting that we expand it further,” Robinson says. “So about eight years ago we decided to follow his advice, start small, and see if it made sense to ramp up and offer the products beyond our local area.”

The company began by targeting potential clients closest to them. “Our idea was to go from four clients to eight to 16 to 32. We tried to use those sales to learn more about the market, what people wanted and didn’t want, and what raw materials would be needed as we expanded,” Robinson says. “We didn’t even need to get to 32 before we realized we were doing pretty well, and it was time to commit more resources to it.”

Robinson decided it was time to hire a sales and marketing manager dedicated to that market. “The idea was to have someone really concentrating on those types of customers, because although the products are still tarps, there’s a difference in how one customer versus another uses them,” he says. “It’s important to have someone on board who understands the culture.”

Foundations first

Mel McClain, president of Fort Wayne Awning Co. in Fort Wayne, Ind., credits television, radio and paper advertising for bringing his company business outside its core awning market. “We used advertising to let people know we were about more than just awnings. We expanded into making boat covers, bimini tops, divider curtains, filter bags and more. Pretty much whatever was sewable, we weren’t afraid to try it,” McClain says. “Several years ago, we no longer needed to spend money on those ads due to increased word of mouth.”

The company gained one of its largest accounts when a potential client brought in a sketch of a product for Fort Wayne Awning to make and possibly improve. Now the company manufactures the product for distribution throughout the United States and in other parts of the world.

Built exclusively for Panera Bread, Oklahoma Custom Canvas Products’ staple stitch awnings with powder-coated frames provide shelter and branding for this store in Tulsa, as well as for stores in greater Oklahoma, Arkansas and Missouri. Photo: Oklahoma Custom Canvas Products.

It’s a balance, though, McClain warns. “Don’t be quick to turn down something different, but be sure to take care of your core business first,” he says. “Over the years we’ve learned when ‘push time’ generally is for awnings and schedule our secondary work around our awning schedule.”

Dan Hayes, president of Tulsa, Okla.-based Oklahoma Custom Canvas Products Inc., agrees. “Core markets always come first, and long-time established customers are first priority,” he says. “Every successful company needs a certain number of solid customers they can depend on to keep the bills paid.”

Hayes turns to good old-fashioned number crunching to be clear about who his best customers are. He advises reviewing year-end sales and rating the top 25 customers from the biggest total sales to the smallest, and attaching a percentage of the gross sales to each customer in relation to their total. “You might be surprised that a large percentage of your sales come from a very small percentage of customers,” he says. “Even though I have hundreds of customers every year, a lot are just one-time customers. Almost 50 percent of my gross sales come from four to five customers. Once you have established that, make sure you take care of those customers no matter what.”

After ensuring that the company’s established customers’ needs are met, Hayes explores alternative markets. “I have always felt that it is important to have the capability to make a variety of products,” he says. “Some of our best customers are petroleum related and as everyone knows, the oil industry goes through cycles of good and bad times. We have learned that it is important to be able to fall back on other products during those times, such as awnings and aviation products.”

Getting noticed
Fort Wayne Awning Co. makes much more than awnings. It regularly manufactures boat covers, bimini tops, divider curtains and filter bags, among other things. For this large pontoon boat cover, the company used durable, high-performance Aqualon® Marine Fabric by Trivantage, and heat sealed the seams together to prevent leaking. Photo: Fort Wayne Awning Co.

Targeted marketing is a strategy Matt Franta, president/visionary of Canvas Craft Inc., Otsego, Minn., uses to expand into new market segments. The company has four main core markets—awning and shade, marine, industrial and events—but Franta is always on the lookout for ways to evolve and expand the company. “We added metal fabrication to our capabilities about ten years ago, which has really opened doors for us in many areas of our business,” he says.

The company created a marketing platform around its four core markets, allowing it to target potential clients more effectively. “We’ve tried to look at what our skill sets are and how we organize around those four ‘buckets,’” Franta says. “There’s just so much stuff competing for people’s attention these days, and if something’s not relevant right away, they’ll move onto the next thing.”

In addition to targeted marketing, Franta seeks to distinguish the company by highlighting its capability to create unique, innovative projects, such as the company’s dynamic sail shade installation at a Minnesota State Fairgrounds amphitheater that won a 2016 IFAI International Achievement Award. Canvas Craft is also working on generating innovative new products, one of which is for the festival and event space to leverage shade mobility and modularity. “We expect to launch the product later this fall,” Franta says. “People want to read about projects that are unique. We’re working hard to put projects out there that people are interested in reading about.”

Natural progression
Expanding into the track and field cover market is one way Engineered Textile Products has been able to diversify its product line. The company used vinyl-coated polyester and vinyl-coated mesh for these pole vault covers in the school’s colors. Photo: Engineered Textile Products.

For Katie Bradford,  MFC, IFM, owner of Custom Marine Canvas in Noank, Conn., finding new products outside her core markets is part of what she loves about the custom specialty fabrics industry. “We’ve had a really fun year of new projects,” she says. “We got called by the University of Florida in Gainesville to make manatee stretchers—fabric stretchers that they can use to pick up
and carry a 3,000-pound manatee.”

The project was initiated by the University of Florida’s Mike Walsh—the veterinarian who helped design a prosthetic fin for a dolphin, memorialized in the movie Dolphin Tale. The university found Custom Marine Canvas via an internet search after its former manatee stretcher manufacturer retired, and now the project is expanding to include other animal stretcher needs, including manufacturing a stretcher for dogs.

There’s a possibility for further expansion of the project as well. “The Clearwater Aquarium has a bigger budget than the university does, and we’re currently making a stretcher for stranded turtles for them, and talking about making stretchers for other animals as well,” Bradford says. “The process is pretty similar as far as construction goes for making stretchers for different animals. This is a pretty tight-knit community, so there’s a possibility that other stranded marine animal facilities could be using our work as well.

“Here’s the thing: You’ve got to be diverse in these times,” Bradford says. “By exploring other products, it protects you so you don’t end up going out of business because all you make is one thing.”

Sigrid Tornquist, a writer and editor based in St. Paul, Minn., is a frequent contributor to IFAI publications.

Leave a Reply