Addressable Market

 
Investors call it your company’s “addressable market,” and it is one of the main factors buyers will look at when they evaluate the potential of acquiring your company.
 
Business 101 tells us we should strive for market share so we can control pricing. Market share is a worthy goal if your objective is to maximize your profits. However, if your primary objective is to increase the value of your company, you want to be able to communicate that you have a relatively low market share across the entire addressable market. In other words, there is plenty of field left to plow. 
 
Consider the following ways you might expand the way you are currently thinking about the addressable market for what you sell:
 
Demographics
 
Demographics involve segmenting a market by objective measures like gender, income, age, and education level. Marriott is a hotel chain but they have created a variety of brands to address the various demographic segments they want to serve. Ritz Carlton is a Marriott brand that appeals to well-heeled travelers, but if all you want is a basic room, you could opt for a Courtyard Marriott. It’s the same company, but they have expanded their addressable market by focusing on different demographic segments.
 
Psychographics
 
Psychographics involves segmenting your market according to the way people think. Toyota produces the Prius, which gets 50 miles per gallon and is a favorite among environmentalists. Toyota also produces the thirsty Tundra pickup truck and, at just 15 miles per gallon, attracts a different psychographic segment.
 
Geography
 
Success in your local market is good, but if you want to really boost the value of your company in the eyes of an acquirer, you need to demonstrate that your concept crosses geographic lines. McDonald’s has more than fourteen thousand locations in the United States, but they have also demonstrated that the golden arches can draw a crowd in other markets. McDonald’s has nearly three thousand stores in Japan, two thousand in China, and more than a thousand locations in the European countries of Germany, Canada, France, and the United Kingdom.
 
You don’t actually have to become a global giant like Marriott, Toyota, or McDonald’s to increase your company’s value, but you do need to be able to communicate that your concept could work in other markets and that there is still good land left to plow.