There is some good news in that the markets are expected to recover to 7.3 million tons by 2014, but that 1.6 percent average annual growth from 2009 to 2014 is not enough to make up for the significant downturn in the past years.

So what are lubricant marketers to do? How do they grow their business when the market is not growing? The bottom line is that staying on the so-called safe side – with the same customers, products and markets – is not an option. Instead, it is often a recipe for disaster.

Anyone who has studied marketing has learned about Igor Ansoff, the Russian-American recognized as the father of strategic business management, and his theories on growth opportunities. Ansoff developed a matrix describing four key ways in which a company could grow.

Essentially, companies can try to increase their market share by selling more existing products and services to current customers. This can be achieved by adopting a couple of tactics including stepping up efforts to aggressively cut costs along with cutting prices. Success from such measures is often short-term as price cuts are usually matched by competitors and neutralized over the long run. Alternatively, some companies have aggressively increased prices with the goal of increasing profits, but price increases are difficult to pass along, especially during sluggish economic times.

Another way to increase market share is to sell existing products and services to new customers. This has typically been achieved by entering new geographic markets. However, in the lubricants industry, most international markets are either already highly competitive or protected.

A third way to grow is to sell new products and services to existing customers. But if we take a look at all the new products that have been launched, the products that succeed are few and far between.

The last approach, which is recommended by Ansoff, is to sell new products and services to new customers. Typically this has been achieved by acquisitions. However, acquisitions are often expensive, and many have not proven profitable in the long run.

There are a lot buts and howevers with the above tactics and strategies, and lubricant companies ought to consider them. Yet many companies fail to realize that their markets are rarely fully penetrated. The key to success today is to create and fully exploit segments and niches that will bolster growth and – more importantly – growth that is profitable.

Nike is touted by many as a good example of a company that has created and capitalized on segments and niches. Nikes first success was making superior running shoes that were targeted at serious runners. Later, they introduced shoes targeted at other sports such as tennis, basketball, football, aerobics, and others. Essentially, Nike moved into adjacent segments. An equivalent move in the lubricants industry might be for a company that sells fire resistant hydraulic fluids to add synthetic removal fluids to their product portfolio and sell them to their steel mill customers.

Nike introduced more products by segmenting more finely. For example, they introduced basketball shoes targeted to guard position, basketball shoes for centers, basketball shoes for high-jumping players and others. Similarly, in our industry we have seen passenger car motor oils that contain rerefined base oils and are targeted towards green buyers, PCMOs targeted towards drivers of four-by-fours, oils (primarily synthetics) targeted toward sporty cars and high-performance drivers, oils targeted to older vehicles and others.

Nike then also chose to move into new types of segments that were related to its existing business – segments such as clothing for various sports, and managing athletes careers. Lubricant marketers, with varying degrees of success, have done the same by introducing products for car care such as windshield washer fluid, wheel cleaners and coolants. Some companies have provided chemical management services to users of metalworking fluids.

A common question from lubricant marketers is, What can we do that hasnt been done before? Kline & Co. would recommend watching for customer needs that are not currently satisfied instead of looking first at the suppliers current products and competencies. That is, do not look inside out – inside the company and then outward from it. The fastest way to grow is sensing the untapped needs of existing and potential customers by studying end users, and then the needs of immediate customers. Most importantly, the lube marketer must decide which needs it can meet best and most profitably.

Look from the outside in. In the lubricants industry, that means not being primarily focused on the needs of distributors or channel partners. The goal should be to truly understand the final customer – whether they use automotive or industrial lubes. Doing so will help take care of most of the needs of distributors or channel partners.

To quote two other authorities on marketing, Adrian Slywotzy and Richard Wise, Most executives have spent years learning to create growth using their products, factories, services, facilities and working capital. They have spent much less time thinking about how to use a combination of relationships, market positions, formal and informal networks, information and insight – their hidden assets – to create value for customers and growth for their employees and investors.

To increase market share and to grow in a declining market is tough, but it is certainly not impossible, as demonstrated by a few of our peers. Heres to everyones growth and success.