If you notice that your customer is buying a product that connects to your business elsewhere, it may be time to diversify the business. Expanding your show portfolio can be a strategy to gain and retain an audience, as well as increase your profit margin.
Incorporated into the skate and surf culture, LayBack was born as a great craftsman, then he opened spaces that combine gastronomy, art and sports, he opened social-themed schools, and recently ventured into the clothing business. On the other hand, the Dengo brand moved away from cocoa to offer items other than chocolate, such as beverages, and opened a restaurant and launched a line of household items.
In general, companies have realized that the customer wants diversity and that they can offer new experiences related to the core business, that is, the core of the business. For this reason, knowing the consumer well is essential, highlights entrepreneurship guru Luisa Castanho.
“You need a product that represents an opportunity and that you’re sure the customer will buy from you right away,” she says. It materializes as a butcher shop that also sells barbecue, charcoal, knives, salt and accessories. “If I know I need a few things, I go to the place that has everything. This gives the customer insight into the savings.”
From Beer to Fashion
Pedro Barros’s skating show gave him a good financial return and he, along with his father Andrei Barros, sought to encourage other athletes early in their careers. The duo spend around R$60,000 a month, financing trips or building skate parks in the communities.
With the opening of CNPJ, LayBack had the potential to grow and spread the brand and culture through the products. Craft beer selected ten years ago, with small production and complex distribution. To make it possible, they opened a food cart that will be the main sales channel for the drink.
One day, during an event with a food cart, Andrei meets Raphael Alsisi, who will later become the CEO of the company and will take the lead in making the business flourish. They have left a food trailer at LayBack Park, spaces that include dining options, skate parks, tattoo parlors, art galleries and concert venues. In general, in different categories, there are 19 units throughout the country.
“Distribution in Brazil is very risky, especially the logistics of beer. Rafael decided to create our own rooms, which led to the creation of another brand and would be the largest consumer of LayBack (beer), without depending on distribution,” Andre says.
With the idea of betting on products that have something to do with culture and attract new audiences, another diversification came through licenses, with a special cup of coffee. The article, for example, caught the attention of parents of young skaters, who are indirectly related to sports culture. “We have the advantage of diversity, but we cannot lose the essence”, says the entrepreneur.
LayBack has also invested in schools to train young surfers and, in December, launched a surf-focused clothing collection in partnership with international brand Rusty. To make all this movement, Andre recommends being aware of what the public wants.
He comments: “You have to generate a novelty at all times and that was the ‘jump cat’ of LayBack.” According to him, the rooms were what most boosted the business that, in three years, went from R$20 million to R$60 million in revenue.
Around the Table
With a 360-degree vision of what cocoa could offer, Dengo’s diversification began with fruit-derived products in addition to chocolate. Tea granules, tea, cocoa honey and gin entered the brand’s portfolio. As a company with a social impact, the strategy promotes a premium cocoa chain in southern Bahia, with an emphasis on small producers.
From this social aspect, in September 2022, Dengo Casa appeared, a collection of household utensils, such as cups, glasses and cutting boards, made by artisans from small Brazilian communities. “All those who consume Dengo want to expand their offer of gifts, and Dengo Casa is more in the world of cooking, it has been something that interests consumers,” says CEO Estefan Sartorelli.
Also in 2020, the company inaugurated the Cabruca restaurant, also as an expansion of the offer of the brand’s concept store, located in Pinheiros. The businessman summarizes: “It will be a store that can bring comfort.” The space includes a small chocolate factory, a cafeteria and an ice cream parlor.
Sartorelli sees two main challenges in this effort: more complex management since he works with more categories, and a personal relationship with smaller producers. These usually work, in this case, on their own, so it is necessary to align the delivery time and the potential amount of supply.
For the CEO, landscaping is a competitive advantage. “Each challenge brings differentiation to the business. Doing things differently today requires effort, action, relationship building and development. It gives us great joy to take on a task with an impact that may take longer, but is more sustainable,” he says. . .
He won’t reveal numbers, but ensures that the strategy has allowed Dengo to increase overall revenue, create more relationship opportunities with the same customers, create new consumer needs and expand brand value.
“It’s essential to keep customers consistently satisfied, engaged and happy, because they will come back and recommend and give gifts,” Sartorelli says. “But there’s no point in diversifying and giving up quality and experience,” he adds.
How to diversify a business
Entrepreneurship educator Luisa Castanho says that the main thing is to have a deep knowledge of the client and the market to start diversifying. “It’s not about knowing how to sell meat, selling grills and charcoal overnight, you have to know where to buy it, and the best cost and sale price,” she instructs.
At this point, it is useful to know the purchasing power of your audience to decide what type of product to offer. For starters, she suggests including something that is already on the market and successful rather than trying to create new items under your own brand, because that requires more time and money. When testing, the expert suggests a mix of a few items and recommends monitoring audience perception.
5 tips from Estefan Sartorelli, CEO of Dengo, to diversify the business:
- know your consumer;
- Evaluate if what you are going to offer again is, in fact, better than what already exists. According to him, the product cannot tarnish the brand or simply be equivalent to what is on the saturated market;
- Start branching out closer to the company’s core business. It is important to understand, in fact, how much the news will add new opportunities;
- Monitor and review the structure of the product or service portfolio once diversification has begun;
- Learn how to remove what didn’t work. “Don’t push yourself too hard. You have to be open to ‘yes,’ to the new, but also know when to say ‘no,'” he advises.