Too often companies rush to bring new products to market without first considering which verticals to sell into and which sales channels to utilize. This leads to a series of detrimental scenarios that end in lackluster market performance or white rabbit chasing that burns cash and never yields market traction.
Less than stellar launch results happen when new product development teams and marketers default to their existing business model without considering broader market possibilities. New products and services often require innovative business models and new sales channels to fully realize their potential.
The other extreme is where teams are overly opportunistic and try to pursue all of the opportunities that arise. Here they fall victim to the siren song of an “in” at a retail chain or distributor. They take all of the deals that present themselves thus executing no real strategy and diluting all of their efforts.
It is best to identify an opportunity and design a new product or service to meet a specific need in the market. This way, the core market is defined and market demand validated. The only work left to do is to analyze expansion markets according to their strategic relevance and profitability. Unfortunately, this is not the way it typically goes down. In most cases, companies and inventors create something and blindly launch it into a saturated market or go in search of a market that exhibits demand for the product – a solution looking for a problem. They don’t think through the specifics of where to play and why. Instead, they go where the tide takes them and hope the winds of fate are lucrative.
If you find yourself with a product or service in search of a market, here is our advice.
Create a model that evaluates strategic impact of each market according to relevant factors like: market size and growth rate, competitive pressure, ease of entry, length of sales cycle, industry growth and latent demand. Weigh each of these factors so that you can prioritize markets according to a quantitative methodology.
Based on the information described above, determine which segment of the market makes the most sense to target. Can you win in the premium space or is there an opening for a value player? The answer to this question will help you determine your pricing strategy and will also guide the sales channels you pursue.
Evaluate the strategic sequencing for entering each market. There is usually a strategic logic to entering markets in a particular order. In many cases, doors won’t open at some sales channels until you have demonstrated success in others.
Growth and success in business are tightly tied to a team’s ability to methodically analyze opportunities and then have the discipline to stay the course. Be measured in your path to market. Too many good products with legs end up back on the shelf because teams exhaust their invested capital and resources pursuing the wrong market or sales channels.
Jocelyn Atkinson and Michael Graber run the Southern Growth Studio, a strategic growth firm based in Memphis. Visit www.southerngrowthstudio.com to learn more.