Written by Dora Cheatham, Program Manager, Emerging Enterprise Center
As we move closer and closer to 2016, everyone’s checking budget numbers and beginning to think about growth for the new year. Your boss just walked into your office and told you the company wants to take your top products into a new market. Somewhere along the line, someone had the idea that your heavy duty industrial cleaners can be sold into the retail consumer market; or your jan san disinfectants should be extended to the aviation industry (planes are dirty, right?) How hard can it be?
The truth is, preparing to enter a new market does not need to be a tough process, but it does need to be thorough, and expectations need to be set at realistic levels before even beginning to look at the 4Ps (or 5Ps depending on your approach).
Here are 4 key considerations you should take into account as you look to taking your products into a new market.
Size of the market vs market potential – in order to assess the size of the market you need to have a thorough understanding of the specific application of your product. A product that is used several times a day in one type of market, may only be used once a day in a different market, which radically changes the size of the market. In addition, if the market leader holds 20% market share in the new market, then your total potential in the early stages of commercialization is likely to be just a small portion of that 20% share. Be realistic in your expectations.
Product attributes – Attributes and benefits of a product that are valued by one market are not necessarily valued in a different market. Make sure you have a clear understanding of what your new target market values as well as their specific needs, and ensure that the products you are offering are designed – and positioned – to meet those specific needs. In many cases, relabeling or repackaging a product may not be enough. The product itself may need to be re-engineered to accommodate the needs of your new market.
Regulatory environment – Different markets have different regulatory requirements – for example, a product that can be used to clean your kitchen or bathroom cannot be used to clean surfaces in an aircraft without meeting stringent aviation material safety requirements. Make sure you are fully aware of any industry, state and federal requirements necessary to market your product in an alternative market. Use a consultant if you have to. It’s cheaper than the alternative.
Sales cycle – make sure you understand the sales cycle and method of the market or industry you intend to enter and not just the sales channels. In some cases, the sales cycle can be relatively brief and straightforward, in other cases, the sales cycle could be long and require a consultative approach. This will greatly impact your marketing plan and materials.
Once you have a clear understanding of the market size and potential you can then start thinking about potential strategies. Here are just some alternatives used by different companies:
- Focus on targeting non-users of the product rather than trying to switch customers from using an existing competitive product.
- Focus on offering additional attributes not offered by any competitive products
- Focus on attacking competitive products by offering superior products OR lower pricing.
- If marketing dollars are available, focus on outspending competition in advertising and promotion, although according to literature, this approach only makes sense if the market leader is in a seriously weaker position and you can outspend the leader at 3:1.
- Target efforts in a specific geographic area or an area not currently served by current competitors.
Then and only then should you start putting together your Marketing Mix or 5Ps. These are the decisions that surround the Product (performance, features, design, presentations, name, etc), Pricing (direct, distributor, geographical, etc), Promotion (PR, marketing collateral, advertising), Place (distribution channels), and People (tasks, sales, support). In other words, you have gained an understanding of the new market and its customers, you now need to ensure that you have the right products, that they are correctly positioned for that market and that your communications correctly reflect that positioning.
General Eisenhower once said “Plans are nothing, planning is everything.”The purpose of planning is to ensure that all the right questions are asked. Too often we “make it up as we go along” which may yield short term benefits, but more often than not can be harmful in the longer term, often resulting in unintended consequences and incurring unexpected costs. While planning does not necessarily eliminate all of these, it does provide a sense of direction and empowerment that permits effectiveness at all levels of the organization and optimizes strategy execution. In brief, planning x strategy x execution = success.