4 Key Steps to Entering New Markets
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.
Entrepreneur Profile: Q & A with Rishi Khan, Extreme Scale Solutions
Question: Tell us a little bit about your background and education.
Rishi Khan: I’ve been starting companies since I was in middle school. My first company was a lemonade stand with my brother and a friend. My dad financed the initial outlay but made us keep Excel spreadsheets of inventory, sales, P&L, and time spent. I think we broke even, but I learned a lot in the process. In high school I started a tutoring service and I also started two companies while in college.
I have a BS in Computer Engineering from the University of Delaware and a PhD in Computational Biology from a joint program between the University of Delaware and Thomas Jefferson University. After my PhD, I started a company with one of my PhD advisors, Dr. James Schwaber, and spent one year as a post doctoral fellow building a proof of concept for a DNA sequencing device that would reduce the then technology cost 1000X. After my post-doc I joined ET International as the VP of Research and Development and led projects that brought $8M dollars to the firm over 5 years. I was a Principle Investigator on a number of Dept. of Energy (DOE) and Dept. of Defense (DOD) high performance computing projects and built a strong network in that field.
Q: How did the idea of Extreme Scale Solutions arise and develop?
RK: When I struck out on my own in 2014, the original focus of Extreme Scale Solutions was on the marriage of High Performance Computing and Big Data, a fusion predicted by Gartner and heavily funded by VCs and the US Government. We originally intended to focus on DOE and DOD Research but started on Enterprise Solutions following a contract from a large Fortune 100 bank. We standardized database configurations and automated for database provisioning reducing a 30 day process with 9 teams to a fully automated 30 minute process.
In 2015, leveraging that initial success, we were contracted by another Fortune 100 bank to build out “Database As a Service”. This included all steps to bring siloed processes from multiple lines of business together into a unified self-service portal for planning, provisioning, and operations. After this contract, we built a platform, Nubrado, which shortens the journey for large enterprises to move to public cloud, or a private cloud-like environment from years to months.
Additionally, in 2017 we began working with Defense Advanced Research Projects Agency (DARPA) and Qualcomm on building next-generation computer architectures to speed up graph analytics by 1000X within the next five years. We believe these two tracks will converge as operational analytics becomes increasingly graph-oriented.
We often refer to our 3 pillars as R&D, software-as-a-service (SaaS) platform, and advisory services. Our R&D keeps us on the forefront of analytics and automation. Our SaaS platform provides planning, automation, and analytics support for large enterprise clouds. Our advisory services supplement our platform by helping companies define process and procedures to align their people with the platform.
Q: So what services, in a nutshell, do you offer companies today?
RK: Today, we provide a platform that enables large enterprises to migrate from legacy bespoke silos to a public or private unified cloud environment. This involves planning (What do I need to buy? Where will all of the databases go? How will they be isolated? How will the share resources? What databases should I migrate first to minimize cost or risk?), automated migration, automated lifecycle management actions, and operational analytics.
Q: What advice would you give to startups seeking to start a business in the world of IT/big data?
RK: Work at a startup to gain experience, credibility, network, and a cash hoard on somebody else’s dime. Give yourself a one-year runway (either through bootstrap funding, grants, or VC funding) to see if you can start to make money. Exist in a network of other entrepreneurs such as the Emerging Enterprise Center, Small Business Development Center, and CEO Thinktank®. Fail fast and often, and stick with what sells.
Q: What’s next for Extreme Scale?
Our major effort is to bring our platform, Nubrado, to alpha customers. We are currently engaging with Oracle on a number of potential customers in banking, insurance, telecom, and other fields. Our goal is to make it easy for large companies to manage massive database landscapes through standardization, automation, manage-many-as-one, management through measured metrics.
In addition, our research arm is focusing on extending work on graph analytic processors to machine learning and other problems that can benefit from software-defined reconfigurable hardware.
The (Internal) Marketing Plan: Bridging the Gap Between Product Development & Sales
Written by Dora Cheatham, Program Manager, Emerging Enterprise Center
An ideal product launch should not only focus on marketing the product to the customer, but also on “marketing” the product internally to assist the Sales Team optimize its sales efforts. Too often, focus is placed on selling to the customer, without effectively training the sales team in the nuances of a product that requires more than just the presentation of features and benefits.
As technologies develop and products become more complex, the more information the Sales Team has on the product, the better they will be able to answer questions knowledgeably and overcome obstacles when working with their customers. Similarly, data gathered by the Sales Team should be cycled back to Marketing to ensure that product is being received and is performing as expected, and any potential issues or improvements can immediately be fed back to the Product Development Team.
Remember that the sales team is on the front line, so a Marketing Plan or Commercialization Plan should include an element that arms the sales team with as many preemptive answers as possible so that he or she can present the company’s expertise effectively and deliver a consistent product message. So what should be included in this Plan?
Product Positioning
Make sure your sales team understands how and why your product is positioned the way it is. If the product was developed as the result of a recurring problem expressed by several customers, make sure the whole team is aware of it. Just because a customer hasn’t expressed the particular problem, doesn’t mean they haven’t experienced it! If it was developed as the result of a new technology that makes the customer’s job easier, make sure they know it.
If you want your sales team to sell on value rather than price, then you need to make sure they understand the intrinsic value of the product and its benefit to the customer, not just its features and price. What problem does it solve? Will it make the customer more effective? Will it save time or labor?
Target Market
Make sure everyone is on board with precisely which customer segment(s) constitutes the target market, and that the sales team understands the criteria on which the potential market size was developed. If the numbers were developed based on a specific application, and a particular customer ends up using the product differently (it has been known to happen), this is critical information that should be fed back to Marketing and Product Development for further evaluation. Was the original data based on a false premise (hopefully this is never the case), or is this a viable alternative application? If so, can this application be extended across the entire market in which case the potential market has just increased and the information should be distributed to the entire sales team!
Competitive Landscape
What competitive products is your sales team likely to come up against? How does the product perform against these products? How are competitive products used versus pricing? Having spent many years in the chemical industry, I have learned that one of the first things to check for is the dilution rates of chemicals: if a product costs $10.00/litre and needs to be diluted at 1:2, it is NOT cheaper than a $50.00/litre product that can be diluted at 1:12 and offers comparable performance!
Sales Tools
Don’t just send the sales team off with a data sheet and price list. Testimonials, value calculators, editable presentations, how-to’s and trial protocols (if applicable) all help the sales team present a professional, polished image of a company that understands its market and is working with their customer to help them make an informed purchase.
Product Availability
If the product or service you are offering has customization options, make sure your sales team is fully aware of the criteria for customization: options, minimums, lead times and other requirements. As Carla O’Dell once said, “If you don’t give people information, they’ll make something up to fill the void”, and too often it’s something along the lines of “Of course you can have that in 2 weeks!” This not only creates chaos for the Product Development and Operations teams but can set unrealistic expectations as far as the customer is concerned. Most customers would rather have a realistic 6 week lead time, than constantly be given reasons why an unrealistic 2 week lead time could not be met!
As a final note, while many companies focus on training upon recruitment, they fail to continue this training as products and markets evolve, yet studies have shown that proper training can boost a salesperson’s productivity by 20% and profit margins by much more!