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Suggest You - Do You REALLY Want to Enter That New Market?
Do you know how to write a great headline? You should because headlines are the lifeblood of your product/service.Newspaper and magazine headlines are some of the best you’ll see. They depend on these headlines for sales. And since they have about 4 seconds to capture your attention, they better be good.Who can resist not at least scanning a few lines after reading headlines like this:"Attack Dogs Maul Helpless Kitten To Death" "Exclusive: TV Star's Secret Getaway Spot Revealed" "How Attractive Do These People Find You?" "The $1 Million Dare"Each of these headlines has an element or combination of elements that affect you.They tease your emotions and leave you hanging like the classical 'what happens next?' scenario.And to satisfy your emotions, the solution is to read the story. Brilliant tactic, isn’t it?Imagine you
* How will market pricing degradation eventually affect your margins and ROI?
10) Number of viable competitors:
* If there are a relatively few number of viable competitors participating within the targeted market, it may more than
justify your market entry
* Sometimes it is less expensive to acquire an existing, resource limited, market participant than try to take market share with a new approach
11) Ability to maintain a technical advantage:
* Can you protect your technology within the time frame required to cover your new market entry investment?
* Maintaining technical advantages requires quality, technical talent. If your current technical staff is over burdened or limited you will not compete
12) Fit with existing company resources:
* Can your company absorb the financial, emotional and physical changes required to effectively compete in the new market?
* New markets often require new, certainly more, talent and personnel
13) Fit with established customer perceptio
Do you need greeters or should you avoid them? That is the perplexing question many retail organizations are struggling with today. Often touted in the press as the perennial example of the benefits to employing greeters,Walmart has hung on to its practice faithfully. But does it work and if so, will merely placing any warm body with a forced smile at the door to your store do the trick of converting entering customers into satisfied shoppers?Not necessarily, there is much more to successfully using retail greeters to affect a significant difference in your bottom line. The basic problem lies with retailers who do not adequately define what it is they hope to accomplish. Retailers and greeters need to fully understand their function.Establishing goodwill with customers is the sole reason for using greeters. Four fundamental purposes and their corresponding methods for
Sometimes it is obvious that entering a new market is a “no brainer” or it is perceived as the “right thing to do” because a competitor has taken the plunge or a handful of existing product or service users, within that market segment, are asking for your market participation.
Taking on a new market is an integrative decision process, cutting across a broad number of competitive issues, internal company functions and various targeted organizational entities. A decision of this magnitude should not be taken lightly because of the overall affect it can have on the total direction of your company and prudent use of limited resources. The cost of making a wrong decision here can be significant both in actual capital outlays and the opportunity costs realized of NOT pursuing another, “better” market alternative.
In Al Ries and Jack Trout’s, “The 22 Immutable Laws of Marketing”, being FIRST in a new market is everything, first is best! Sometimes deciding to venture into a new market segment just because a competitor did only makes the same decision one of duplicate failure.
Anyone who has ever been involved in sales management knows that sales personnel have a tendency to sell what they don’t have … always trying to solve all of every customer’s problems no matter whether it makes financial sense for the company they represent or not. Marketing managers also have to learn to systematically justify entering a new market not because a handful of existing market participants have asked them to enter their market.
The first step in evaluating the overall merit of entering a new market should be to discuss and determine the applicability of these 14 market segment attributes:
14 Critical Market Segment Attributes
1) The number of products/ services required to effectively compete:
* Ideally the more “full service” you can be the better your chances of success
* Customers prefer “one-stop shopping”, if you cannot provide the complete customer solution package, they have little reason to switch suppliers
2) Capital required to effectively compete:
* Understand your costs to enter a new market before you assume your revenues
* Sales projections are typically too high and cost estimates too low in new business ventures
3) Long term sales potential:
* Accelerating advances in technology reduces long term customer retention possibilities. In many markets customer needs are constantly changing.
* Priority should always be give to retention of existing, short term revenue streams, ultimately the best means to fund potential long term growth
4) Relative Profitability:
* Is return on investment greater via a new product or pursuing another market?
* It is always less costly to grow profits from existing customers in existing markets than to pursue new customers in new markets
5) Ease of product distribution:
* New markets are often best penetrated with non traditional distribution/ sales representation
* Does this potential market “fit” with your current distribution structures?
6) Post sale service requirements:
* Product/ service information demands of new market customers can require more and new forms of post sale customer service
* Technical support for state-of-the-art product/ service offerings can be in limited supply and very costly, difficult to staff
7) Degree of customer loyalty:
* Every market has a varying degree of customer loyalty depending on number and quality of competitive product/ service offerings
* Do key targeted users within the new market buy on product/ service value or well established relationships with existing suppliers?
8) Time required to get into the market:
* Product/ service “life cycles” in some industries last only a couple of months
* Can your company develop, test, certify and fill distribution channels of a short life cycle product/ service within the time frame required?
9) Anticipated competitive response:
* New market entrants are greeted with new competitive marketing tactics upon entry by established suppliers who seek retention of existing market share
* Will existing pricing levels remain once you have entered the market?
* How will market pricing degradation eventually affect your margins and ROI?
10) Number of viable competitors:
* If there are a relatively few number of viable competitors participating within the targeted market, it may more than
justify your market entry
* Sometimes it is less expensive to acquire an existing, resource limited, market participant than try to take market share with a new approach
11) Ability to maintain a technical advantage:
* Can you protect your technology within the time frame required to cover your new market entry investment?
* Maintaining technical advantages requires quality, technical talent. If your current technical staff is over burdened or limited you will not compete
12) Fit with existing company resources:
* Can your company absorb the financial, emotional and physical changes required to effectively compete in the new market?
* New markets often require new, certainly more, talent and personnel
13) Fit with established customer perception
Change, make that constant change, is the way of the world. A double edged sword, change provides opportunity on one edge and creates outdated services, products, processes, marketing and manufacturing methods with the other. Companies slow to embrace change and adapt as conditions shift ultimately face a crises of financial viability and survival.Whenever a company is in decline/distress, among the usual suspects one can find: declining profits, trouble complying with loan covenants, customer complaints on the rise, customer defections, talent loss- high turnover, absence of short and long term planning, supplier problems, failure to adapt to new technologies, reduced working capital, and changing accounting principles; just to name a few. The number and mix of problems will vary from company to company.So, several of the more common trouble signs have emerged and your
Anyone who has ever been involved in sales management knows that sales personnel have a tendency to sell what they don’t have … always trying to solve all of every customer’s problems no matter whether it makes financial sense for the company they represent or not. Marketing managers also have to learn to systematically justify entering a new market not because a handful of existing market participants have asked them to enter their market.
The first step in evaluating the overall merit of entering a new market should be to discuss and determine the applicability of these 14 market segment attributes:
14 Critical Market Segment Attributes
1) The number of products/ services required to effectively compete:
* Ideally the more “full service” you can be the better your chances of success
* Customers prefer “one-stop shopping”, if you cannot provide the complete customer solution package, they have little reason to switch suppliers
2) Capital required to effectively compete:
* Understand your costs to enter a new market before you assume your revenues
* Sales projections are typically too high and cost estimates too low in new business ventures
3) Long term sales potential:
* Accelerating advances in technology reduces long term customer retention possibilities. In many markets customer needs are constantly changing.
* Priority should always be give to retention of existing, short term revenue streams, ultimately the best means to fund potential long term growth
4) Relative Profitability:
* Is return on investment greater via a new product or pursuing another market?
* It is always less costly to grow profits from existing customers in existing markets than to pursue new customers in new markets
5) Ease of product distribution:
* New markets are often best penetrated with non traditional distribution/ sales representation
* Does this potential market “fit” with your current distribution structures?
6) Post sale service requirements:
* Product/ service information demands of new market customers can require more and new forms of post sale customer service
* Technical support for state-of-the-art product/ service offerings can be in limited supply and very costly, difficult to staff
7) Degree of customer loyalty:
* Every market has a varying degree of customer loyalty depending on number and quality of competitive product/ service offerings
* Do key targeted users within the new market buy on product/ service value or well established relationships with existing suppliers?
8) Time required to get into the market:
* Product/ service “life cycles” in some industries last only a couple of months
* Can your company develop, test, certify and fill distribution channels of a short life cycle product/ service within the time frame required?
9) Anticipated competitive response:
* New market entrants are greeted with new competitive marketing tactics upon entry by established suppliers who seek retention of existing market share
* Will existing pricing levels remain once you have entered the market?
* How will market pricing degradation eventually affect your margins and ROI?
10) Number of viable competitors:
* If there are a relatively few number of viable competitors participating within the targeted market, it may more than
justify your market entry
* Sometimes it is less expensive to acquire an existing, resource limited, market participant than try to take market share with a new approach
11) Ability to maintain a technical advantage:
* Can you protect your technology within the time frame required to cover your new market entry investment?
* Maintaining technical advantages requires quality, technical talent. If your current technical staff is over burdened or limited you will not compete
12) Fit with existing company resources:
* Can your company absorb the financial, emotional and physical changes required to effectively compete in the new market?
* New markets often require new, certainly more, talent and personnel
13) Fit with established customer perceptio
Years ago I worked as a computer technician for a large shipping company. Basically, I drove to client sites and installed or upgraded computer hardware and software. I liked the job. During March of 2000, gas prices started to rise in the U.S. The federal mileage reimbursement was not really compensating for the cost of gas. The majority of the technicians in the office wanted our employer to help us make up the difference in the cost of gas. Our supervisors were sympathetic. However, the general manager was not sympathetic at all. He said, that the cost of fuel was affecting everyone especially the company. He said the company had to fuel hundreds of trucks and planes. And customers did not expect the cost of shipping to increase due to an up tick in gas prices. Of course, everyone grumbled about what he said.Over the next three months, the price of gas rose .27. Now the gru
2) Capital required to effectively compete:
* Understand your costs to enter a new market before you assume your revenues
* Sales projections are typically too high and cost estimates too low in new business ventures
3) Long term sales potential:
* Accelerating advances in technology reduces long term customer retention possibilities. In many markets customer needs are constantly changing.
* Priority should always be give to retention of existing, short term revenue streams, ultimately the best means to fund potential long term growth
4) Relative Profitability:
* Is return on investment greater via a new product or pursuing another market?
* It is always less costly to grow profits from existing customers in existing markets than to pursue new customers in new markets
5) Ease of product distribution:
* New markets are often best penetrated with non traditional distribution/ sales representation
* Does this potential market “fit” with your current distribution structures?
6) Post sale service requirements:
* Product/ service information demands of new market customers can require more and new forms of post sale customer service
* Technical support for state-of-the-art product/ service offerings can be in limited supply and very costly, difficult to staff
7) Degree of customer loyalty:
* Every market has a varying degree of customer loyalty depending on number and quality of competitive product/ service offerings
* Do key targeted users within the new market buy on product/ service value or well established relationships with existing suppliers?
8) Time required to get into the market:
* Product/ service “life cycles” in some industries last only a couple of months
* Can your company develop, test, certify and fill distribution channels of a short life cycle product/ service within the time frame required?
9) Anticipated competitive response:
* New market entrants are greeted with new competitive marketing tactics upon entry by established suppliers who seek retention of existing market share
* Will existing pricing levels remain once you have entered the market?
* How will market pricing degradation eventually affect your margins and ROI?
10) Number of viable competitors:
* If there are a relatively few number of viable competitors participating within the targeted market, it may more than
justify your market entry
* Sometimes it is less expensive to acquire an existing, resource limited, market participant than try to take market share with a new approach
11) Ability to maintain a technical advantage:
* Can you protect your technology within the time frame required to cover your new market entry investment?
* Maintaining technical advantages requires quality, technical talent. If your current technical staff is over burdened or limited you will not compete
12) Fit with existing company resources:
* Can your company absorb the financial, emotional and physical changes required to effectively compete in the new market?
* New markets often require new, certainly more, talent and personnel
13) Fit with established customer perceptio
Have you always wanted to go into business for yourself? If so, it's possible that you've considered whether buying a business franchise is the right choice for you. Starting a business in any field is a significant life and professional decision, and, as with any major decision, it is important to weigh all of the pros and cons before taking the leap into a business franchise opportunity.There was a time when someone wanting to start a business would follow the traditional route of selecting an industry, researching and establishing financing, and then hanging a shingle on the doorpost. These "mom-and-pop" businesses in many ways became the backbone of economic growth and development. Yet, as many entrepreneurs will readily tell you, independent businesses, even with their allure, often carry great risk, and the vast majority of small businesses fail within the first few year
6) Post sale service requirements:
* Product/ service information demands of new market customers can require more and new forms of post sale customer service
* Technical support for state-of-the-art product/ service offerings can be in limited supply and very costly, difficult to staff
7) Degree of customer loyalty:
* Every market has a varying degree of customer loyalty depending on number and quality of competitive product/ service offerings
* Do key targeted users within the new market buy on product/ service value or well established relationships with existing suppliers?
8) Time required to get into the market:
* Product/ service “life cycles” in some industries last only a couple of months
* Can your company develop, test, certify and fill distribution channels of a short life cycle product/ service within the time frame required?
9) Anticipated competitive response:
* New market entrants are greeted with new competitive marketing tactics upon entry by established suppliers who seek retention of existing market share
* Will existing pricing levels remain once you have entered the market?
* How will market pricing degradation eventually affect your margins and ROI?
10) Number of viable competitors:
* If there are a relatively few number of viable competitors participating within the targeted market, it may more than
justify your market entry
* Sometimes it is less expensive to acquire an existing, resource limited, market participant than try to take market share with a new approach
11) Ability to maintain a technical advantage:
* Can you protect your technology within the time frame required to cover your new market entry investment?
* Maintaining technical advantages requires quality, technical talent. If your current technical staff is over burdened or limited you will not compete
12) Fit with existing company resources:
* Can your company absorb the financial, emotional and physical changes required to effectively compete in the new market?
* New markets often require new, certainly more, talent and personnel
13) Fit with established customer perceptio
Paul Wilson, Managing Director of Aster Training has rolled out many 5S implementation programmes for companies throughout the UK.Paul takes up the story, “Some organisations we work with initially tend to think they have a unique set of problems or operating conditions which would make 5S and the other lean tools difficult to implement. The reality tends to be very different. Once we get over the initial hurdle of the ‘buy-in’ of the management team, progress and improvements can be rapid.The mechanics of 5S implementation are relatively easy and straightforward but where organisations can make a mistake is by failing to build in objective review mechanisms designed to identify how far the workforce has bought into the programme. 5S is about making everyone responsible and accountable for their work areas, not just the enthusiastic few.5S is also a company wid
* How will market pricing degradation eventually affect your margins and ROI?
10) Number of viable competitors:
* If there are a relatively few number of viable competitors participating within the targeted market, it may more than
justify your market entry
* Sometimes it is less expensive to acquire an existing, resource limited, market participant than try to take market share with a new approach
11) Ability to maintain a technical advantage:
* Can you protect your technology within the time frame required to cover your new market entry investment?
* Maintaining technical advantages requires quality, technical talent. If your current technical staff is over burdened or limited you will not compete
12) Fit with existing company resources:
* Can your company absorb the financial, emotional and physical changes required to effectively compete in the new market?
* New markets often require new, certainly more, talent and personnel
13) Fit with established customer perceptions:
* How will your existing customers be affected by your pursuit of a new market and new customer base?
* It is critical to define and evaluate your existing customer’s perceptions of all your major strategic moves
14) Financial status of key targeted customers and market share mix:
* Are key targeted customers financially stable?
* Is there a diverse mix of new market participant market shares?
The justification of entry into a new market segment involves effectively identifying viable competitors, relevant target market attributes, competitor and key customer market shares while correctly defining your company’s current financial, technical and human resources.
For marketing and sales management this 14 market attribute checklist is more intuitive than measurable. However, it is an excellent means to initially come to a “pass or fail” decision before any additional resources are applied to any market expansion effort. If you want to further quantify this analysis you can numerically weight each market attribute with your own specific market attribute priorities and give numerical “grades” to any or all new market entry candidates to calculate a weighted value for any new market.
Like trying to address any noteworthy marketing challenge, whatever you can do to quantify and measure your potential marketing alternatives, the more relevant your analysis, the better your management decisions will be.
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