The starting point for identifying product/markets is to focus on first, the markets. There are two criteria that we use in Lean Marketing to assess or to evaluate markets.
The first one has to do with how attractive is that market?
Attractive of markets could be defined in terms of the market growth rate. Is it a growing market or is it a market that is in decline? For most purposes we probably want to target markets that are growing as opposed to in decline. We may want to look at the competitive intensity of the market. Is it a highly competitive market or is it more of a blue ocean type of market? One where there are few competitors or preferably even none.
What is the revenue flows within that market? What’s our market share position? Who are the dominant players? There’s any number of different criteria that we can use to assess the attractiveness of a particular market.
The second criterion is the ability to compete.
Now we take a look at how capable are we in competing within a potential market. That goes back to this concept of what are our competencies?
And one of the things we may want to look at from competitive standpoint is what the qualifiers are? What are the must haves? Do we qualify for that particular product/market or are we going to have to invest additional resources to qualify?
Second, do we have a product line that has both the width and depth of the market? Can we successfully provide product and product support? That’s a very important point. Do we have the product support systems to support the product lines once we are marketing there?
What about our distribution system? Do we have the right network setup? Are the dealers that we have adequate or the brokers, the agents, the middlemen, that type of thing? And again, do we have the right personnel?
So by matching the attractiveness of the market with our ability to compete, we can then begin to prioritize different potential markets. Clearly we want to target those markets that are highly attractive and for which we have a very strong ability to compete. Then we want to target attractive markets that we might have a moderate ability to compete in. We also want to be able to ask the question, what do we need to do to improve our capacity to compete with any of those markets?
This is an approach that is good not only for those companies that are embarked on a marketing development strategy where they’re looking to enter new markets and they’re trying to assess the efficacy of any market, but it’s also a good thing for companies to do on an audit basis of what their current markets are because a lot of those companies have inherited markets and been serving them.
From time to time markets change, their attractiveness will change, the market growth rate may drop, and the competitive intensity may have increased significantly, the revenue flows have declined. So it’s a good opportunity for the company to take a look at what they are currently doing and then make the assessment as to whether or not those markets are the right ones for the company to be in.
Leaders who take the time to really focus and understand their markets are super tough competitors. That’s why they’re leaders and not followers.
The following was derived from a conversation between Dr. Reidenbach creator of the 5Cs of Driving Market Share and me.
