Ch3: Targeting the right marketsGo To Market Go To Market

StrategyStrategy

OverviewOverview

I. Review of Chapters 1 & 2

II. Chapter 3: targeting the right markets 1. Common targeting pitfalls What not to do: Enconix 2.Six steps to successful targeting What to do: Marriott International 3. What we learned 4. Critique 5. Questions

Review: (Ch 1) Go-to-market Review: (Ch 1) Go-to-market

StrategyStrategy Choice and alternative: increasing channel availability

(P.7) Today, it’s no longer just about what you sell; it’s also about how you sell it

Go-to-market strategy:

A game plan for reaching and serving the right markets, through right channels with the right products and the right value proposition

Total CustomerExperience

Purpose

• Attract and retain the most desirable customer • Increase sales with lower cost

4 ingredients of a winning go- to market strategy

Ch6: The product and The value proposition

Ch5: Channels and Partners

Ch3: Market

Ch4: Customers

Review: (Ch 2) Review: (Ch 2) The ten commandments of going The ten commandments of going to marketto marketI. Go-to-Market strategy must start with the customer

Exact information can gather from customer: product, channel, value proposition, markets

II. Aggressive use of low-cost channels will have a dramatic impact on profits

III. How you sell has to fit with what you are selling

Customer, Economics, Complexity

IV. There is Always a tradeoff between market coverage and control

The high- control strategy vs. The high- coverage strategy

3 reasons why ‘e-channel’ is not work

VI. Getting channel cooperation is more important than preventing channel conflict

VII. You cannot be everywhere at all times for every customer

VIII. The business model has to be sound for a go-to-market strategy to succeed

V. Not Every go-to-market solution has an ‘e’ in it

IX. It takes time for new channels to become productive. Patience is necessary

12 to 24 months to build and roll out a new go-to market strategy:

X. To win big a go-to-market strategy must be innovative and different

Targeting the Targeting the rightright marketsmarkets

“It’s impossible to choose a successful mix of channels until you determine which markets those channels are supposed to reach.” –Pg73

Chapter3: Targeting the right market

Ch3: Market

Picked the wrong market: Enconix(1998) 246 employee and over $55 million in sales

Disciplines and savvy business development focus Niche of small-to-mid sized industrial manufactures with $50 to 250 million in revenue

Developed understanding of the needs and information technology requirement of their market : (1990s) ERP SCM CRM

Developed new software and service to meet theexpanding needs

What not to do: EnconixWhat not to do: Enconix

(1998) Change the direction: Y2K focus Software developers Y2K specialist

• Less impact of Y2K: the failure of Y2K focus

• ERP business had changed dramatically

• Customers reduce the IT spending due to Economic slow down

Change the direction: PRM focus Y2K specialists PRM consultants

• Consumer goods manufactures • Food distributor• Computer hardware vendors

Insignificant and biased marketing research

New target markets

(Aug 2001) Sales: $ 28M

=No experience No understanding

The Four Pitfalls of Market The Four Pitfalls of Market Targeting…and How to Targeting…and How to

Avoid ThemAvoid Them Trap #1: Chasing untried and unproven “blue sky” markets…

and neglecting solid, available business that’s close to home (p. 81)

Trap #2: Putting too much weight on 3rd party market research reports, which often have inaccurate, agenda-driven estimates

Trap #3: Assuming that markets can be “good” or “bad”, outside of the context of your unique offerings and your business goals

Trap #4: Ignoring crucial internal sources of information when evaluating new market opportunities

Market targeting trap #1Market targeting trap #1 Chasing untried and unproven “blue sky” markets…

and neglecting solid, available business that’s close to home

Usually, the pursuit of entirely new market opportunities is the slowest, most expensive, least effective, and least certain way to increase revenues

-Reasons Why??? 1:Customers: New customers in new markets are difficult to

reach 2:Products: New products are much more difficult to sell than

existing ones

Companies fall into two basic camps: 1: The “Blue Sky” approach (e.g. Enconix)

From the established to the uncharted 2: The “Build on your strengths” approach

Grab the low hanging fruit first, then go higher

To avoid this trap remember: Most Companies have more potential business then they could ever handle

Market targeting trap #2Market targeting trap #2 Putting too much weight on 3rd party market

research reports, which often have inaccurate, agenda-driven estimates

Recently, many market research firms have been publishing highly inflated estimates

At the minimum, get multiple, independent sources of information when evaluating a market

Take the time to learn how these conclusions are being made

In the end, you can eliminate the risks of over-reliance on 3rd party market research by doing some of the work yourself

The bottom-line is that you should never make the decision to participate in a market based solely on the basis of 3rd party research,

Market targeting trap #3Market targeting trap #3 Assuming that markets can be “good” or “bad”, outside

of the context of your unique offerings and your business goals

Just because a market looks promising, doesn’t mean it is a good opportunity for you

The right market depends on what you’re trying to sell, and if that new potential market fits within your business goals

Example: Steady growth vs. maximum sales growth

To avoid this trap remember, there is no such thing as a “good” or “bad” market, each should be evaluated with respect to your unique business situation

Consider the costs, risks, and the time-horizon of the market entry

Marketing target trap #4Marketing target trap #4 Ignoring crucial internal sources of information

when evaluating new market opportunities

Within most organizations lies a wealth of information about opportunities and risks in the market place which most choose to ignore

To avoid this trap look to three sources of market insight within your company:

1. The sales force2. People who deal with partners or distributors3. People who know a lot about the competition

Six-steps for market Six-steps for market targeting*targeting*

1. Develop a universe of markets 2. Choose market evaluation criteria 3. Evaluate target markets against

criteria 4. Validate markets with key prospects 5. Prioritize markets for penetration 6. Fine-tune target markets over time

1. Develop universe of 1. Develop universe of marketsmarkets

Generate list of potential markets Consider which markets offer good opportunities Which are similar to those you are already

successful in? Get input from those within the company Add markets recommended from other

sources Narrow down removing markets which:

Have no need for you product or service Have prohibitive entry costs Legal or regulatory restrictions

2. Choose evaluation 2. Choose evaluation criteriacriteria

Choose a workable number of criteria Criteria can include:

market size market growth rate ability to exert brand leadership cost of entry cost to serve channel availability competitive density strategic fit

**There is no “right” set of criteria for everyone!!!

3. Evaluate targets 3. Evaluate targets against criteriaagainst criteria

Evaluate using a scoring metric

May not find information for all criteria

Be ready for information gathering

This step should produce 5-10 “good” markets

Market evaluation criteria

Fortune 500

Small Business

High tech vertical

Core Criteria

Market Size

*** ** **

Market growth rate

** *** (?)

Secondary Criteria

Channel availability

*** ** **

4. Validate markets with 4. Validate markets with key prospectskey prospects

Purpose: final check of your best potential markets

Recommendation: Call 30 customers in target

markets over 3-4 weeks Measure how receptive they

are Check for any potential sales Produces group of attractive

markets ready for you

5. Prioritize markets5. Prioritize markets

Two schools of thought on prioritization: 1) Choose market which scored best

evaluation Pursues ‘best’ market first, but may not

produce best results 2) Choose market which offer opportunities

right now Decision should relate to time and investment

costs needed to penetrate market Create a “plan” for market penetration

6. Fine-tune markets 6. Fine-tune markets over timeover time

Market conditions will change over time—it is inevitable

This is not a one-time process Should be repeated at least once per

year

The world’s best companies take a dynamic view of their target markets, and so should you!!!

Best Practice: Marriott Best Practice: Marriott InternationalInternational

Thorough and creative in identifying new markets Travelers are diverse and cannot be served

by a one-size-fits all brand Scientific approach to market

evaluation 13 stage evaluation process that includes

competitor analysis, fit with corporate goals, and mathematical scoring to rank opportunities

Ongoing market-tuning

What we learned…What we learned…

Know thyself Look toward your current customer

base for growth opportunities Formulate growth strategies that

build on your strengths

CritiqueCritique

Tool for continuous market evaluation? Permanent cross-functional team

QuestionsQuestions

How can focusing on existing customers help a company achieve growth?Opportunity to increase share of customer, information concerning new market possibilities

Name three internal sources of information available when evaluating new markets.Sales force, People who deal with partners or distributors, and People who know a lot about the competition.