Ch3: Targeting the right markets

Go To Market Strategy

Overview
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 Strategy

Choice and alternative: increasing channel availability

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

Go-to-market strategy:

A game plan for reaching Purpose and serving the right markets, through right Attract and retain the most desirable customer channels with the right Increase sales with lower products and the right cost value proposition

Total Customer Experience

 4 ingredients of a winning go- to market strategy Ch5: Channels and Partners

Ch3: Market

Ch4: Customers

Ch6:

The product and The value proposition

Review: (Ch 2) The ten commandments of going to market

I. 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

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

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 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

Chapter3: Targeting the right market

Targeting the right markets

Its impossible to choose a successful mix of channels until you determine which markets those channels are supposed to reach. Pg73
Ch3: Market

What not to do: Enconix

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 the expanding needs

(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

Insignificant and biased marketing research

Change the direction: PRM focus Y2K specialists PRM consultants

Consumer goods manufactures Food distributor Computer hardware vendors

(Aug 2001) Sales: $ 28M

New target markets = No experience No understanding

The Four Pitfalls of Market Targetingand How to Avoid Them

Trap #1: Chasing untried and unproven blue sky marketsand neglecting solid, available business thats 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 #1

Chasing untried and unproven blue sky marketsand neglecting solid, available business thats 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 #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 #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, doesnt mean it is a good opportunity for you The right market depends on what youre 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 #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 force 2. People who deal with partners or distributors 3. People who know a lot about the competition

Six-steps for market 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 markets

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 criteria

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 against 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 *** ** *** Core Criteria Market Size Market growth rate Secondary Criteria Channel availability ** *** **

Small Business

High tech vertical ** (?) **

4. Validate markets with key 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 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 over time

Market conditions will change over timeit is inevitable This is not a one-time process

Should be repeated at least once per year

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

Best Practice: Marriott International

Thorough and creative in identifying new markets

Travelers are diverse and cannot be served by a onesize-fits all brand 13 stage evaluation process that includes competitor analysis, fit with corporate goals, and mathematical scoring to rank opportunities

Scientific approach to market evaluation

Ongoing market-tuning

What we learned

Know thyself Look toward your current customer base for growth opportunities Formulate growth strategies that build on your strengths

Critique

Tool for continuous market evaluation?

Permanent cross-functional team

Questions

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.