The good news is: new high-potential market opportunities are typically discovered closer-in than you would\u00a0imagine. Some await discovery hidden in the clutter of your current customer list. Others find you, not the other way around.\u00a0 In either case, your task is to recognize and quickly assess their viability.<\/p>\n
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The biggest barrier is not that opportunities do not exist, but rather that firms have not dedicated a resource, and put in place the discipline to continually explore, vet and test their viability. New market opportunities can quickly and positively impact the bottom line. So, the key to growth is learning a) how to consistently be on the lookout, b) how to recognize possibilities and c) how to test their reality and viability.<\/p>\n
Places for discovery:<\/span><\/p>\n Here are six places that have created the biggest up-sides for our clients.<\/p>\n If you think you\u2019ve already looked in these places, you might want to check again after reading this blog post.<\/p>\n Your small customers:<\/span><\/p>\n Some of the most significant growth opportunities we have seen have come from analysis of small, unexpected customers that have, under the radar, slipped into a firm\u2019s customer list.\u00a0 They are typically considered insignificant and\/or outliers for two reasons: 1) the revenue amount represented was relatively low and 2) they came from outside the primary market targets of the firm. However, a quick analysis in several cases revealed that these customers were actually representative of much larger markets \u2013 markets with large numbers of customers with the same significant unmet needs that were already being satisfied by the firms\u2019 product lines better than any other offering available.<\/p>\n In one case, the small \u201cinsignificant\u201d customer was representative of 20,000 similar organizations nationwide, none-of which had as good a solution to their problem as was being delivered by the firm\u2019s software. This new market opportunity was tested and validated within 90 days. Growth over the next two years in that market more than doubled the company\u2019s revenue<\/p>\n Well-known business thought-leader, Peter Drucker, in his book \u201cInnovation and Entrepreneurship\u201d, named this phenomenon \u201cthe unexpected success\u201d. \u201cUnexpected successes\u201d are characterized by customers buying your product from markets you had not considered, getting benefits you had not conceived because your solution was inherently better than alternatives they had to consider.<\/p>\n This common dynamic means that someone in your firm should always be asking your \u201cunexpected-success\u201d customers these four questions:<\/p>\n The lack of a consistent asset dedicated to this analysis, delays the discovery of breakthrough new opportunities.<\/p>\n Your customers\u2019 unmet needs:<\/span><\/p>\n The iPad, the SUV and the microwave oven are examples of new product ideas that were formulated to meet customer needs that were \u201csubconscious\u201d or simmering just below the surface of a customer\u2019s \u201cexperience\u201d with current solutions. The key words in this sentence are \u201csubconscious\u201d and \u201cexperience\u201d.<\/p>\n Typically, in smaller companies, not enough time is dedicated to thinking about the subconscious needs of customers and the customer use experience.\u00a0 Most product development roadmaps we have seen are driven by; a) urgent responses to competitive moves, b) the drive to reduce product costs, and c) evolutionary feature extensions to current offerings. None of these create new market breakthroughs.<\/p>\n New market breakthroughs come from insights into customer behaviors, problems and product usage.<\/p>\n Your competitors\u2019 current markets:<\/span><\/p>\n In the 1970\u2019s GM (50%), Ford (25%) and Chrysler (15%) collectively owned 90% or more of the United States automobile market. Now some 40 years later, imports represent a huge portion of that same market. The lesson learned is that if you do not fragment your own market, a competitor will do it for you.\u00a0 The caveat: In each segment of the competitor\u2019s market you target, you must have a relatively advantaged solution.<\/p>\n Imports won their initial US auto market share by fragmenting the US automaker\u2019s markets and offering a value proposition that represented a significant value proposition improvement in one specific segment \u2013 the industry\u2019s most vulnerable \u2013 small, economic compact cars. After establishing that foothold and clinching their quality reputation in the compact segment, they then stepping-stoned through the other segments \u2013 leveraging that quality reputation.<\/p>\n Your new market opportunity may simply be created through a focused initiative at a segment of your competitor\u2019s markets that is most vulnerable due to that competitor\u2019s neglect of the segment. This is particularly effective if the competitor is much larger.\u00a0 You should never attack a competitor on all fronts at once.\u00a0 However, all competitors are vulnerable to fragmentation and differentiation aimed at dissatisfied or under-satisfied customers in some sub-segment of their business.<\/p>\n Your channel to market:<\/span><\/p>\n Most firms decide on their channel-to-market based on what benefits it provides in market coverage. The market (customers) really only care about the services the channel provides to them \u2013 not the exposure it provides to the firm. If the channel is under-satisfying the needs of the customers\u2019 this represents an opportunity for a) increasing value delivered and compensation received, or b) increasing market share based on service.<\/p>\n Amazon was launched as a channel alternative to brick and mortar book stores.\u00a0 It didn\u2019t capture all book customers \u2013 but it did exploit a vulnerability and weakness of the then current book stores by offering convenience and in-home browsing. It created the on-line-bookstore market.<\/p>\n Your sales pipeline:<\/span><\/p>\n A sales person\u2019s effort in pursuing an opportunity is typically influenced by three factors: a) the anticipated initial purchase amount, b) the magnitude of the long-term opportunity as communicated to the sales person by the customer\u2019s purchasing department and c) the commission rate associated with the opportunity.<\/p>\n The first thing to recognize is that customer predictions of ultimate volume activity (part b above) are typically overstated \u2013 many times to hold up a carrot in order to exact the best pricing for whatever it is you are going to quote. More important than the volume prediction, is its logic. It should never be accepted at face value. Discovering the logic is what separates pursuit of a typical opportunity from discovery of a breakthrough market.<\/p>\n To test the validity and logic of a large prediction the savvy sales organization pursues a revealing question chain:<\/p>\n Purchasing managers almost always over-predict the anticipated adoption of their new products. However, the answers to the two questions above may reveal a truly large and compelling market opportunity. For example, a firm that makes metal fabricated parts for military and aerospace customers may find in its pipeline an opportunity for a part for a medical device.\u00a0 That opportunity may represent a number of situations: a) someone looking for a competitive quote to replace their current supplier, b) the need for a part for an evolutionary incremental product or c) a breakthrough new product.\u00a0 Looking at the face value of the opportunity may not reveal the truth behind the opportunity.\u00a0 Only by delving deeper can the truth of new market opportunities be discerned.<\/p>\n International:<\/span><\/p>\n The demographics and economics of India and China are intriguing. The average age of the population is much lower than in the United States, their educational levels are growing, their income per capita is growing and their middle class is also growing.\u00a0 Indra Nooyi, the current CEO of PepsiCo, when asked where her company will be investing in the near future stated those facts \u2013 along with two population statistics that clinched the answer.\u00a0 India has a population of 1.1 Billion people and China a population of 1.5 Billion people. (Current stats are 1.2 Billion and 1.3 Billion people respectively).\u00a0 For PepsiCo the investment decision is made.<\/p>\n Those investments will require infrastructure and support \u2013 a \u201cdemand-halo\u201d \u2013 from smaller companies, creating an opportunity for international expansion.\u00a0 Navigating the local laws, regulations, cash repatriation and other idiosyncrasies of international expansion is a bit of a challenge but it can be done.\u00a0 If you don\u2019t do it, someone else will \u2013 likely some competitor.<\/p>\n Conclusion:<\/span><\/p>\n Given the incredible amounts of money spent today on branding, websites, Search Engine Optimization, sales promotions and tradeshows it is sad that a small portion of those funds do not find their way to support a \u201cmarket opportunity sleuth\u201d (MOS).\u00a0 Even if your firm has only 10 people in it \u2013 assigning the job of MOS to even one-half a person would be wise.\u00a0 That person should be responsible for scouring the areas listed above and reporting monthly on findings. After all, even if only one breakthrough opportunity is discovered in the course of a year \u2013 the investment would be worth it.<\/p>\n Read our related posts \u201cDiagnosing Stalled Sales<\/a>\u201d and \u201cFoundational Marketing<\/a>\u00a0– and please send us your comments.<\/p>\n\n
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