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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.