Finding
new market / business opportunities through organized innovation
Companies around
the globe today are struggling to survive or going through a major turnaround. They
are still struggling to figure out which way is right to take their business up,
which new markets, products, services they can possibly address. Companies wish
to find some or the other way, not just to survive but flourish, however
designing future road map seems covered with lots of uncertainties. Where
to turn for growth is the question mark for the many business owners.
C. level
executives of the companies are asking about ways to improve the health and
effectiveness of their innovation programs. This is a direct consequence
of global market trends. These companies understand that growth will not
come from doing more of the same business activities but is possible only by
changing it through innovation.
One common
question come from the most is; “How to efficiently find new markets for the
existing products / services?” There are a few basic approaches to
driving revenue growth:
® Finding new markets for existing products / services
® Extending the client (revenue) life of
services in their current markets
® Finding new applications for technologies or
methods
® Entering adjacent markets
Innovation is the
tonic to drive the health and success of the company. Let me address the
1st and the most important starting point “Finding new markets for
existing products / services”.
Fragment markets: The total of buyers in the segments for which
we have a whole product.
Defining each of
these markets is important in guiding our company’s operations and strategy,
and for communicating to interested parties, including investors, analysts and
the media. How we determine these market definitions is very complex.
Total
market (the potential market)
You need to
estimate your total market size since it helps both in narrowing down the
“other market” definitions, and also in permitting perspective on our
addressable market. Defining the total
market size is the easiest of exercises.
If you can estimate what percentage of the population wants our products
/ services at the price you intend to charge, and if your services are new and
lacks competition, then the calculation is quite easy:
(Target buyers population * percent buyers) *
Price. It sounds easy but it is not as simple as that.
Some analyst
firms like Gartner might already have estimated the annual spend for our
services category, and can provide top-line numbers. However, if a market is mature enough that
analyst groups have an accurate reading on total annual spend, chances are it
is not a market you want to enter!
Mature markets will always have some sharks and whales that eat start-up
small fishes.
Addressable
market
Addressable
markets are those that you can address, meaning the ones that you have an
actual chance of selling our products or services. This includes all buyers for whom you have a
reasonably packaged products or services solution, attached with certain
constraints. If your services can adequately serve multiple segments, then your
addressable market might be as large as the sum of the segments. But it rarely happens.
Convincing
market
You cannot start
selling your products / services to our addressable market; you actually need
to look at the smaller realistic market. You can even call it “Convincing
market“. These are the markets you can realistically recruit considering your
internal constraints.
Having an
addressable market of a million buyers is meaningless if you have a budget that
can reach 1k. Calculating your realistic market is easier than your addressable
market because the number of variables is smaller and the numbers are very clearly
defined. If you have been selling our
services for long time, you also know our win/loss ratios.
If your
calculations on your realistic market are sound, and if you can explain how
invested money will scale your market outreach, then your company management
will mostly believe your projections. If
you present the other way around, by saying you need money to sell to your
addressable market, they will send you home since there is no proof of results.
Segment
markets
As you know segments
are essential to marketing. You have to create a whole services portfolio to
attract buyers, but creating new services for a whole new market is
impossible. Thus, a segment is a
‘market’, and a collection of closely related segments may be a larger scale
market.
The
Steps in Measuring
There are two
approaches:
Decline:
Take each market and put restrictions
and a lot of caps on it to divert marketing efforts towards smaller
markets. For example, start with the
total market and add restrictions to discover new addressable markets, and then
do the same to the addressable market to find the convincing market. This is the least advised approach since it
may trigger dissatisfaction for your sales and marketing personals
Build-up:
Start with your business plan, track record
and current budgets and project your short- and mid-term realistic
markets. This is the right approach for
start-ups. Smart companies do it from the bottom-up, supported by real numbers
picked from reliable sources to build the definition. Quality numbers can come from surveys,
studies, analyst re-ports, sales records and other sources.
Author
Bhartesh Sagar
