The Best Market Opportunities Go to Companies That Test the Waters (Marketing Memo, April, 2005)
Your company has spent five years in R&D (longer for life sciences products), and you have burned through your life savings and millions in venture capital. You want to build markets quickly because you need revenues. To make sure that you are not building the wrong market, find answers to the following questions: "Which market segment should we target? Where is the pain? Where are the opportunities? What are the barriers?"
WHICH MARKET SEGMENTS TO TARGET?
Before you can build markets, you must identify the right ones for your company. If you want to introduce a product or service, determine which industry and which segment within that industry needs your products or services. Talk to prospects in the target market to verify your assumptions.
Is your telecom product or service best suited for equipment manufacturers or for carriers? Is your software tool suitable for discrete manufacturers that make countable items (mass spectrometers), or is it more suitable for process manufacturers that make generic products (methyl alcohol)? Is your diagnostic equipment suitable for in vitro diagnostics (lab and near-patient diagnostics) or for in vivo (animal) tests? Your assumed target market may not be your actual target market. You may have to rethink your product or service and/or find another target market.
WHERE IS THE PAIN?
While you are developing products or services, talk to prospects to identify their practices and unmet needs. For instance, the healthcare industry needs technology for recruiting patients for clinical trials and, as the Vioxx case demonstrated, technology for managing trial results.
Talk to prospects to discover whether your offering will actually help them. After years of research, a medical device company discovered that emergency medical providers, their assumed prospects, could not use the company's cardiac monitor while responding to emergencies. Responders could obtain as much patient information by looking at patients and using a stethoscope as they could by using the monitor.
WHERE ARE THE OPPORTUNITIES?
To validate your choice of market and segment, look for market drivers, such as new technology, buyer demand, and new government regulations.
WHAT ARE THE BARRIERS?
Still other issues may make you question whether you have identified the right target market. Examples are timing, competition, use of substitutes, and special industry requirements.
Reprinted with permission of Mass High Tech, which published the article on Feb.7-13, 2005.
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