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: Total Customer

A game plan for reaching Experience
and serving the right Purpose
markets, through right Attract and retain the
channels with the right most desirable customer
products and the right Increase sales with lower
value proposition cost
 4 ingredients of a winning go- to market
strategy

Ch5:
Ch3: Ch4: Channels
Market Customers and
Partners

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 New target markets
Computer hardware vendors
=
No experience
(Aug 2001) Sales: $ 28M 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 Fortune Small High
evaluation 500 Business tech
criteria vertical
Core Market Size *** ** **
Criteria
Market ** *** (?)
growth rate
Secondary Channel *** ** **
Criteria availability
 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 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

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.