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Ch3: Targeting the right marketsGo To Market Strategy
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Overview
I. Review of Chapters 1 & 2
II. Chapter 3: targeting the right markets1. Common targeting pitfalls
What not to do: Enconix2.Six steps to successful targeting
What to do: Marriott International3. What we learned4. Critique5. Questions
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Review: (Ch 1) Go-to-market Strategy
Choice and alternative: increasing channel availability
(P.7) Today, its no longer just about whatyou sell;its also about howyou sell it
Go-to-market strategy:
A game plan for reachingand serving the rightmarkets, through rightchannels with the rightproducts and the right
value proposition
Total Cus tom er
Experience
Purpose
Attract and retain the
most desirable customer
Increase sales with lower
cost
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4 ingredients of a winning go- to marketstrategy
Ch6:
The productand
The value
proposition
Ch5:Channels
and
Partners
Ch3:Market
Ch4:Customers
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Review: (Ch 2)
The ten commandments of going to market
I. Go-to-Market strategy must start with the customerExact information can gather from customer:product, channel, value proposition, markets
II. Aggressive use of low-cost channels will have adramatic 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 coverageand control
The high- control strategy vs. The high- coverage strategy
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3 reasons why e-channel is not work
VI. Getting channel cooperation is more important thanpreventing 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-marketstrategy 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-tomarket strategy:
X. To win big a go-to-market strategy must be innovativeand different
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Targeting the rightmarkets Its impossible to choose a successful mix
of channels until you determine which
markets those channels are supposedto reach. Pg73
Chapter3: Targeting the right market
Ch3:Market
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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 andinformation technology requirement of their
market : (1990s) ERP SCM CRM
Developed new software and service to meet theexpanding needs
What not to do: Enconix
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(1998) Change the direction:Y2K focusSoftware 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 focusY2K 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
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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, whichoften 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 internalsources of information when evaluating new
market opportunities
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Market targeting trap #1
Chasing untried and unproven blue sky marketsandneglecting solid, available business thats close to home
Usually, the pursuit of entirely new market opportunities is the slowest, most expensive, leasteffective, 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 uncharted2: 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 couldever handle
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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 inflatedestimates
At the minimum, get multiple, independent sources of information whenevaluating 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 marketresearch by doing some of the work yourself
The bottom-line is that you should never make the decision to participate in amarket based solely on the basis of 3rd party research,
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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
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Marketing target trap #4
Ignoring crucial internalsources 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 toignore
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
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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
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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
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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!!!
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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
marketsMarket
evaluation
criteria
Fortune
500
Small
Business
High
tech
vertical
CoreCriteria
Market Size *** ** **
Market
growth rate
** *** (?)
Secondary
Criteria
Channel
availability
*** ** **
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4. Validate markets with key
prospects
Purpose: final check of your best
potential markets
Recommendation:
Call 30 customers in target marketsover 3-4 weeks
Measure how receptive they are
Check for any potential sales
Produces group of attractive
markets ready for you
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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
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6. Fine-tune markets over time
Market conditionswill 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 viewof their target markets, and so should you!!!
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Best Practice: Marriott International
Thorough and creative in identifying newmarkets
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 competitoranalysis, fit with corporate goals, and mathematical
scoring to rank opportunities
Ongoing market-tuning
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What we learned
Know thyself
Look toward your current customer base forgrowth opportunities
Formulate growth strategies that build on your
strengths
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Critique
Tool for continuous market evaluation? Permanent cross-functional team
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Questions
How can focusing on existing customers help a
company achieve growth?
Opportunity to increase share of customer, informationconcerning 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.