The Market Wedging Into a Market New

The Market

Wedging Into a Market New product or service Parallel competition Franchising

New product or service Truly innovative products are rare Innovate with a modified product, service or technology Success comes from being first with the best Watch out for “me-too” competitors (next slide) => defendability

Parallel competition Find a market which is not satisfied by current product or service offerings Provide an improved product (not merely copy an existing competitor) Seeking opportunities in parallel competition: Competitors who only believe in their own products; slow to incorporate other innovations Too much emphasis on technology means a competitor may not be providing what the customer wants Competitors only service certain niches; other customers left out Current competitors provide mass services to everyone; opportunity to serve a niche

Franchises Take a proven business formula and expand it Business advantage usually comes from geography and being able to deliver great service For the franchisor, franchising is a way of increasing distribution For the franchisee, franchising is a way to lower the risk of a new business

Innovation Adoption – The Common Marketing View Early Majority Early 34% Adaptors 13. 5% Innovators 2. 5% Later Majority 34% Laggards 16%

Cracks in the Adopters Curve. . . (Geoffrey Moore) Cracks Early Adaptors Innovators Early Majority Later Majority Laggards

. . . And The “Chasm” Early Majority Early Adaptors ators The Chasm Later Majority Laggards

Market Size Think Big, and try to find lots of applications to your product. Once you have thought big, make sure you segment properly A $200 million market? How does it break down?

Market segmentation is the process of dividing the total market for a good or service into several smaller, internally homogeneous groups. Segmentation is necessary because customers in a market have: Differences in buying habits. Differences in the way the good or service is used. Different motives for buying. In short: different needs!

Markets are segmented by: Intuition based on experience and judgment. Mimicking competitors and earlier market entrants. Performing a structured analysis that includes: Identifying the current and potential wants that exist within a market. Identifying the characteristics that distinguish segments. Finally, determining size of segment and how well it is being satisfied.

Ford vs. GM Henry Ford: “You can get the Model T in any color you like—as long as it is black. ” Alfred Sloan: “GM will produce a car for every purpose and a car for every purse. ” Results of market research: Chevrolet for entry-level buyers Pontiac for those moving up Oldsmobile for the growing middle class Buick for those who want a finer product Cadillac for status seekers

Positioning is the act of designing the company’s offer so that it occupies a distinct and valued place in the target customers’ minds. Usually the “-est” of something. Everyone remembers the first or best of any accomplishment.

Differentiation Developing a number of meaningful and valued characteristics of the product offering that distinguish it from a competitor’s product.

Ability to Provide a Unique Product or Service Find A Valuable Niche Stupid? Dot. coms !!! Price competition Value to customers

Differentiation Can anything be differentiated? Is there such thing as a commodity?

Differentiation – Product Form Features Performance Quality Conformance Durability Reliability Repairability Style

Differentiation – Service Delivery Installation Customer Training Consultation Sales support Promotional tools Repair Other Services? Loyalty programs Warranty/Extended maintenance

Differentiation – Other Image Symbols, brands Media Atmosphere Events Personnel Channel

Why Will Your Customers Buy From You? Take a hard look at your product or service and ask yourself, “Why would I need this thing? ” Ask the same question of several people who also use your (or a competing) product or service. If your product or service doesn’t exist, what are the substitutes? Who will be your 1 st customer? Your 100 th? => Many times a question of timing