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Back from your future 31 October, 2013

Posted by varoom in Marketing Plans, Strategy.
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Most early stage companies manage their business looking forward perhaps a year sometimes longer. This can sometimes cause an effect I call “Horizon planning” that is only working towards the business level you can safely see in the future. If you just aim for the business level can safely see you will only ever reach your visible horizon. What early stage companies should do is look beyond their business horizon into the future to define a business goal and work backwards from that goal to see if they are doing the right things today so that the business will achieve the future goal.

For example, let’s say, that your long range goal is to be ten times the size in five years. In year five you should be able to estimate how many customers you need to be serving to reach that business level, how many products will be sold and at what price point would they need to be achieving. From this 5th year view work back and estimate what shape the business needs to be in year 4 to make year five achievable in terms of customers/products/prices and for each year do the same until you return to the current year. Then you put on top of that your best estimates of success rates of turning customer leads into paying customers and then map in the cycle time you should need to turn a lead into a paying customer. If that meant that in order to reach 1,000 customers in year 5 you need to market to 1Million potential customers you can then see what kind of marketing program you must deploy in each year to reach out to enough potential customers that generates enough paying customers.

When this is done you often find that the marketing campaigns, branding strategies, and product roadmaps being envisaged today do not generate the size of potential business needed to allow growth to reach the finale goals.

The choice then has to be made: Either change the 5 year business goal as it appears unrealistic or substantially change the marketing strategy so that it generates the right size of customer base.

Grev

The first rule of Fight Club…. 27 March, 2013

Posted by varoom in Marketing Plans, Strategy.
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At a recent key note speech at the Bristol Sizing The Market event hosted jointly by the BCS, IET and South West Founders, I talked about novel ways where an early stage company could do some useful market research when sizing their potential markets. This covered ways in which you could dig down into parts of the web where information is not readily indexed by search engines, ways in which you can use online images to inform your market research and mining data from governmental reports. Formal market research either in report form or paying for targeted research are options not normally open to funding challenged enterprises.

I ended my speech with the saying, taken from the movie of the same name, what’s the first rule of Fight Club…is..Not to talk about Fight Club. What this means is that you should not talk about your product idea when sizing your potential market.

This raised a few eyebrows as some pundits’ claim that getting your product out and into the hands of customers sooner is better for your business and not disclosing your product appears to run counter to this.

Firstly I agree with the advice that getting early engagement and feedback from customers is vital for every early stage business. This feedback allows the product to be improved and become more fit for purpose.

However during the market research phase of a business, before the product even exists, you must not reveal your product concept to the market place. Doing so only risks a competitor starting a competing product development before you are ready and at the time of market research you don’t have a product, yet, to put into the hands of potential customers.

In the market research phase…. Don’t talk about Fight Club (your product idea). The purpose of this market research phase is to validate your understanding of the demand, gather some quantitative figures that allow you to put a business value on the market.

Avoid being a morsel in the food chain 14 December, 2007

Posted by varoom in Marketing Plans.
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If you are starting a small business with a new product or service which adds in to existing supply chain and you plan to sell it to some pretty large customers in an existing market you should carefully analyse the supply chain. Entering into this pipeline of companies, making up the various suppliers to that market and the major customers, is critical because it behaves like a food chain.

Analysing the food chain will tell you about the practises and behaviours of the major players, who the big players are, who the major customers are and if there are intermediate suppliers.

Large suppliers try to avoid having someone new in the way between themselves and their major customers making it hard to successfully operate in between a big supplier and a big customer. Because of this tendency to protect their customer relationships you need to have a clear strategy when entering the market.

Another factor is the risk tolerance of major customers. Some will not consider smaller, early stage, companies due to the risk this brings, the weakness in resourcing for support, future stability, continuity of supply, credibility and many others.

What operating mode should you consider when entering a new market? How can you mitigate against the incumbents behaviours ?

One approach is a partnership with a major player in the supply chain. In one agreement you can avoid being a problem for a supplier in the pipeline and also build credibility with customers by being associated with a known supplier.

Another mechanism is to adopt a disruptive approach. Enter the market deliberately to cause a breakdown in the existing pipeline and force players to change their approach. To do this you need a disruptive product or service which compels the market to take it seriously. Not all products can do this and you need to consider, carefully, which approach is feasible.

In conclusion, when you enter the marketplace not everyone will welcome you but adopting the right market entry can make a big difference.

Greville Commins