If you have a solid marketing plan in place, it is far easier to say "yes or no" or "continue or abandon" to ideas from customers or from within the organization, a position outlined in a previous column.
Mapping the marketing context is ultimately about determining how favourable conditions are for your brand and your product or service. There are five key questions to address:
Define the arena
Defining the market is really about making three decisions.
- Who, in rough terms, are we selling to?
- Where, roughly, are we going to operate geographically?
- How would we generally describe the product or service market we are in?
Defining the arena can be quite straightforward if, say, you are selling bread in grocery stores in Canada – or quite difficult if you are merging medical expertise with technology and it is unclear whether the United States or Europe is more likely to adopt the solution.
Well-defined arenas tend to focus the marketing planning and lead to greater success.
Market size and growth rate
This is notoriously tricky. In rare instances, the market size for your exact arena will be published and readily available online, or in a report you can pay for. In most instances, the market size will have to be estimated or calculated as you will have defined your arena in a way that is different or not typically tracked. When estimating or calculating a market size, the goal is normally to get to a gross sales or annual revenue figure. Using three or more methods – no one method will ever be right – will let you arrive at a range that is typically sufficient. Ultimately, it's about confirming that the market is big enough.
Growth rates will either be findable, or they can be calculated by looking back over the previous few years for a trend and then extrapolating it forward. It is unwise to go back more than three years, since recessionary numbers are not good future indicators.
We want to see large markets, with hundreds of millions of dollars, combined with good growth rates – high single digit or low double digit – but not necessarily rapid growth rates. Those markets can be tricky to serve.
Mapping the competitors
Similar to defining the arena, deciding on the categories of competitors will likely be harder than identifying them. Once a competitive set is determined, your checklist for each will include:
- Estimated market share for each.
- Value proposition and competitive position for each.
- Biggest strength and weakness for each.
Competitive intensity is quite subjective, and seeking out industry insider perspectives is usually the best bet. First-mover advantage can often be a myth: the first mover has to spend to create the market, and it will make lots of mistakes. It's best to favour markets with established but weak or languishing competitors.
Mapping the channels
The channel structure in most industries will be obvious – direct, online, retail, distributor – but the quality of channel partners and the brand and revenue trade-offs are often not. Determining how important it is for you to control the brand and customer experience, and then evaluating those decisions against speed to market or ability to get to targeted customers is critical at this stage.
Channel partners who support or share the branding and customer experience touch points are far more favourable to traditional distribution or sales partners.
Economic, sociological, environmental, technological, political and demographic trends
Running a PEST analysis will uncover most of the trends you are looking for, and it will be fairly easy to get good quantitative data for most of these factors. However, it will be a qualitative analysis and judgment call as to what they mean for your business.
Stable economic and political conditions are most desirable – though recessionary economies are not as scary as unstable economies, since even recessions create opportunities depending on the value proposition. The sociological, environmental, technological and demographic implications will depend entirely on what you are selling and to whom.
Special to The Globe and Mail
Mark Healy, P.Eng, MBA, is a partner at Satov Consultants – a management consultancy with practice areas in corporate strategy, customer strategy and operations strategy. Mark's focus areas inside the customer strategy practice include consumer insights, customer experience, innovation and go-to-market strategy. He is a regular speaker and media contributor on topics ranging from marketing to strategy, in telecom, retail and other sectors. Mark is known as much for his penchant for loud socks and a healthy NFL football obsession as he is for his commitment to Ivey and recent Ivey grads. He currently serves as chair of the Ivey Alumni Association board of directors. Mark lives with his wife Charlotte and their bulldog McDuff in Toronto.
Join The Globe's Small Business LinkedIn group to network with other entrepreneurs and to discuss topical issues: http://linkd.in/jWWdzT
Mark Healy