As we approach the end of the first quarter, many of you will be focusing on identifying market opportunities to achieve your revenue and growth targets.
Finding market opportunities is a crucial challenge for many Start-Ups and SMEs. A study by CB Insights has shown that 42% of Start-Ups fail because there was no market for the product or service offering they had developed.
It is not good enough to develop an offering with incredible features and technology or one that tackles problems that are interesting to solve but does not address the needs of business customers.
Your offering must solve a MARKET PROBLEM—a problem significant enough that your company can solve it with a scalable solution. With a scalable solution, an offering that you can repeatedly sell thereby generating revenues and driving the growth of your company. To identify what market problems your company should focus on, you must LISTEN TO THE MARKET.
HOW TO LISTEN TO THE MARKET
Listening to the market means gaining an in-depth understanding of your company’s current and prospective industries and geographic markets in terms of their:
• Trends
• Market Performance
• Competitor Activities
We will discuss each of these briefly.
a. TRENDS
The types of trends which may impact your company can be quite varied depending on the industries being considered. However, the following three trends should be examined to identify market opportunities:
1. Customer Trends: In a B2B context, customer trends should be considered on two levels:
a. Business Customer trends: Changes in requirements, preferences and behaviours of the business customers you would sell to
b. End Customer trends: Changes in requirements, preferences and behaviours of your customers’ END customers
2. Adjacent Industries and Markets: It is important to understand the customer trends, innovations and technologies that are occurring in other industries. This may help your company identify opportunities it can pursue within its target industries and markets.
3. New technologies: These could be new technologies that are either used by incumbents in the industry to either provide additional value or improved service to customers. Alternatively, they could be new technologies being used by end customers.
The trends identified may present opportunities for your company in terms of providing new offerings or changes and enhancements to current ones.
b. MARKET PERFORMANCE
You must gain an in-depth understanding of how current and prospective industries and markets are performing. Some of the key metrics that should be examined as part of your market assessment include:
• Revenues
• Profits Generated
• Number of businesses operating
• Number of businesses that have entered
• Number of businesses that have exited
You should be examining each of these metrics both in absolute terms and growth rates.
c. COMPETITOR ACTIVITIES
When considering market opportunities, it is critical that you also “listen to competitors”. Even if the market performance and market trends are seemingly attractive, competitor activities can determine:
• If you will pursue certain markets
• How you will compete and operate within them
When undertaking a B2B competitor analysis, be sure you take a buyer-driven approach.
This means that your analysis must reflect the alternatives that buyers and their influencers within a particular industry could consider. Buyers and influencers may consider multiple alternatives to meet their objectives and requirements.
This may entail:
• Looking at direct competitors who offer similar types of product or service offerings
• Looking at indirect competitors who have different types of product or service offerings but will still enable the customer to achieve his or her desired outcome
For instance, a company seeking IT support may consider an IT consulting firm or consider hiring an independent IT specialist through a talent platform such as Expert360.
Your competitor analysis should include an examination of the following:
• Their key markets and customers
• Their core offerings
• Offerings to provide additional value to customers (e.g., consulting, financing, reporting)
• How they service and support customers
• How they engage with business customers
• Core capabilities (e.g.: skills, expertise, methodologies)
THINK GLOBAL NOT JUST LOCAL!
Do not confine your search for market opportunities solely to your domestic market. Consideration should be given to potential global opportunities particularly if your company has a niche or unique offerings and/or provides value adds which would give your offerings strong appeal.
Studies have found that SMEs that venture beyond their domestic borders tends to:
• Be more productive
• Pay higher wages
• Earn bigger profits
Furthermore, SMEs that manage to sell internationally, consistently recorded impressive export growth of 20% or higher over a 3-year period. (Source: Exporting: A Key driver of SME Growth and Profits).
WHERE TO LISTEN
There are many sources to help you gain a strong understanding of the industries and markets you operate in and the competitors that you will be up against.
Sources for listening to the market include:
• Market research reports: Produced by specialist firms such as IBISWorld and Gartner
• Consulting firm industry reports: Produced by global firms such as McKinsey and Accenture
• Industry and professional associations: Produce reports as well as host industry events such as roundtables and forums often attended by industry leaders and potential buyers
• Visits to your target market: Speak directly with potential customers to understand market characteristics as well as customer priorities and challenges
WHAT TO DO NEXT
Meet with your team, revisit your target industries and markets.
For each of these, ask yourselves:
- Do you have an in-depth understanding of market performance? Relevant trends?Competitor activities?
- Are there any gaps in understanding of these three areas that must be filled?
Are there potentially international markets that should be considered?
STAY IN THE KNOW!!
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