12
Mar

Plan on an ongoing intelligence gathering effort on competitors within your business plan

In order to formulate a competitive market plan it is essential to collect accurate information about competitors. Perhaps for this reason alone, with regard to developing an entirely valid understanding of the business operations of competitors in a market, it makes sense for businesses of any size to include an ongoing intelligence gathering activity in the business plan. Without an accurate understanding of the costs that competitors incur bringing products to market, the history of their client engagements (successes and failures), and, finally, the features and benefits of their product offerings it is not possible to assemble key points in a competitive strategy, for example:

  • the unique value of your product and/or
  • a method of producing a product at a cost substantially below that of competitors

It is indicative of the few businesses that actually succeed vs the number that are started that, unfortunately, little substantive information is collected on the above two points beyond mere conjecture. Where the health of a business is the matter at hand, it is not adequate to act based upon conjecture. An accurate sense of specific market realities must be assembled if some level of success is to be achieved.

We offer this type of competitive intelligence gathering service. We welcome requirements to assemble an overview of a specific marketplace, to formulate a picture of methods at competitors and, finally, to put together a thorough analysis of the product offerings from specific competitors. Typically we summarize the results of this type of work in a management report suitable for presentation to executive management and/or a board of directors. We highly recommend that we have an opportunity (through an engagement) to take our work a step further, working closely with a CEO to identify opportunities to craft unique offerings for specific niches. Finally, we will happily analyze product development systems to identify areas were costs can be reduced to meet the challenge of achieving the position of lowest cost competitor in a given market.

If you believe that your market opportunity is substantial, then why not allocate financial resources to ensure that you have made a best effort at achieving the position in the market that you are after? Literally thousands of dollars in unnecessary business expenditures can be saved by focusing first, and foremost, on formulating an accurate picture of your competitive position in a market. The resources required to put together this picture constitute a bargain when compared with the cost of operating largely ignorant of competitive offerings.

Please call Ira Michael Blonder at +1 631-673-2929 to further a discussion about your need for a competitive market analysis. You may also email Mike at imblonder@imbenterprises.com

© IMB Enterprises, Inc. & Ira Michael Blonder, 2012 All Rights Reserved

21
Jan

Develop a Thorough Familiarity with Competitors to Keep Market Development In Perspective

I never counsel clients to enter markets where competitors cannot be identified. The only exception, as I see it, is a market that services a niche set of needs that have arisen from a larger, more familiar and competitive market.

For 95% of innovative technology businesses, markets without competitors are, at best, not worth entering and, at worst, traps capable of sinking entire businesses. Most so called break through products are really, when analyzed, solutions to needs that are either confined to very small markets for which a first provider with little capital may be able to capture most of the business, or to needs that have been underestimated or otherwise unknown (in a television interview aired in January, 2012, Bill Gates communicated some of his own “shock” at the great success that became of the Microsoft that he and Allen founded. He noted that neither of them ever planned on the massive size of the market that would develop for personal computers). With regard to the former type of opportunity, once ensconced in the leader position, a pioneer will be able to fend off competitors “late to the dance”. But these types of opportunities are seldom readily apparent. Usually a first provider of this type will be founded by someone who has personally spent time as a user in the market, knows the need very well as well as the solution.

With regard to the latter, big splash break through products require lots of capital, not only for developing products and solutions, but also for developing and nurturing markets themselves. Therefore, these opportunities are usually the stock and trade for Venture Capitalists with deep pockets. Not the everyday turf trod by under the radar technology driven businesses.

Therefore, business plan 101 dictates that chosen markets must include the participation of competitors as a demonstration of the viability of the revenue potential of the market to feed the business. Once these markets have been identified it is essential that as much information be gathered about competitors as possible. This information will prove to be invaluable when it comes time to select a distribution model for a product, service or solution. After all, why leverage a channel distribution strategy if no one else in your vertical is doing the same? They may well know something that you do not. In this case, what you may not know may be able to hurt you in the form of dollars spent needlessly on intermediaries who no one else is using to win their business.

I am presently working with clients facing just this type of challenge. I welcome opportunities to discuss specific needs. Please call me at +1 631-673-2929 to further a discussion.

© IMB Enterprises, Inc. & Ira Michael Blonder, 2012 All Rights Reserved

18
Jan

A Post on Rising Above the Commodity Fray

I met recently with the president of an Independent Software Vendor (ISV) with software offerings built with the Java® programming language who expressed disbelief when I let him know that his prices are too low. I later learned that when I took a break to leave the meeting he asked of a trusted colleague “what does he mean that our prices are too low? Each of our competitors are priced into our range? How can we raise our prices?” I should state that this ISV offers a product in the online marketing category, a piece of software that delivers lots of reports about search engine placement for products by keyword, etc. I should also note that I’ve written elsewhere in this blog about the controversy implicit to online marketing for the sale of complex products to global businesses and other large organizations; specifically does marketing online get you anything besides a big dose of commoditization if you’re offering complex products with intangible value to an uneducated prospect? From my conversation with this CEO I must say that the same question applies to vendors of online marketing software, as well.

All well and good, but what’s relevant to marketing and selling big ticket software and other technology products to global businesses and other large organizations in 2012? Specifically that the old adage, “a sales person without a sense of urgency is no sales person at all” rings true. With a product with an entry level price of $199.95, lots of competitors, and a limited universe of prospects, I am of the opinion that the price of this software has to go up, one way or another, if this CEO’s business is to grow to any size of significance. I should also add that this ISV is located in Eastern Europe, where the cost of living is substantially lower than the cost of living here in the States, but no matter. Opening offices internationally will be an inevitable step forward for this ISV if/when they do manage to grow; therefore, at some point they will have to pay out higher salaries which will put lots of pressure on the present pricing model.

When I returned to our meeting I attempted to educate this CEO that he should think about turning some weaknesses of his product into the foundation of his higher pricing model. Our discussions illuminated the fact that this ISV assumes that its customers are presently only utilizing 10% of the capability of their product. My response was, is there a common additional value that most any customer can derive from the remaining 90% of the product that is under utilized? If there is such a common additional value, then why not take a proportion of that additional value (in hard dollars and cents) as an entirely justified additional cost for customers who want, need, and “must own” the remaining 90% value that is presently alluding them. Of course, then let’s take that proportion and build it into the pricing model of the product.

There is an old time precedent to this strategy. Just look back to the mid 1980s when Xerox Corporation successfully sold high end laser printers into the global business market against HP LaserJets. How did Xerox bring off these sales against a competitor with drastically lower prices? Xerox took the steps to integrate its laser printer products into the predominant computing environment of the mid 1980s–distributed mainframe and PC computing. Fact was that their printers had the necessary “hooks” to print mainframe data where HP’s products did not. It doesn’t matter that the required connectivity was rather trivial. What matters is that Xerox had it and HP did not. Xerox made the sales at a higher price point within a heavily commoditized market.

I specialize in these types of discussions. If you have a technology product with some broad market appeal for global businesses and other large organizations, I’d like to hear from you. Give me a call at +1 631-673-2929.

© IMB Enterprises, Inc. & Ira Michael Blonder, 2012 All Rights Reserved

14
Nov

Pick Market Niches with Great Care — Ready Fire Aim Won’t Work for Market Niche Decisions

Building markets on monies spent, but for solutions that are under utilized, is a problematic endeavor. Consider that 1) the big purchases have already been made and 2) that the solution purchased has not proved to be popular.

Consider the enterprise business market for social collaboration software. This market includes products like Microsoft® SharePoint® and IBM® Lotus Notes. Traditionally purchases of SharePoint and Notes have been plagued by low levels of user adoption within the enterprise. Answering “why” adoption rates are low has proven to be a risky endeavor as research power houses like Forrester Research (http://www NULL.forrester NULL.com) are at a loss to explain clearly a pervasive reason for low adoption rates. Rather, Forrester and others contend that low adoption rates are the result of a combination of factors, including low levels of “user friendliness” in the features of SharePoint and Notes as well as a tendency to push users into re-engineering daily business processes.

Business Process Re-engineering (BPR) is neither a trivial thing to achieve, nor an area where most consulting firms ought to venture to find new business. Sales cycles are very long. As well, the typical BPR solution requires the buy-in of multiple silos from within the enterprise; for example, for banking and finance, Audit, Compliance and MIS/IT may all have to endorse the same solution before an order will be placed. Building consensus among these three powerful organizations can literally be a multi year effort that will prove expensive, not only with regards to the amount of time required to pull off the deal, but, perhaps, in terms of additional parties who may have to be added to the sales team (for example, an ex CEO or other key influencer who can persuade all three groups to endorse the solution) at a costly price.

If major BPR is required to resuscitate the fortunes of Notes, or SharePoint within a business, then why go there? Rather, as I see it, a better case for building a niche upon a purchase already made is to demonstrate how SharePoint or Notes can be applied to an additional need, one that is compelling, but not addressed properly within the enterprise. Once again, turning to banking and finance, the need for constant compliance reporting across this highly regulated industry will provide a greater driver for an attractive market niche with a substantially attractive value proposition. Just compare the cost of using something already purchased, for example SharePoint, for compliance reporting vs the cost of licensing IBM OpenPages. No brainer?

© IMB Enterprises, Inc. & Ira Michael Blonder, 2011 All Rights Reserved

13
Nov

Use Teleprospecting to survey customers

Sell what they buy.

Building a product marketing strategy that pulls 20% of efforts from technical innovation (internally generated) and 80% of efforts from listening, analyzing, and summarizing what customers within a market segment need and look for from products and services (externally generated) makes sense. In my experience there is a significant opportunity for success for products crafted to match what customers are buying. Further, accomplished marketers like Peppers & Rogers Group (http://www NULL.peppersandrogersgroup NULL.com), and George S. Day (http://marketing NULL.wharton NULL.upenn NULL.edu/people/faculty NULL.cfm?id=186) emphasize the importance of surveying customers to determine what:

  1. value means
  2. solutions they are purchasing to deliver value
  3. and, finally over time, whether they got the value they were after when they purchased and implemented solutions

Teleprospecting provides an effective means of collecting information from customers and prospects. Put the information you capture from teleprospecting interviews or surveys into a picture of a market from the perspective of customers and prospects. Of course, with regards to determining a useful answer to objective (1), above, keep in mind that the question is very broad; therefore, the answers received will be useful as you assemble a broad value proposition for the market, but not especially useful on a case by case basis. Nevertheless, simply putting together an broad, but accurate, value statement for a market segment will be a very worthwhile endeavor. Further, by obtaining answers to objective (3), above, whether or not solutions, once implemented, deliver the value that they promised, you will have another gold nugget to enrichen the products that you, subsequently, decide to build or, perhaps renovate.

It’s best if the teleprospecting effort can be made by independent parties, but for a business operating under the radar with few sales, and limited means, the slate is still clean enough to permit internal staff to undertake the teleprospecting effort. Anyways, if your best prospect is larger business, then engaging in lead generation from a teleprospecting effort makes the most sense. After all, larger businesses pose longer sales cycles complete with complex systems for making buying decisions.

One last point on value: As I’ve written in earlier posts, if your product or service is complex, then you must dig as deep as possible through sales qualification steps (that you have carefully designed for a specific prospect opportunity) to determine the specific value that the prospect at hand is after. I emphasize that this value statement must be framed in terms of cost savings if it is to be truly persuasive and convincing. Further, the greatest reward (in terms of the magnitude of revenue to be received from an order) will be greatest where the prospect understands that by purchasing your solution she/he will save the most money with regards to ongoing operations.

© IMB Enterprises, Inc. & Ira Michael Blonder, 2011 All Rights Reserved

21
Aug

Build Highly Successful Products to Deliver Palpable, Clear Cost Savings and Win Big

Jeff Thull, in his book “Mastering the Complex Sale” (http://www NULL.masteringthecomplexsale NULL.com/) makes a strong case for delivering tangible, observable cost savings to customers as the foundation for successful complex selling to enterprise business customers. I agree completely with Mr. Thull’s point. In fact, I see clearly how products targeted to markets that require complex selling efforts should be designed entirely around cost savings. If you cannot deliver tangible cost savings to a customer with a conceptual product, then don’t waste your time.

Using this rule of thumb, that products must deliver tangible cost savings to justify a purchase at some planned price (I’ve italicized the word “some” to convey the importance of flexibly approaching the task of pricing products in a ratio to cost that delivers persuasive savings to customers to successfully build a market) or else move on to a better idea, it is easy to see why solutions like online website development have disintegrated into low price/low value offerings. After all, isn’t the market message for online website development some version of “everyone else has a website, why not you”? Where is the value proposition in this rationale? Where is the presentation of clear, measured cost savings for the customer? How different and how much more persuasive would be a market message that details the cost savings packed into an online store versus the expense represented by a brick and mortar store! Sadly, this type of cost savings centric market message is generally absent from the online website development marketplace.

Designing products to deliver measurable cost savings ensures maximum return on investment from selling efforts. After all, sales of these products should deliver long term relationships with satisfied customers, just the type of business that most business ought to crave. If you opt to follow this approach, then be fully prepared to truly deliver savings via your early customer engagements or else relegate your market message to the trash can. Therefore, delivery and after sales support must be completely aligned with marketing & sales to deliver success. Complete alignment means understanding the cost savings for the customer and taking whatever steps are necessary to deliver those savings in each and every engagement.

In the world of the complex sale, there are no purchases made without saving capturing some substantial saving against costs that would otherwise have to be incurred by the business. This is especially true for businesses in highly regulated industries where costs can result from improper policies and procedures. It is remarkable how open prospects with “external drivers” (meaning unfavorable regulatory reviews) are to discuss these drivers and to communicate the costs that they need to save. Successful marketers to highly regulated industries learn quickly to collect as much detail about these “external drivers” as they can to construct their custom, individualized presentation of tangible value to prospects. Don’t fail to do the same.

© IMB Enterprises, Inc. & Ira Michael Blonder, 2011 All Rights Reserved