I have worked with some clients who, for one reason or another, need to start selling intangible products that are still in development. A couple of these reasons for entering a market without a finished product are obvious:
- To raise cash and/or
- To enter markets where an opportunity is time-sensitive and delaying entry will wipe out the opportunity
Each of these reasons may appear to be valid, but I never recommend proceeding on either one of them, especially if the planned product is complex and targeted to enterprise business.
Consider that an unsuccessful engagement, repeated several times with poorly chosen “pioneer” customers (such as top players in targeted markets) can precipitate an early demise for an entire business. Never forget that the old adage about bad news traveling fast always holds true. In the thin air of the small world of top targets the same faces pop up. From time to time employers may change, but individual experiences will not.
The only exception to this rule is to be found where the task of product development is actually a product renovation or some type of repackaging for a different market. If you are renovating or otherwise repackaging an existing intangible product, and you need to raise cash from sales, then there is no problem, whatsoever, as long as you merely continue sales of the existing product. Be prepared to put up with any revenue shortfalls through other methods as you will not have an opportunity to reprice the product until you complete the task of renovating and repackaging what you’ve got into “new clothes.”
If you need to sample market reaction as you experiment within the process of renovating, repackaging and repositioning, then be absolutely sure to target appropriate prospects where risks to your reputation and brand can be carefully controlled. Prospects are appropriate targets if they are far from the top of an industry vertical, but offer the culture and business realities that will be consistent once you finally enter markets with your finished product.
Selling a product that is ill suited for a new market will not work if you need to enter the new market before opportunity evaporates. In this case the only viable strategy is to acquire a competitor. Of course this route will be costly, so it will always be better to make the effort to precisely time entry than to start work in the first place.
© IMB Enterprises, Inc. & Ira Michael Blonder, 2011 All Rights Reserved