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.
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