Who Wants What You Got?

I am honored to receive several emails every week from entrepreneurs looking for advice. Last week I received several from those looking to get their new products to market. What I found to be most interesting about all of these emails was the fact that while their products were all in and of themselves interesting and even technically brilliant, each of these entrepreneurs (I believe, far smarter than myself) seemed to be lost when it came to answering the question, “who could really benefit most from this innovation?”

Cart Before the Horse It really is a “cart before the horse” conundrum. Should you spend more time developing a great product and figure out a way to attract people or should you look to the marketplace for specific needs and develop your product accordingly?Well both, of course. But I suppose it could be argued that you should spend even more time trying to understand the market for your product than actually designing it in the first place. If there is no market (or the market is too small) it is irrelevant whether the product works or not.A Better Mousetrap The deadly combination of unbridled enthusiasm for technical innovation and inattention to market issues is so frequently a cause of product failure that some industry watchers have come up with an expression for the result: the better mousetrap that no one wanted.The Value of Research There is no question that the ability to do a proper market assessment separates the better performers from the poorer ones. Market research is the ongoing process of analyzing customer needs, market size and composition, the competitive environment and industry trends. The goal is to thoroughly understand the marketplace to reduce risk and make better decisions. Market research can help reveal threats and uncover opportunities. A thorough market analysis can help companies avoid common pitfalls such as overestimating the number of potential customers, underestimating the strength of competitors, or pricing a product at a point where customers refuse to buy it.Where to Start It is important that entrepreneurs start looking at market issues early on in the product development process to focus scarce development dollars effectively. Why waste money and time developing product features that customers aren’t willing to pay for or perfecting a product that isn’t sufficiently differentiated from competitors’ offerings? At an even more fundamental level, why develop a product at all if the market isn’t big enough?Necessary for Funding What potential funders are looking for is not so much a great product or service but rather evidence that a product addresses a reasonably large and growing market. They also want confirmation that entrepreneurs have a solid understanding of the complexities of their intended markets and can answer questions like: “which competitors pose the greatest threat,” or, “which customer segments hold the greatest promise?”Competitive Intelligence It is critical that we take the time to fully understand our competition. Sun Tzu, the ancient Chinese warrior said, “Know thine enemy.” In order to cost effectively compete in the marketplace you must “know your competition.” I have devised a very simple way for you to gather intelligence about competitors. It is completely ethical and devastatingly effective.Become Their Customer The best way to understand you competition is to “become their customers,” at least for a bit. Few entrepreneurs or small business professionals do this, yet it is probably the most effective way to understand what your competition is all about. Call, visit and research on them. Ask them plenty of questions. Don’t tell them you are a competitor but truly become a potential client for a moment and try to understand what makes them tick. I am constantly amazed at the number of organizations who launching new products that fail to do this. As a consultant I perform this task for all of my client’s with regard to their competitors. And as I say, it works magnificently.What Makes Them Different What makes this so effective is a tool that have have devised to systematically evaluate their product or service. I call the “Competitive Landscape Profile” (or the CLP). The CLP allows us to plot the proficiency of each of our competitors on a chart that gives us a very clear picture of who they are, what they do, where they fit and how they are different.The C.L.P. The chart includes their position in the market, client strategy, distribution profile, pricing strategy, customer service rating, product differentiation, branding strategy, ect. The CLP is a graphical chart that allows everyone to see precisely how each competitor fits into the marketplace. I addition I also recommend that marketers obtain the following information from their competitors in order to fully complete the CLP:  Archive competitors ads. Take a month or two and track where and when they advertise as well as what they say in their advertising. Price list and shipping and return policies. Brochure and promotional material like POP, mailers, packaging, etc.  Analyze their web presence. Commit their names to memory. Research the names of their best clients.In short it is through fully understanding your competition and the market that you plan to operate in which will dictate the ultimate success of your new venture. So I encourage all of you entrepreneurs to take some time to fully understand “who wants what you got” BEFORE you begin developing you even begin developing your product or service.I hope that this “Business Update” has been helpful in assisting you to improve the performance of your organization. For more information on how the Small Business Advisory Network assists companies in improving their performance, please feel free to contact us at 310-320-8190 or email mdeo@sbanetwork.org.Mark Deo

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