Ch3: Targeting the right markets
Go To Market Strategy
Overview
I. Review of Chapters 1 & 2
II.
Chapter 3: targeting the right markets
1. Common targeting pitfalls
What not to do: Enconix
2.Six steps to successful targeting
What to do: Marriott International
3. What we learned
4. Critique
5. Questions
Review: (Ch 1) Go-to-market Strategy
Choice and alternative: increasing channel availability
(P.7) Today, it’s no longer just about what you sell;
it’s also about how you sell it
Go-to-market strategy:
Total Customer
Experience
A game plan for reaching
Purpose
and serving the right
markets, through right
• Attract and retain the
most desirable customer
channels with the right
• Increase sales with lower
products and the right
cost
value proposition
 4 ingredients of a winning go- to market
strategy
Ch3:
Market
Ch4:
Customers
Ch6:
The product
and
The value
proposition
Ch5:
Channels
and
Partners
Review: (Ch 2)
The ten commandments of going to market
I. Go-to-Market strategy must start with the customer
 Exact information can gather from customer:
product, channel, value proposition, markets
II. Aggressive use of low-cost channels will have a
dramatic impact on profits
III. How you sell has to fit with what you are selling
 Customer, Economics, Complexity
IV. There is Always a tradeoff between market coverage
and control
 The high- control strategy vs. The high- coverage strategy
V. Not Every go-to-market solution has an ‘e’ in it
 3 reasons why ‘e-channel’ is not work
VI. Getting channel cooperation is more important than
preventing channel conflict
VII. You cannot be everywhere at all times for every customer
VIII. The business model has to be sound for a go-to-market
strategy to succeed
IX. It takes time for new channels to become productive.
Patience is necessary
 12 to 24 months to build and roll out a new go-to
market strategy:
X. To win big a go-to-market strategy must be innovative
and different
Chapter3: Targeting the right market
Targeting the right markets

“It’s impossible to choose a successful mix
of channels until you determine which
markets those channels are supposed
to reach.” –Pg73
Ch3:
Market
What not to do: Enconix
Picked the wrong market: Enconix
(1998) 246 employee and over $55 million in sales
Disciplines and savvy business development focus
 Niche of small-to-mid sized industrial manufactures
with $50 to 250 million in revenue
Developed understanding of the needs and
information technology requirement of their
market :
(1990s) ERP SCM
CRM
Developed new software and service to meet the
expanding needs
(1998) Change the direction: Y2K focus
Software developers
Y2K specialist
• Less impact of Y2K: the failure of Y2K focus
• ERP business had changed dramatically
• Customers reduce the IT spending due to Economic slow down
Insignificant and biased marketing research
Change the direction: PRM focus
Y2K specialists
PRM consultants
• Consumer goods manufactures
• Food distributor
• Computer hardware vendors
(Aug 2001) Sales: $ 28M
New target markets
=
No experience
No understanding
The Four Pitfalls of Market
Targeting…and How to Avoid Them

Trap #1: Chasing untried and unproven “blue sky” markets…and neglecting
solid, available business that’s close to home (p. 81)

Trap #2: Putting too much weight on 3rd party market research reports, which
often have inaccurate, agenda-driven estimates

Trap #3: Assuming that markets can be “good” or “bad”, outside of the
context of your unique offerings and your business goals

Trap #4: Ignoring crucial internal sources of information when evaluating new
market opportunities
Market targeting trap #1

Chasing untried and unproven “blue sky” markets…and
neglecting solid, available business that’s close to home

Usually, the pursuit of entirely new market opportunities is the slowest, most expensive, least
effective, and least certain way to increase revenues
-Reasons Why???
1:Customers: New customers in new markets are difficult to reach
2:Products:
New products are much more difficult to sell than existing ones

Companies fall into two basic camps:
1: The “Blue Sky” approach (e.g. Enconix)
From the established to the uncharted
2: The “Build on your strengths” approach
Grab the low hanging fruit first, then go higher

To avoid this trap remember: Most Companies have more potential business then they could
ever handle
Market targeting trap #2

Putting too much weight on 3rd party market research reports,
which often have inaccurate, agenda-driven estimates

Recently, many market research firms have been publishing highly inflated
estimates

At the minimum, get multiple, independent sources of information when
evaluating a market

Take the time to learn how these conclusions are being made

In the end, you can eliminate the risks of over-reliance on 3rd party market
research by doing some of the work yourself

The bottom-line is that you should never make the decision to participate in a
market based solely on the basis of 3rd party research,
Market targeting trap #3

Assuming that markets can be “good” or “bad”, outside of the
context of your unique offerings and your business goals

Just because a market looks promising, doesn’t mean it is a good opportunity for
you

The right market depends on what you’re trying to sell, and if that new potential
market fits within your business goals
 Example: Steady growth vs. maximum sales growth

To avoid this trap remember, there is no such thing as a “good” or “bad” market,
each should be evaluated with respect to your unique business situation
 Consider the costs, risks, and the time-horizon of the market entry
Marketing target trap #4
Ignoring crucial internal sources of information when
evaluating new market opportunities



Within most organizations lies a wealth of information about
opportunities and risks in the market place which most choose to
ignore
To avoid this trap look to three sources of market insight within your
company:
1.
The sales force
2.
People who deal with partners or distributors
3.
People who know a lot about the competition
Six-steps for market targeting*

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1. Develop a universe of markets
2. Choose market evaluation criteria
3. Evaluate target markets against criteria
4. Validate markets with key prospects
5. Prioritize markets for penetration
6. Fine-tune target markets over time
1. Develop universe of markets

Generate list of potential markets



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Consider which markets offer good opportunities
Which are similar to those you are already successful in?
Get input from those within the company
Add markets recommended from other sources
Narrow down removing markets which:



Have no need for you product or service
Have prohibitive entry costs
Legal or regulatory restrictions
2. Choose evaluation criteria


Choose a workable number of criteria
Criteria can include:

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market size
market growth rate
ability to exert brand leadership
cost of entry
cost to serve
channel availability
competitive density
strategic fit
**There is no “right” set of criteria for everyone!!!
3. Evaluate targets against criteria



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Evaluate using a scoring metric
May not find information for all criteria
Be ready for information gathering
This step should produce 5-10 “good”
markets
Core
Criteria
Secondary
Criteria
Market
evaluation
criteria
Fortune
500
Small
Business
High
tech
vertical
Market Size
***
**
**
Market
growth rate
**
***
(?)
Channel
availability
***
**
**
4. Validate markets with key
prospects


Purpose: final check of your best
potential markets
Recommendation:




Call 30 customers in target markets
over 3-4 weeks
Measure how receptive they are
Check for any potential sales
Produces group of attractive
markets ready for you
5. Prioritize markets

Two schools of thought on prioritization:

1) Choose market which scored best evaluation

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Pursues ‘best’ market first, but may not produce best
results
2) Choose market which offer opportunities right
now
Decision should relate to time and investment costs
needed to penetrate market
 Create a “plan” for market penetration

6. Fine-tune markets over time


Market conditions will change over time—it is
inevitable
This is not a one-time process


Should be repeated at least once per year
The world’s best companies take a dynamic view
of their target markets, and so should you!!!
Best Practice: Marriott International

Thorough and creative in identifying new
markets


Scientific approach to market evaluation


Travelers are diverse and cannot be served by a onesize-fits all brand
13 stage evaluation process that includes competitor
analysis, fit with corporate goals, and mathematical
scoring to rank opportunities
Ongoing market-tuning
What we learned…



Know thyself
Look toward your current customer base for
growth opportunities
Formulate growth strategies that build on your
strengths
Critique

Tool for continuous market evaluation?

Permanent cross-functional team
Questions

How can focusing on existing customers help a
company achieve growth?
Opportunity to increase share of customer, information
concerning new market possibilities

Name three internal sources of information
available when evaluating new markets.
Sales force, People who deal with partners or distributors, and
People who know a lot about the competition.