|
 “If
a man can write a better book, preach a better sermon, or make a better
mouse-trap, than his neighbour, though he build his house in the woods,
the world will make a beaten path to his door”.
The above quote, attributed to the American philosopher Ralph Waldo
Emerson (1) encapsulates the cheerful optimism of many budding entrepreneurs.
Their world beating product offers a quantum leap in technology and
customers will be queuing up to get their hands on it. There is no competition
and the company will have the market to themselves. When potential investors
hear the words “there is no competition” this is usually
a signal to draw the meeting to a close. No competition can often mean
there’s no market either.
When assessing the market potential for a new product or service, a
number of key issues need to be addressed. Below, we cover some of the
basics involved in market analysis.
Size
of market
Underpinning your sales and marketing plans will be a good understanding
of the potential market you’re addressing. This will require identifying
potential customers as a clearly identifiable group and definingf their
shared needs. Even though the global market may be huge, companies will
need to be able to identify their addressable market –
which potential customers can be reached with the sales and marketing
resources available and within the required timescales?.
Competition
Competition may be either direct – with product comparisons
based on quality, price or features – or indirect, which brings
in alternative solutions to solve a problem. For example, a social networking
website isn’t just competing with similar sites, but also face-to
face networking events and normal social interaction. What’s so
special about your product that someone should pay for it ?
Understanding customer needs
This exercise should be undertaken as early in the product development
cycle as possible. Nothing beats talking to potential users of the product
to understand their actual issues and problems and how your product
might best address these concerns. What solutions do they currently
use and what are the drawbacks ? Are there likely to be cost constraints
? Are there long-standing relationships with existing suppliers ? And
what regulatory issues are there ?
Routes to market
How will you get your products into the market ? Should you manage
your own sales team or hand this role to an distributor or agent ? What
are the best routes into overseas markets ? What marketing tools are
most appropriate ? In many cases, the slice of your margin taken by
sales and marketing costs will exceed those of production, so it is
vital to get things right.
Psi-ense
Approach
We have developed considerable expertise in the area of business
to business (B2B) market analysis, with a wide range of assignments
covering many products and market sectors. A typical assignment will
start off with an estimate of market size and the addressable market
accessible to the client. Competitors will be assessed to determine
strengths of a company’s USPs. In most cases, we will approach
potential customers and opinion leaders to gain a better understanding
of their needs. We will also suggest routes to market and potential
barriers to market entry.
More complex assignments may require detailed face to face interviews,
cost analysis, identification of channel partners and scenario modelling.
Two case studies of recent assignments are given below.
Case Studies
RFID
Our client had for many years been a market leader in telephony
applications but saw this as a declining sector. Its market base comprised
a wide range of public service clients including hospitals, local authorities
and the police. The client believed its expertise in communications
would enable it to move into the radio frequency identification (RFID)
sector, providing its customers with a range of value added services.
We assessed the client’s customer base and identified particular
strengths in one sector. We then undertook a modelling exercise to scope
out the technology options available and the partnerships required.
We approached a number of potential partners to discuss opportunities
for collaboration and costed the various inputs involved.
As a result of this, we were able to provide the client with a detailed
overview of the market opportunities available.
Online monitoring instrumentation
A university had developed technology for measuring a range of parameters
in a droplet of liquid and felt there were a number of commercial applications.
Psi-ense was asked to undertake a market assessment of three market
sectors – food & drink, inks & paints and detergents.
A web-based technology review was undertaken to identify existing technologies
in each of these sectors. This was followed up with in-depth telephone
interviews with a number of end users in each of the sectors involved.
The study identified the user requirements in each sector, enabling
the company to focus its development plans accordingly.
The
company subsequently raised £250,000 for prototype development.
(1)
Note. For the literary pedants among you, the quote at the top is only
attributed to Emerson. The actual words in his journal were
“I trust a good deal to common fame, as we all must. If a
man has good corn, or wood, or boards, or pigs, to sell, or can make
better chairs or knives, crucibles or church organs, than anybody else,
you will find a broad hard-beaten road to his house, though it be in
the woods
”.
Sadly, no mention of mousetraps.
|
