If you are considering entering a new target market, with an
existing or new product or service, it makes sense to first
systematically analyze the market in question via some
fundamental market evaluation criteria. It is not only
rational but most cost effective to determine if a new market
pursuit makes sense for your company before any significant
resources are further applied to the effort.
A “pass or fail” test of your targeted market is recommended
with your company’s core management team collective
involvement. Discussing the attributes of a given market and
further analyzing the business logic behind your intention to
participate in a new market will generate some very
enlightening conversation among your key decision makers.
Having various management functions present for the discussion
generates the most effective, broad base perspective,
appropriate “next step” for this strategic decision.
Besides further justifying or reducing your intentions to enter
a new market, weighing all the same attributes of any one
targeted market candidate against another target markets of
consideration can lead to a pivotal decision for the future
direction of your company. The opportunity cost of choosing
the “wrong” or “least rewarding” target market, given limited
corporate human and financial resources, can make or break
your collective ability to meet or exceed your company’s short
and long term growth objectives. Again, effectively utilizing
a simple, systematic evaluation checklist made up of some of
the market attributes listed below can be most time efficient
and cost effective.
Our list of market attributes cover various business sectors
and should not be considered a complete listing. To make this
evaluation exercise most productive for your management team,
first evaluate this list for relevancy and then add whatever
number of additional categories or attributes that correlate
to your company’s collective business priorities, resources,
risk/ reward tolerance levels and growth objectives.
MARKET PRODUCT / SERVICE LINE ATTRIBUTES:
* Market has a viable need for product application advancements
or transitions
* Market is not dominated by short product life cycles
* Market allows for effective competitive advantage without
extraordinary design, engineering or research cost
* Market allows for effective competitive advantage without
extraordinary testing, certification or performance
compliance issues
* Market offers opportunities for relatively high product /
service gross profit margins
* Market does not require a large number of products or
services to effectively compete
* Market share is gained more from product value or by high
value service
* Market product/ service applications have worldwide demand
* Market product/ services are compatible with existing company
core competencies
* Market product/ service offerings can be legally protected
* Market generally does not present extraordinary financial
liability exposure
* Market demand is not extraordinarily seasonal or difficult to
forecast
MARKET CUSTOMER ATTRIBUTES:
* Market offers a diversified mix of key customer product /
service users
* Market offers financially stable customers
* Market offers relatively consistent purchase loyalty
* Market has existing product/ service users who will purchase
other related offerings
* Market is supported long term by fundamental economic and
demographic growth
MARKET SERVICE ATTRIBUTES:
* Market does not require an inordinate amount of after-the-
sale service
* Market can be supported by a centralized customer service
location
* Market does not require extensive service certification from
3rd party entities
* Market does not proliferate extraordinary product/ service
warranties
* Market service requirements are not hazardous to company
personnel
* Market does not require extraordinary distribution
requirements
* Market share can be augmented with effective e commerce
tactics
MARKET COMPETITION ATTRIBUTES:
* Market is dominated by well known competitors and suppliers
* Market is not dominated by one company (> 80% market share)
* Market has reputable competition, a quality image and history
* Market offers competitors that would be future acquirers or
acquisition candidates
* Market is not targeted for international penetration via
pricing tactics
* Market requires a reasonable level of financial and technical
resource barriers to entry
MARKET GROWTH:
* Market has a proven history of growth
* Market has a high probability of long term future growth
* Market offers traceable causes of growth
* Market has worldwide growth
* Market has regional growth niches
* Market growth cannot be negatively affected by existing or
pending legislation
Justification of entry into any new market or niche thereof
involves effectively identifying all viable competitors,
relevant market attributes, key market participants and their
market shares. Being able to strategically apply this
qualified information with respect to your known company
financial, technical and human resources can result in
extraordinary business growth opportunities.
If you want to further quantify this analysis you can
numerically weight each market attribute with your own
specific market attribute priorities and then give numerical
“grades” to any or all new market entry candidates to
calculate a weighted value for each new market opportunity.
Evaluating new business opportunities should be a well thought
out, straightforward, iterative process. Beginning the
evaluation process with a simple tool to justify further
analysis is a prudent procedure. The more effective your
analysis, the greater the probability your strategic decisions
will maximize return on investment.
Source: http://www.ArticlePros.com/author.php?Mark Smock
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