The need for periodic introspection of target market – Part II

As promised, I am back to talk in detail about each of those questions that I have indicated in my earlier blog. Please take a look at my earlier blog before you start reading this blog post.

1. Is the target market still bigger enough to satisfy the growth requirements?
This is critical especially for public listed companies as they have to meet the YoY growth requirements to satisfy their investors’ expectations. Suppose if the target market is shrinking, then it is time for Product Strategists to look for diversification either through new products for the same market or getting into a new market with the same product.

2. Are the requirements / product preferences of target market still remaining same?
There are always untold/implicit product preferences of the target market and hence any organization that is capable enough of understanding those requirements would hit the bulls’ eye. For instance, no one would have ever told Steve Jobs to make a touch phone. Same holds well for IPad too, no one would have every told Steve Jobs to make a larger IPhone that can work like a tablet. Considering the amount of success achieved by those two products, there is clear correlation between success of the product and understanding the customer requirements. Soon after the initial signs of success of IPhone, Blackberry should have assessed whether there is clear shift of preferences from QWERTY to TOUCH and act accordingly. This is one of my other favorite topics ‘Requirements has to be understood, not queried’. I will probably have a blog post on this topic very sooner.

3. Is competitor offering better value proposition by raising the bar of innovation?
BlackBerry was offering lots of values at least until Apple released IPhone. IPhone raised the bar of innovation by several levels by enriching customers through a superb touch screen. Siri application in IPhone 4S only exemplifies that Apple is continuously raising the innovation bar leaving the competitors way behind. Under these circumstances, it might not be possible to compete with Apple and other such products head-on without significantly raising the bar of innovation. Samsung through its S series phones has shown to the world that it can match Apple. Alternate strategy is to create a niche or target a different market segment. For instance, Black Berry can still play a larger role in mobile security space and it might gain prominence with emergence of BYOD (Bring Your Own Devices).

4. Is product getting commoditized?
There is a common theory that the product that offers higher value in the entire value chain will have lion share of the profit. Desktop market offers perfect anology, both Windows and Intel rendered higher value, so all the OEM vendors like Dell, HP and Compaq had to be contended with razor thin margins. To some extent Dell tried to differentiate itself by offering customization. Eventually we had seen acquisitions (by Dell) and mergers (of Compaq and HP). So if the product is getting commoditized, it is time for either acquisitions or mergers for better growth opportunities.

5. Can the target market be served by any alternative product?
Overlooking this aspect has lead to downfall of many giants. Intel also could not realize that the smartphones and tablets can be a viable alternative to laptops and desktops. Eventually they entered the smartphone market bit too late. Initially smartphones never appeared to be an alternate product. The alternative products start in a very small way without attracting much attention, later they slowly and steadily increase their capability to disrupt the established market. Again smartphone is the best analogy. So when trying to evaluate any product(s) as a potential alternative evaluate the progress (in terms of performance and capability) that those products have made over last few years and predict whether those products can improve performance at a same scale to be a viable alternative.

6. Can the product satisfy any unmet needs of adjacent market?
This is more likely a strategic activity. But as I outlined in my blog on ‘Customer Innovations’, our existing customers (more importantly innovative customers) can provide valuable insights on whether the product is being used for a purpose quite contrary to its intended use. Such inputs will be critical for Product Strategists to target a new market and thereby generating additional demand for the product. Though I have touched upon demand generation in the blog topic on ‘Attacking White Spaces’, the detailed blog on demand generation is long due, let me try to write more on this topic ASAP.

7.Is the target market over served?
Any product over serving significant part of the target market is tantamount to losing that portion of target market to the competition. For instance, Intel always tried to roll-out higher end processors into the market. But not everyone are heavy users, certain low end processors are good for performing minimal job of browsing, email, power points creation and doc reading. So Intel cautiously released Atom processor to cater to the over-served target audience. Please note I am referring to a timeframe (2-3 years earlier) when the smartphones and tablets are not very familiar. Now they both are considered to be alternative products, we have discussed about them little earlier. But the decision to roll down a scaled down version of the product will always depend on the organization strategy. For instance, in hospitality industry Hilton or Welcome Group will never get into a budget hotel business. If such move is necessitated, they might utmost do with different brand name. In smartphone industry, Samsung is synonymous with all range of mobile phones, whereas Apple only caters to high-end segment and they would never enter ‘dumb-phone’ market irrespective of the attractiveness of that market. So the decision to roll out a downgraded version of the product does not purely depend on the size of Total Addressable Market (TAM).

The above responses (with exception of last 2) would only provide a snapshot of how our product is currently performing in the market and the candid introspection will help us reveal lots of insights about customer preferences, competition and the direction in which market is heading. However this exercise alone is not sufficient if the response to majority of the questions (excluding last 2) is negative and it should ring alarm bells in the higher echelons of the organization. In such case, this activity should be followed by a deeper strategic analysis of how to elevate the product. On the contrary what happens in most of the public listed companies is that they either ignore such insights calling them as fad or panic. Probably I need to talk about the former of how not to ignore early warning signals. Oops I am promising lots of blog articles, really not sure how long will I take to complete all those promised blogs given the duration taken to write each blog. May be it is time to pull myself before I suggest others on how to revamp their products. I will also talk little about the later aspect of panicking..
Please keep glued to this space for more details.

 

Attacking white spaces

Most Product Managers are busy handling day-to-day operational activities that they hardly focus on any strategic initiatives. But to ensure that our product stays alive and marches ahead of the competition, we have to constantly keep evolving our product to keep pace with the changing needs of market and customers. Sometimes it might also happen that the product has reached its logical end, so we have to quickly reconcile that the product is in sunset phase and take the bold step of burying our own product that we have nurtured over the years. In case of sunset phase, we can also start conceiving an alternate product. In any case, we have to occasionally take a pause from our regular day-to-day activities and obtain fair view of how the market, customer requirements/demand might take shape in few years from now. Such a view can be obtained through effective debate involving TMEs, Product Managers, and Product Marketing Managers. I call it a debate because there is no scientific methodology to anticipate the needs of the customer/market. For an effective debate backed by data, we have to solicit responses/ opinion/ feedback wrt competition, customer pain points, product trends (backed by evidence wherever possible) from multiple sources such as BDMs, Account Managers and Sales (primarily from the customer facing teams). Success of this exercise is purely dependent on the ability of the organization to create and capture synergies across different silos (Marketing, Business Development and Sales). Otherwise each silo will act independently and it will leave Product Managers without much input for key decision making. I will probably write a different article dropping my thoughts detailing the need to create such synergies. For now, increasing product revenue can be treated as a compelling reason to create such synergies because the entire exercise will ultimately culminate in increasing the revenue potential of the product. Now coming back to our discussion, we have to later use those inputs to do some careful analysis and frame our thinking in the following directions:

  • Identifying growth opportunities
  • Capabilities to create new market – Demand generation
  • Unserved vs Overserved market segments

The above directions are not mutually exclusively, it might at least help us to streamline our thoughts and ensure that we attack white spaces in all possible ways.

In the forthcoming weeks, I will share my detailed thoughts on each of those directions stated earlier.