Betsy Gillette
Who Knows if Your Product Exists?
Market Research
June / July 2005
Volume 3 Number 3
If you build it, they will come. This is the mantra of many technology entrepreneurs. After all, they've built the latest and greatest whiz-bang doodad in the world, and who wouldn't want that? Everyone will be beating down the door for one!
This, of course, is overlooking a simple fact: if people don't know about a product, they can't buy it. The technology entrepreneur must now engage in the market planning process to determine the best means and methods for approaching the market so that potential customers can buy.
The most thorough way to start this planning process is to go through the marketing elements, commonly referred to as the 5Ps: position, product, price, place (distribution) and promotion. The basis for this information comes from the entrepreneur's initial market research efforts (please see earlier issues of TechComm for more information on the market research process). The following is a very brief overview of the basics of market planning; more in-depth information is planned for future issues.
If you are drowning in market research information, begin with positioning, or how you might stack up in the minds of your potential customers. One of the best ways to pare down the research is through a SWOT (strengths, weaknesses, opportunities, threats) analysis—a time-tested and effective tool to figure out where your company or product stands in the market. Strengths and weaknesses are things that are internal to your company. For example, if your company has been issued patents both domestically and internationally, you have protected your technology rights and have created barriers to entry for your competitors.
That's a great strength. Opportunities and threats are external to your company, and an example could be new regulations. Depending on what your company does, that could be either an opportunity or a threat. Go through this SWOT exercise for your company and a couple of competitors, and look at the results side by side. Something should stand out to set your company apart and to be used for positioning. If not, it's back to the drawing board for revisions.
Product is another element. Some things to think about are your product's stage of development, features and needed enhancements, manufacturing process, different types of competition vs. your product and industry regulatory approvals or certifications. The answers to these questions can help determine your window of opportunity for an effective product launch, the remaining tasks to be built into a product roadmap and the information to use for your product's value proposition (see TechComm, April-May 2005).
Pricing a product is difficult for most companies and especially for technology entrepreneurs. There are no hard and fast models for most new technology products in industrial settings. You have to use your judgment, considering your competition, current pricing, customer benefits and customer price sensitivity, among other things. If your SWOT analysis for your product shows more meaningful customer benefits (be realistic about this and always look from the customer's perspective), consider charging more than current competitors or product alternatives. Many technology entrepreneurs really do have better products, but drastically undercut current market prices. Why leave money on the table? If your product is about the same as what's already out there, but you think a few of your product's features can be played up, price the product about the same.
Place, or distribution, is simply how you get your product into the hands of your customers. There are direct and indirect methods of selling to customers.
Direct sales are often used when your product is expensive, technologically complex or must be integrated into customers' existing processes. Some indirect sales channels include OEMs (original equipment manufacturers) or systems integrators, VARs (value-added resellers) and distributors. You may need to use several different channels to find buyers in your target market segments. Your research may indicate, for example, that customers in the U.S. buy directly from companies, and in Europe they buy from distributors. Always keep your target market segment in mind when determining your distribution methods.
Promotion is creating awareness for your product in the marketplace. For industrial products, forget about mass market advertising, most notably TV.
It's expensive and ineffective in reaching your target market segments.
Instead, focus on methods like industry trade shows, where you can simply attend to meet and talk with competitors, customers, and analysts. Or, you can have a booth, sponsor promotional items, or try to get speaking engagements to tout your technology and product. White papers sent to analysts or trade journals may help get some credible recognition for your company. Industry trade associations are also effective ways to meet your peers, customers, analysts, and other industry insiders.
Think of these marketing elements as pieces of a large puzzle, and enjoy going through them to pull together the best plan for getting your product to market.
Betsy Gillette is a market researcher for Technology Ventures Corporation.
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