Three Key Challenges to Entering New Markets
In the struggle to move beyond cost-cutting to growth, organizations must look to totally new sources of top-line product revenue. To drive new revenue, companies are increasingly exploring how to best identify and enter new markets.
In a late 2009 Ernst & Young survey of c-suite executives of large, multi-national organizations, 93% of the respondents were at least maintaining – if not amping up their focus on broadening the customer base and entering new markets. Similarly, a recent Boston Consulting Group study, affirms that companies are raising their focus on the ‘conservation end of the innovation spectrum’ – namely, on offerings that allow for expansion into new customer groups and new offerings for existing customers.
And while executives recognize the value in leveraging existing product offerings, technologies and intellectual property by mapping these offerings to new markets or tapping an unmet need of their existing customer base - the reality is: entering new markets is risky business.
To successfully enter new markets, companies first need to address the following key challenges:
Lack of Market Insights.
Rushed for time and overwhelmed by too much raw data, product designers often lack sufficient insights into a market’s current technology trends and their future evolutionary potential. Valuable sources of these insights, such as patent databases and trade journals are under-utilized because it’s just too difficult and time-consuming to extract useful concepts and trends. Designers are forced to proceed without a comprehensive understanding of the competitive landscape and the state of the target market’s technologies. Emerging competitors, blocking Intellectual Property, or advances in new technologies are easily overlooked. Such oversights, if not fatal, will at least result in costly rework and time-to-market delays if not discovered early in the project life cycle.
Inability to Conceive a ‘Market-Taking’ Product.
Caught in the inertia of being too close to the problem, engineers have difficulty envisioning “out-of-box” design strategies that will establish competitive differentiation by breaking through historical constraints and design assumptions. The process of determining the optimal insertion points for introducing new functionality frequently lacks an objective set of criteria, and the ad hoc nature of brainstorming sessions often means that past experience or personal bias will dominate the outcomes to the extent that the future winds up looking too much like the past.
Lack of Fresh Ideas on How to Implement an Innovative Product Design.
When it comes to implementing the new design, engineers are again limited to the techniques and resources of their past experience and current know-how. By definition, this domain expertise taps only a small spectrum of the world’s intellectual and scientific knowledge. Yet, an analysis of the patent literature shows that innovation often occurs when technical challenges are overcome by applying science from completely different domains. Simply put: engineers lack the means to quickly and effectively identify, research and validate such ideas in the limited time available to them.
Fortunately, there are proven innovation tools and methods that can help companies overcome the three challenges.
Whether you want to tap an existing product or technology to solve a new set of problems for your current customers or you are looking to apply an existing product or technology to address the needs of an entirely new set of customers, these tools can help you avoid delivering functionality that fails to create sustainable competitive differentiation.
Stay tuned for a future post on the Five Steps to Successful Market Entry and hear how Invention Machine is working with companies like Statoil and Chemtura to identify, explore and drive revenue growth from new market opportunities. Or, click here to see if Goldfire, our innovation intelligence platform, is right for you.