Your market entry strategy is wrong.

Time and time again, we receive enquiries from people who have great innovative products, but just cannot get adoption and are at their wit’s end as to why they cannot achieve sales. How frustrating. In reality, there are some very simple mistakes that put businesses in this position. In this blog, I want to be very explicit as to what you can learn from disruptive innovations and the market entry strategies NOT to follow if you want to maximise your odds of success.

Article by Trevor Holmes

Gain more Insight…

At first glance, you will see these 5 key reasons for failure as “counterintuitive” to what many believe is the right way to gain traction in the marketplace. However, statistically we know that market entry is much more successful when following some basic rules.  
Below are the 5 key reasons that your market entry will fail. 

1. You're targeting the high end market

It seems logical to think that “if we land this BIG fish, then we will eat for a lifetime”, however there are so many reasons why trying to land the big corporate is a contributing factor to many failures. 
Big firms have high expectations, long procurement processes, large bureaucracies and low tolerance for products that are not perfect. And as a new entrant to a market, you should be “testing” the market with a Minimum Viable Product to validate that your innovative idea is solving a problem that many need solved. You may be a small business, focused on scaling. Even if you land the contract, the demands a large corporate can place on you as a market entrant can be so impractical that it can bring your business to its knees.  

Instead of chasing the big fish, focus on either the low-end market or non-consumption market. This way you can work with this less demanding segment who simply want and value what you have to offer and are much more tolerant even if your product is not exactly “perfect”. 

Instead of chasing the big fish, focus on either the low-end market or non-consumption market. This way you can work with this less demanding segment who simply want and value what you have to offer and are much more tolerant even if your product is not exactly “perfect”.

2. Pricing for profit rather than adoption

Your primary objective of entering a market is simple; adoption. You need users to adopt your innovative product. You need to validate that someone out there wants, values and needs it enough to pay $$$ for it. This is fundamental in a soft launch market entry strategy. Profit comes later down the track, so within your market entry strategy, and particularly if you are sourcing capital investment, be sure that you are budgeting and cashflow forecasting to continually invest in adoption strategies rather than profits. There are many reasons why you want adoption over profit in this early-stage market entry phase. 

Why DO I want adoption over profit in this early-stage market entry phase?

3. Competing on the basis of "better performance"

Don’t do it. Statistically we know that as a new entrant competing against incumbents (your competitors) on the basis of “Better Performance”, you have less than a 14% chance of winning. That’s right, less than a 14% chance which is basically bringing your strategy into the realm of “will you be lucky?”. Some more statistics for you – 80% of innovative product launches fail. 77% of the reason why they fail is due to external factors such as incumbents (your competition).

80% of innovative product launches fail.

Think of it this way; if you were a powerful company and a new entrant came into your market, trying to steal your profitable customers… would you just sit back and allow that? No! Incumbents that you threaten WILL respond, and in many cases, very aggressively. 
Your market entry strategy should aim to stay “under the radar” of incumbents. This is why targeting the low end or non-consumer market is so successful. If you steal the low end, not so profitable customer from a large competitor, they are more likely to be quite happy to see those customers off their books; this strategy is unlikely to illicit a response from the competitor. This is what you need while you grow and become stronger before tackling the big players head on. Think of Grill’d in how it has entered the market, grown and become powerful and is now taking on the likes of McDonalds head on (and sometimes in a very cheeky way). 

4. You don't know the market well enough

Assumptions followed by action are the death of many innovative market entries. Assumptions followed by action are full of danger. Why? In most cases as a new entrant, you’ll get your assumptions totally wrong. Instead of acting on your assumptions, try this:

Make your assumptions, but then do the research to validate your assumptions. Or in fact, equally as powerful is when you invalidate your assumptions.  

Know your market and know it extremely well. Things you should be able to answer succinctly are things like: 

  • What is the size of the market, locally, nationally, and globally?
  • What are the market segments within your targeted market?
  • What do you customers want, need and value in how they strive to succeed in their business?
  • What is the job they are trying to do (more on this in number 5)?
  • How are they doing that job right now? What ways are they executing workarounds?
  • How big of a problem is it?
  • Who are the low end or non-consumption customers who do not have access to solutions now, or cannot afford them or the current solutions are too complex?
  • Who are your competitors? And remember, don’t limit competitors to what you consider to be the direct competitors. Even non-consumption is a competitor where you need to understand why it is that people do not currently consume. 

 

Remember: even the non-consumption market is a competitor until you understand it.

While all 5 key reasons are important, knowing your market, what the opportunity really is and all the behaviours around how this target market works, thinks and acts can be most fundamental to your success (or your failure).

5. You have a solution seeking a problem

Far too many times we see innovations from people who “had a great idea” but have not found the “job” that this great idea does for businesses or consumers. In other words, they have come up with a solution and trying to find a problem that it solves. Often these types of great ideas are very feature based. They are what we call “sustaining innovations” and I hate to be the bearer of bad news; but almost always, where the solution is a cool feature, they fail. The greatest way to test your idea as to whether it has a probability of success is to define the “Job to be Done”.  
The Job to be Done concept is so powerful. When you nail the Job to be Done and target the correct market entry segment with an MVP (minimum viable product), your probability of adoption is extremely high. If you want to apply it to your market, book in a call for a demonstration today, we will be glad to elaborate.

What do Innovation Consultants do?

You see, we really don’t need to have so many great ideas failing. Instead, we simply need to focus on the facts and statistical information to reveal what causes failure. When you know the formula of how to enter the market and follow basic steps,  you increase your probability of success. This doesn’t mean that execution is a breeze; far from it. But it gives you the framework to learn and adapt as you gain deeper knowledge of your right market segment, in order to enter and gain adoption. And by now, hopefully you know, this is the basis of building a sustainable and scalable growth model to success.  

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