by David Kosoglow
We've all heard about products that have bulldozed their way through their markets, creating profit machines for their developers. These products are the ones that sell well to start, and just keep on selling -- despite facing huge amounts of competition -- despite seeming in many ways no better than the rest -- despite having been developed and produced by small companies with limited resources compared to the competition.
You may even have competed against such a product. Whenever your sales people enter a deal, you must unseat this dominant product because it's the first product being considered. Then, when it's time to close your deal, this product comes back to make closing the deal more difficult. You can't avoid that one competitor because it's always there, in a position of strength. Have you ever stopped to figure out why?
In most cases, it's because the management team at the competing company has taken the time to examine and analyze their product and market. They've uncovered information that helps put them ahead of the pack. And they continue to gather information to stay ahead. It doesn't really matter whether we're talking a $30 consumer product or a $300,000 corporate product; a solid understanding of the market leads to better decisions, higher revenue, and lower costs.
Think about this example: The team at Homecomp Corporation has developed a software product for the home computer user. However, the company has never marketed a home computer software product before, and the management does not know the market well. So they set out to uncover the best way to market their product. They start by finding out what users want from this type of product. Then they analyze their own product and the competing products to see how they stack up in terms of the needs and wants of the market. If they're faced with competitive deficiencies, they enhance their product, thereby avoiding the risks of alienating the market. Additionally, they use their market data to determine the best way to reach their market -- what media to use; what messages to convey; where to distribute the product. Under this scenario, in which company decisions are based on market evaluation, several things are bound to happen:
Nobody said it would be easy; but it is likely to be a good investment. Spending some of your time, effort and money on the front end to research your market and analyze your findings pays off handsomely. Not only will it start paying off as soon as your product is launched; it also pays back continuously -- as long as you keep abreast of your market and competition. It's a small ongoing cost that saves a lot.
We've already illuded to several types of research & analysis that are high priority for most companies: market research, product benefit analysis, competitive analysis, trend analysis. Although these are not the only types, they're the most likely to be needed to assure a productive marketing strategy and related tactics.
First you need to understand your market. Who are the people that are most likely to want your product? What is the problem that your product solves? How important to your market is finding the right solution? Does the market realize that a problem even exists, or will you have to teach them that the problem is there? Does your product solve the entire problem, or will unsolved portions still exist after your product is in use? The better you can define your market and its needs, the more likely you are to hit the target with your product and your promotion.
Once you know what the market needs, you need to examine your product (or your proposed product). Figure out the benefits of your product. Determine how your product directly addresses the needs of the market. Does your product cause any additional concerns to the user? Why would somebody buy your product? Why would they decide to abstain from purchasing it? These types of questions will help you ascertain whether you've got a marketable product.
Of course, you're not alone in the market. There may be one or more direct competitor. In fact, there are many segments of the computer industry in which there are 50 to 100 "look-alike" products competing in the same market. To win, you need to differentiate your product. That, too, takes knowledge -- of your competition. Ascertain the strengths and weaknesses of as many direct competitors as possible. Figure which competitors are likely to meet you under which circumstances. Do the competing products differ substantially from yours? Are they oriented toward different types of users, or exactly the same user? Even if your product is sold through resellers (as opposed to directly to the end user by your sales force), you'll face some sort of competition.
The other type of competition that many companies neglect is the indirect competitor. For instance, you may have automated a task that is currently done using one of several manual products. These manual products are your competition too. Sometimes indirect competition is more difficult to beat than a direct competitor.
Trends are important because they show you where the market will be in the future. Think of it as aiming at a moving target. As your market moves, you must take aim so that your bullet arrives at the new position to greet the target, because if you aim at the old position, you'll miss the target. Trend analysis helps pinpoint the future.
The best time to start your market analysis is well before your product is ready to launch. Advanced planning helps you size your market, tweak your product, and plan your marketing communications tactics so you can hit the ground running. With careful analysis, you can become the dominant competitor that everyone else hates to face.
Suppose, though, that your product is already being sold. Is it too late to utilize market research & analysis to your advantage. Heck, no! But to make sure, ask yourself this question: "Do I want to increase my sales and profits?" If the answer is yes, use research to help you get the most from your product.
With as many resources that are at your disposal, you have no excuse for not doing your homework. Market research & analysis is not a luxury; it's a requirement.