Travis Wilson is a Canterbury hero who has made it in the tough US professional sport of baseball. From an early age his skills were recognised, developed and honed with a view to reaching the major leagues. Of course Wilson didn't go to the US and try baseball and gridiron and basketball with the hope he'd succeed in one, but that is what many talented young technology businesses try to do with their innovations.
Don't be BADD
It is ridiculously obvious in Wilson's example that he should focus on the one sport where he has a real talent, but many businesses don't look at themselves the same way. "Lack of focus, or what I call Business Attention Deficit Disorder, is the Achilles heel of most businesses - large and small - that end up not making it. And the technology world is littered with tens of thousands of neat "tools", "applications," and "solutions" that no one ever sat down and figured out 1) a specific, concrete need for "it" and 2) how to market and sell the thing at a profit." says Internet marketing writer Tom Ranseen.
Selecting a market, i.e. focussing on a set of customers with a similar level of buying interest, isn't easy. When you are striving hard to grow and expand, it is difficult to have the confidence to say no to sales opportunities. After all, your brother knows a guy at David Jones in Melbourne, or your mate's cousin is the CFO of a start-up in San Francisco. You can't turn away these opportunities can you?
The courage to focus
To be successful you can and you must have the courage to focus. What many smaller companies fail to realise is that selling a product into four different markets is the same as selling four different products. Market expansion and diversification is a key to growth at a certain stage of a company's development, but spreading your focus too widely too early results in stalled growth.
As Geoffrey Moore says in his technology marketing bible Crossing the Chasm, "When you hear them saying things like, 'It will be a billion-dollar market in 2005. If we only get 5 percent of that market...' When you hear that sort of stuff, exit gracefully, holding onto your wallet."
That kind of thinking is seductive, but misses the real picture. It is not the size of a market that is relevant, but how much customers in those markets are willing to buy of your kind of product. Looking at it from the customer's perspective - their need, buying cycles, competitive position of their industry and so on - a billion-dollar market can quickly reduce to a few million.
Hardest marketing decision
Focusing on a market is one of the hardest marketing decisions you'll make. But all companies have limited resources and these resources need to be 100% focused on a specific market to achieve the maximum gain. Everything can then become aimed at a particular group of customers - the sales process, the advertising activity, the support process, the product, the promotion etc. You save time, effort and money. Focus will make things happen.
So how do you go about selecting a market?
Establishing the need At a fundamental level the process starts with looking at your product or service features and understanding them from the perspective of the customer's need. The CD player becomes "the need for entertainment," or the computer system 'the need for better information'. It is really about discovering the true value your business brings the customer. The next question then is to establish some sort of priority amongst those people with a need, i.e. who needs entertainment the most.
Market attractiveness With an idea of some priority markets, you can begin the real work on whether or not a market makes sense for your business. You need to establish how attractive that market is - it's size, where it is located, how competitive it is, what barriers to entry exist and so on.
Your capability The attractiveness of a market needs to be balanced against your organisation's capability - what sort of skills you have, where you and your sales channels are located, what reference sites you have in this market, what resources are required to meet the market need.
This is all pretty standard business practice, but a little pointless until you have gone through that very tough process of distilling that customer need very clearly and matching your product accordingly.
This sort of approach might seem illogical to New Zealand companies, used to spreading themselves across multiple small markets to survive. But this sort of market focus is the absolute key to getting to the next level - to achieving market success in large markets like Australia, the UK or the US.
The bottom line is that the bigger your aspirations the more disciplined your focus needs to be. Just as Travis Wilson couldn't succeed amongst the 7 foot giants of the NBA, or the muscle mountains in the NFL, a business operating in markets without a strong need for its product will struggle to prosper.