Marketing executives have limited dollars and resources to invest on marketing programs and create market share growth. How do they pick the optimal go-to-market strategy to achieve market leadership? What markets do they invest into and how much? How do they create Marketing Innovation so that they are maximizing the marketing investments and generating higher revenue today and in the future?
to create the appropriate context.
1. Growth market:
a. Growth market is the market where the organization is seeing the most business traction today. The marketing executive needs to first answer the following questions to establish the baseline: What is our current market share in the Growth market? Who are our prime customers? Why are the customers using our products? For how long? Do we provide an effective solution? Are we winning? Why are we winning? Who are we winning against?
b. The marketing executive also needs to determine the Growth market trends. Whether the Growth market is going to grow further. And determine whether the organization is growing at the pace of the Growth market or faster than the pace of the Growth market.
c. At this point an internal analysis of marketing programs that have worked well to get us to this position in the Growth market is needed. The marketing executive needs to determine what has worked and what has not. And why?
d. Now, the key question needs to be addressed on how marketing department can accelerate the business in this Growth market? Whether the department can create an assembly line of marketing programs to accelerate the growth in this market, and rapidly scale. What does the department need to create the assembly line?
e. Finally the department needs to determine the marketing tools, sales collateral and techniques needed to create the demand in the Growth market.
f. Knowing that Growth markets provide maximum revenue dollars today, minimum of 50% to 60% of the marketing investment should be focused on the Growth market. The marketing game is all about execution in the Growth markets.
2. Emerging market:
a. Any market where the organization is seeing an early traction is an Emerging market. The questions that the marketing deparment need to address are: Why are we seeing the early traction? For how long? Do we have an effective solution? Are we winning? Are there competitors prevalent in this market?
b. Now, the marketing department needs to determine whether the Emerging market is a new industry, a new geography, a new vertical, a new user, or a new application of our product.
c. At this point, market sizing and trending is needed. Is there a larger market here beyond the Emerging market? How big is the size of the potential Emerging market? What is the potential growth of this Emerging market? How can we win in this Emerging market? Again, marketing needs to have answers to these questions.
d. The marketing department should invest into one or two emerging markets. Marketing programs for an emerging market will be more creative, innovative and ad-hoc.
e. In an Emerging Market, it is always best to create a Hypothesis. Experiment. Test the hypothesis. Change as often as needed.
f. Knowing that there is a huge upside from investing in an emerging market, minimum of 10% to 20% of marketing investment should be focused here. There is mid-term to long-term revenue potential in the Emerging markets.
3. Existing market:
a. Existing market is the market consisting of the existing, long-standing customers. First, the marketing department needs to know who the existing customers are, why they purchased company's product, how long they have been using company's product, whether they are happy customers and loyal customers, and the company's current relationship with these customers. Another key question to address is how many customers the company loses every quarter and why.
b. It is very important to understand how the existing customers are using company's products. Whether the customers are using the products to the fullest potential. This would lead to key question: Can we market more of the same products to the existing customers? This is tied to extracting the maximum life-time value from the existing customers. Marketing needs to know the maximum life-time value of the existing customers.
c. Another key question that needs to be answered is: Can the company market different products to our existing customers? How do we do this?
d. Ultimately, the marketing department needs to determine the total revenue potential from existing customers. And assess on where the business is today, and the growth potential.
e. When it comes to execution, marketing department should analyze the marketing programs for the existing customers, on what has worked well in the past, and what has not worked well.
f. Another program to consider is whether the existing customers can refer the company to more customers. And what processes need to be in place to achieve this. An estimate of the total potential market of referral customers from the existing customers is essential. Again, establishing the baseline on where the company is with referral business, and analyzing the growth potential is needed.
g. Existing customers not only bring the company maintenance and ongoing service revenue, but provide a tangible upside at a lowered investment.
h. Minimum of 15% to 20% of marketing investment should be focused here. There is short-term revenue potential in the Existing markets (unless it is completely tapped).
4. Replacement market:
There are two replacement markets. Markets that the company takes away from Competitors and Adjacent markets.
a. Competitors:
1. Marketing department needs to have a deep understanding of the direct and indirect competitors and their business. Market share analysis needs to be conducted on Competitors' current market share, and importantly whether their market share is growing, shrinking or remaining flat.
2. Competitive marketing strategy needs to be established.
3. Simply put, competitors' customers need to be identified. A key question to ask is: Are the competitors' customers satisfied? How is our own customer satisfaction?
4. Analysis needs to be conducted on why the organization loses against the competitors, why it wins against them in new business. A list of the competitors' weaknesses needs to be surfaced as part of the SWOT analysis.
5. Further research on how many customers the company has won over from the competition needs to be undertaken (takeaways) and by the same token, existing customers lost to competition (giveaways).
6. Finally, marketing department needs to creatively finds ways to access the competitor's customer base (names, titles, industries, etc.).
7. At this point, marketing department is ready to create marketing programs to win away competitor's customers. At a minimum, the program includes campaign, offer, marketing and sales tools, fulfillment, product and data conversion and integration.
8. Minimum 10% to 20% marketing investment should be aimed at competition. There is mid-term revenue potential in Competitors' markets (programs take time to execute; customers take time to convert).
b. Adjacent market:
1. Adjacent markets are markets that are either sub-sets or super-sets of the solution that the company provides. The company must know on whether it provides a complete solution to the customer's problems or only a subset. For instance, the solution could be deeply embedded within a business process wherein the customer uses other technologies and products. If the company provides a complete solution, what is the strategy against those who provide only a subset? If the company provides a subset, what is the strategy to provide a complete solution? These questions need to be addressed.
2. The marketing department needs to determine the players in the Adjacent market that provide a complete solution or a subset, and whether they are potential competitors or partners.
3. Further, the marketing department needs to answer the following questions: Who are the customers? Are their needs maturing? Are they looking to upgrade and replace the other players? What is the market growth potential?
4. Finally the all-important analysis on resources, costs, profits and risks associated with entering an Adjacent market needs to be conducted. Questions such as entering the Adjacent market head-on, complementing existing players, or focus on a specific niche need to be addressed.
5. The key to execution in Adjacent Market is Experiment. Test a hypothesis. Change the strategy as often as needed.
6. Minimum 5% to 10% marketing investment should be aimed at Adjacent markets. There is mid-term to long-term revenue potential in the Adjacent markets (creating a strategy, executing and attracting customers will take time).
9. Executing marketing programs for adjacent markets require opportunistic measures and entrepreneurship.
5. Untapped market:
a. Untapped market is where the company has zero business and no traction. Marketing department needs to determine the Untapped markets, and reasons on why the company has not created any business in these markets.
b. Marketing has to answer the following questions: Can we tap into this market? What is the investment required? What is the available market?
c. Competitive analysis needs to be conducted on whether the competitors have already tapped into this market, and why.
d. As part of execution, marketing needs to think about creating beachheads, and whether the company can leverage their mindshare to build and create this market.
e. Since Untapped market is brand new, a key question on market entry needs to be analyzed: entering with partners or going direct.
f. Marketing department needs to think about creating opportunistic mechanisms to explore the untapped market, and should be willing to change them often.
g. Minimum 1% to 5% marketing investment should be aimed at untapped markets. There is long-term revenue potential in this market.
h. Untapped market is where companies evolve, become great companies and bring in new revenue and market share. Investing into untapped markets is high risk, high reward strategy.
Marketing Innovation requires strategy, disciplined execution, and entrepreneurship (especially outside Growth markets). Marketing Innovation can create significant market leadership for organizations that put all the marketing wheels in motion.
Originally published in 2006. Republished in 2009.
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