Every couple of hours in the US a new product is launched and over 98% of them fail. Does it pay to be the first in? Is it better to learn from the experiences of the first entrant to the category? Whether the CMO is a late entrant or a pioneer seeking to usurp upstarts, it helps to have a thorough understanding of the market entry successes of the successful 2%.
First, they recognize that consumers are more empowered, but they are not the ones in the cockpit. CMOs shouldn’t forget that solocomo is empowering their brands as much as it is empowering consumers. Second, they understand a simple “Big Idea” solution to a complex problem is often too simple and wrong, as it does not provide enough guidance. While the purpose of simplicity is valid, it doesn’t reflect the intricacies of brands and their markets.
CMOs recognize that there is no rifle shot solution. To stay innovative CMOs know that stories cannot be the sole substitute for great products. The strongest brands pull together Omni-channel marketing strategies that optimize strengths and weaknesses that reinforce the brand’s promise. For that to work the right balance of change and continuity needs to be struck – too much or too little change can wreak chaos on a brand’s successful entry.
To avoid havoc CMOs need a customized go-to-market entry plan that identifies strategic opportunities in target markets that will maximize market penetration and revenue. To make this work CMOs need to create an integrated marketing strategy that encompasses launch plans, product positioning, marketing, pricing through to distribution, lead generation, trade shows, partnerships and online strategies.
In established markets with little brand differentiation maximizing sales growth is not going to be easy. The challenge for CMOs of up and coming brands is to develop a differentiated market entry to overcome these obstacles. To do so these CMOs need to be analyzing their product to gain a real understanding of its SWOT (strengths, weaknesses, opportunities and threats) and business model. Head on market entry can be expensive and the competition can easily defend their position. This requires insight into the market – competitors, target consumers, structure and operation. The challenge is to find a gap in the market that the CMO can provide differentiation. By narrowing the focus on a specific segment the CMO is able to target, communicate and build partnerships more effectively with less overhead. This equips the CMO to build a comprehensive, highly targeted niche entry strategy, through to operations, production, marketing and sales.
Market entry strategies include strategic alliances, JVs, M&A, franchising, contracting and licensing, stand alone/greenfield operations and global supply chains. Whichever strategy is preferred there are four key elements to getting it right:
– Market evaluation
– Business model creation
– Implementation roadmap
Market evaluation is achieved via primary and secondary research. Key questions include what are the regulations associated with the business, the costs, timing, the process, the limitations of licenses and what entry strategies are available so decisions can be made. For the customer evaluation key questions are what are the customers’ needs and purchase behaviors? What customer need is not currently being served? Which segments should the CMO target and what are the key purchasing criteria? As for the competitive evaluation it encompasses assessing the competition, what product categories they offer, how large the market is, which segments to target, noticeable trends, market issues and what are the impediments and barriers to market growth. The CMO can also identify what distribution channels they should use and who are the potential channel partners?
Ultimately it comes down to evaluating the company as to whether it’s positioned for success, does the CMO need a partner, what are the capabilities the CMO needs to acquire and what organizational changes will be necessary to support marketing & sales of the product launch? Once the outputs of the market evaluation have been reviewed the development of the business case comes next. CMOs use the analysis to assess the appeal of the market including its size, growth potential, expected revenues and unmet customer needs. Then there are the difficulties the CMO will face entering the market and the capabilities to overcome these hurdles such as competition, regulation, investment required, talent needed, investment and the opportunity cost. An integral part of this phase is identifying potential partners needed and/or desired. From here the big questions remain whether you have the ability to execute the plan along with the economic analysis of potential entry scenarios.
Once these have been agreed the implementation roadmap needs to be developed. A strong implementation roadmap makes change a success for without it can result in calamity. The roadmap framework contains a detailed strategic plan for market entry to implement the strategy. Key questions that the roadmap answers are what is needed for the potential strategies to work, what hurdles need to be overcome, the organizational change required to support it, the timing, resources and risks and what are the alternatives. With all the right building blocks in place the CMO can launch the product, design her organizational structure, manage the implementation of the new organization and develop an appropriate HR strategy to develop the company, train staff along with KPIs to measure performance.
Pioneers in most industries, once they’ve successfully entered are dynamic, but aggressive competitors have a vast array of weapons to attack you. If you’re a pioneer and want to be King of the Hill you need an entry strategy that makes you number one or two in the marketplace. Therefore, is being entrepreneurial worth the risk and what is the optimum balance between the risks and rewards? Let’s not forget everyone else is looking to lead too so even if you’re the pioneer you can lose that market status overnight without proper insights, but if you get it right you become one of the 2%. Katching.