Do You Know Your Market Targets?
Deeply understanding your market targets is one of the most important things an expansion stage technology company can do.
That knowledge can lead to unique insights that transform your product-market strategy and allow you to understand how well you’re executing against it. It truly is the first piece in the big competitive advantage puzzle, which if done well can link to developing and executing business growth strategies and company development strategies. Understanding your market targets will start you off in the ultimately correct direction.
At OpenView, we’ve made market participant analysis one of the focuses of our OpenView Lens framework, which is an extension of Strategy Maps and a way to help expansion stage technology companies design and execute comprehensive strategies.
The Market Participant Lens showcases the view of a company’s target customer segments, the users and buyers in those segments, the people who influence those users and buyers, the marketing channels available to reach the users and buyers (and the sales channels they use), and the companies or products that compete for the attention and resources of other market participants.
By looking through the market participants lens, you can get a much clearer picture of the market’s current state and trends. And from that, you gain a clearer idea of the goals that you might want to create, allowing you to develop initiatives to execute and realize them.
So how does it work?
At the early stage of a company, the core idea comes from one of several angles:
– There is a significant user need that has been identified
– There is a buyer that has money to spend and idea of what they want to spend it on
– There is a product idea that germinates
– There is a unique technology that germinates
Expansion strategy starts with target customer segments!
As companies develop their product/early customers and start to enter the expansion stage, it is time to develop an expansion strategy for the company. In order to develop a robust expansion strategy, companies must first focus on the target segment they are aiming to penetrate. Without this point of view, it is impossible to create an expansion strategy.
Once you know your target customer segment, you can better understand the users in the segment in order to create your whole product strategy. Also, once you know your target customer segment, you can better understand the buyers in the segment in order to create your go-to-market strategy.
Looking at it more deeply, the market lens has 12 focal points
If you really want to nail your expansion strategy, you need to understand and be able to describe 12 different market targets that you are addressing as part of your expansion strategy:
1. Target Customer Segment
Most companies poorly define their target customer segment (or segments). That’s a problem, because it can be very, very difficult to design an expansion stage strategy without a clear view on your target customer segment.
Larger companies often try to penetrate several segments, but — at this growth stage — companies should look through the market participant lens for each segment separately. It will provide the clearest understanding of your market participants.
This focal point represents all of the people who interact with your whole product (core product, plus all of the ancillary professional services, training, and issue resolution services that surround it) throughout its lifecycle, along with those who are in your target segment. Users include people who install, configure, administer, and interact with your product or service on a regular basis.
Buyers represent all of the roles involved in your product’s buying process and the people previously identified in your target market segment. They could include users acting in buying roles, the economic buyer, decision makers, buying committees, and legal and purchasing departments.
4. Buyer Influencers
This group represents the people who influence your buyers during the buying process, helping them be more efficient or effective. For example, influencers might help them become aware of your product or convince them to try it out. They could include people who previously purchased your product, important writers, industry analysts, bloggers, or respected experts.
It is really important to understand the influencers from the perspective of the buyers in your target market segment, because influencers in that segment may not be the same in another.
5. Indirect Marketing Channels
Indirect Marketing Channels are the “places” that influence buyers during the buying process. There are a significant number of channel possibilities, but some examples include periodicals, content sites, events, online forums, blogs, search engines, and more traditional advertising media like radio, TV, print, and billboards.
6. Direct Sales and Marketing Channels
You can use these channels to directly influence the buyers during the buying process. This group includes your own website, social media networks, email, SMS messaging (and other forms of messaging), telephone conversations, in-person meetings, and retail locations (if you own stores).
7. Indirect Sales Channels
This focal point is represented by the channels or places through which your buyers can purchase your product when they don’t buy it directly from you. That might include e-commerce sites, stores, VARS, distributors, OEM relationships, or third-party salesforces.
The bottom line is that the better you understand your target customer segment and the users and buyers within it, you’ll have a far greater grasp of the market participants in the previous four market participant channels.
8. Complimentary Products and Services
The users in your target customer segment are working within a particular context, including products and services. The more you understand the complimentary products and services (and the companies that create them), the better you will comprehend the context of your users. From that, you’ll generate more ideas for improving your own whole product and perhaps, initiate partnerships with providers of those complimentary products and services.
9. Delivery Channels
The delivery channels represent the means in which you can deliver your whole product (and its updates) to your users. Those channels include the Internet, phone, and physical delivery. Or, you might deliver the product through an indirect channel, such as having a channel partner deliver your product or include it as part of a broader product another company is offering (for example, shipping your software with Dell computers).
10. Product Influencers
This group differs slightly from the previous group of influencers. Here, these influencers help the actual users of your product better understand it, resolving issues and encourage better use of the product over time. If you want a third party to help with your users, these influencers are an important group to understand.
11. Indirect Communication Channels
These are the “places” that influence your users during the usage lifecycle. They include online forums, blogs, and other social network sites, as well as periodicals and other sources your users read.
12. Direct Communication Channels
Unlike indirect channels, direct communication channels allow you to speak directly to your users. They might include the user interface of your product, your website, email, SMS messaging, telephone conversations, in-person meetings, and retail locations (if you have stores). The key is to understand the channels that are best suited for your users.
So, there you have it.
With those 12 focal points, you should be able to hone in to your market participants and operate with far better knowledge of what they need and how to reach them. Reality is often much more complex than simply understanding and executing against each of those focal points. But this lens should help you parse your market participants to glean unique insight, establish product and go-to-market strategy, and understand the effects of your execution.
There is a 13th focal point that companies should keep an eye on, too: Key Competitors. It complicates the lens a little bit, but it’s vital to consider those competitors in the context of your market participants, rather than independent of them.
The key opportunity with the market participant lens it to get true clarity on who exactly those participants are and how you can better understand them. If you can accomplish that, it will lead to a much better overall understanding of what exactly you need to do to maximize market penetration.
That will inevitably lead to better competitive advantage and allow you to develop and execute business growth and company development strategies.
As you race to close the books on 2019, it’s worth stepping back and considering what the future will hold for B2B software. OpenView’s experts weighed in with their predictions across product, sales, marketing, pricing, corporate development and talent.
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