Introducing a New Product in a New Market: How to be Successful in The “Suicide Cell”?

Last week, I wrote about competing against free software, and this week I will share with you a few strategies of entering a new market with a new software product.

Many Product Managers of expansion stage software companies are aware of the Ansoff Matrix or Product-Market Growth Matrix. The “suicide cell” in the matrix, circled in red in the picture below, is the most risky quadrant, where a business introduces a new product into a new market. The chance of success in the Diversification, or “suicide cell”, is very low and can be as low as 5%. Most existing businesses try to stay out of this area. However, start-ups are often in this space, as they introduce new products in a new market that they are just entering. Some established companies will also go after this space, lured by the potential rewards of succeeding here as they develop new products with the hope of being a dominant player in the market. For players in this high risk quadrant, here are a few ways of improving your chances of being successful when introducing a new software product into a new market:

Commit to staying in the business for the long term: It is very important to have realistic expectations for the time and resources that your product will need in order to gain market share and be successful. It is also important to realize that you will be bombarded with a large pool of unknowns and things that will be outside of your plan. You are likely to underestimate your risks, the competitive landscape, the investments needed, the time required to achieve profitability, and so on. Whatever it is, despite all the planned and unplanned obstacles and the patience required in sustaining through such happenings, the management teams need to be committed in their efforts and in their access to funding for the long term.

Find ways to quickly get a grasp of market requirements: Being a newbie in the market, you need to quickly acclimate yourself to the needs of the new customers, to the competitors in the market, to the industry language. One of the quickest/easiest ways to do this is to hire employees who already have experience in the target market. In addition, other ways include doing targeted market research, attending trade shows, being part of industry associations and partnering with other companies in the industry – all of which will get you up to speed and help you get through the initial learning phase quickly.

Offer a whole product solution: Don’t just create the product, but also offer supporting integration services, application software, and so on, that your customers will need in order to feel like they are getting the expected return on their investment. A good example of this is Apple’s iTunes Store, which was a prime constituent to the success of the Apple iPod. You can also enlist the companies you partner with to provide the different elements in the whole product creation.

Get your consumers to trust your product: Consumers tend to always be more trusting of established players in the market, which is why, despite having a great product, you might still be unable to get a good grip of the market. Besides a targeted market strategy and email blasts, there are two other ways of establishing credibility: firstly, by establishing and publicizing success with important reference accounts; secondly, by partnering with other companies that have already earned credibility in the market.

I hope the above tactics are of help to you. Please let me know if you have other ideas. Also, share your story if you have survived the suicide cell and was successful in rolling out a software product.