Am I Too Late?
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Am I Too Late? It’s A Dumb Question That Will Save You Lots of Money
When is it it too late to enter a market?
The answer begins with the use of polarity management, that is, a complex problem solving system that recognizes the existence of more than one right answer. An example would be found in the question, “How do I get to New York?” The answer could be by car, train, bike, plane or bus. There are multiple “right” answers. It all depends on the other priorities driving your need to go.
This holds true for entering a new market. There are multiple variables that determine the validity of your final solution. One of the first that comes to mind is the existence of competition, both present and potential. Most market analysts would say it’s too late to enter the tablet market. Apple and Samsung are embroiled in heated competition spending millions in promotions and legal maneuvers to block each other and sew up key markets. Amazon has launched Kindle Fire with a huge content library working in conjunction with its savvy tablet to entice customers to buy based on added value . Lenovo has entered with the IdeaPad Tablet PC powered by Android; Acer, with the world’s first 10-finger multitouch ICONIA. Now Dell has announced its powerful Latitude XT3.
The same holds true for manufacturers of solar panels. Global demand is up 9%. But, because of the falling price of polysilicon and other components, as well as the abundance of suppliers already duking it out for a small slice of rapidly dwindling market share, seven solar panel manufacturers have filed for bankruptcy, and all competitors, including the big boys like First Solar inc and Suntech Power are reporting weaker profits. Some companies have seen their value fall as much as 90%. A major shakeout is definitely underway.
These two sectors represent a no-brainer in terms of market entry. Unless you have a tablet that prints out $100 bills, or a solar panel that reflects all of the satellite channels for free, it’s too late to get in.
Sometimes, however, the decision to enter or not enter a specific market is more complex and not as clear. There’s an unmet need, the market is in its infancy, there are no major players and the cost to enter is manageable. At a distance it might appear to be an entrepreneurial dream. But is it?
Here are four questions you need to ask:
1. Is the opportunity a match for my organization’s core competencies?
Core competencies represent an individual’s fundamental knowledge, ability, and/or expertise in a specific skill set. Core implies the individual has an intrinsic inclination toward matters in a specific area and is an ideal candidate for future learning in that area and related areas. The cumulative competency mix of all team members, internally and externally (contract workers and key consultants) represents your organization’s core competencies. Thus, if your company roster is made up of Traditionalists and Baby Boomers, a market opportunity to sell Andriod and Apple phones is not a good match. As a proud Baby Boomers, I demand at least one full day to learn how to turn my new phone on. And please don’t trouble me with these things called apps.
2. Does the threshold to entry make me a sitting duck?
Threshold to entry refers to the difficulty or ease with which anyone can enter the market and compete. If you open up a corner fruit and vegetable stand, what will prevent your neighbor from doing the same? And how will you compete when you learned that his grandfather has a farm in the country and will provide him with tomatoes and cucumbers for free?
The threshold for getting into a marketplace such as fruit and vegetable stands, barber shops, pool halls, delivery services, laundry mats, wedding planning, etc. is low. Therefore, it’s just a matter of time before someone comes along and offers the same product or service, either at a lower price or with more attractive bells and whistles. You are a sitting duck, just waiting to be roasted in the ovens of commerce. It’s too late to get into the market because people have already figured out how to get in, just like you, long before you started thinking about it. Conversely, not everyone has figured out how to build a nuclear plant or third generation micro-alloyed steel to be used in new fuel-efficient automobiles. But can your company roster of young Millennials handle the job?
3. Is the target I’m about to pursue a trend or fad?
The basic difference between the two is trends last longer. By the time you gear up for a fad like LeBron James T-shirts that read, “Welcome to Miami, LeBron“, or open a health store based on the caveman diet regiment (the assumption that things must have been better when we foraged for food without breads or carbohydrates), someone will have done a poll to show that LeBron is now a goat, and an archaeological study to show that cavemen died way too soon. In today’s instantaneous society, things change quickly. You can easily be left holding the fad bag.
4. Has the market matured to the point of diminishing prospects?
Mature markets such as microwaves, watches, credit cards, term life insurance, etc., have reached a point where the products or services are not “significantly” different, most everyone has a “satisfactory” rendition or representation of the product and there aren’t enough new customers to go around. Market leaders are slashing prices and trying to steal customers from each other, and to add to the misery, the products or services are teetering on obsolescence.
Except for the sake of making a fashion statement, most people are no longer depending on their watch to tell the time. They use their Smartphones. And who’s rushing into the local ATT&T center to buy the latest killer cordless landline phone? Again, people are moving to cell phones.
So is it too late to enter your dream market and start to set the world on fire?
The short answer is maybe … maybe not. The point is the process must not be arbitrarily. You must plow into today’s world of smart analytics, data mining and predictive analysis to determine what’s best for your organization. Let me say a few words about this and then I’m through.
Data mining refers to the analytical sifting of data to find new patterns, relationships, sequences and insights critical to the continued existence and growth of your business. The process is discovery-driven and multi-dimensional and tied to the realistic prospect of predicting the future.
The search by small businesses to find compatible niche markets is tied to studying clusters of information that spill the beans about trends that cannot be seen with the naked eye. This process of placing bets on future scenarios and then deploying valuable resources (time, money, human capital) to seize promising opportunities is the lifeblood of any organization. To have a fighting chance in this volatile economy, you have to move to a position of making percentage plays, trying everything in your power to take the guest work out of the equation.
Many years ago, as a marketing consultant, long before the advent of this high-powered number crunching phenomenon, a lady came to my agency seeking help with her dream business. Her husband had died, left her $100,000, and now she could open up the dress shop she’d always dreamed of. I felt like a wet blanket because I spent most of the afternoon trying to talk her out of it. How was she going to compete with Foley’s (which eventually became Macy’s)? She didn’t have the advertising budget. She couldn’t buy in volume to lower the price. She couldn’t offer the size and color selection. She had leased a retail location that was five blocks from a neighborhood with high crime statistics and a disproportionate number of liquor stores and pawn shops. She had absolutely no strategy for differentiation.
I begged her not to do it. I even refused to design her logo and signage, hoping this would discourage her. But this was her dream. She did it anyway.
It took about eight months to run through the $100,000. I got a huge knot in my stomach when I drove by the location and saw the going-out-of-business sign. From the very moment she entered the market it was already too late. But she wasn’t willing to ask the dumb question … or accept the cruel, dream-killing answer.
A killer (Facebook) product and innovative (Domino Pizza) strategy can pave the way into existing markets and propel you past the competition to a position of success and dominance. That’s what we all hope for, isn’t it? That’s the essence of the dream we all share. But the process must start with a realistic assessment of our chances for success. We need to ask the dumb question. And if the answer is not favorable, we must learn to move on.