|
Four Challenges in Developing Software Market Strategy
by Christine Crandell
Contrary to conventional wisdom, truly successful software market strategy is elegantly simple. It does however require excellence in four 'fundamentals' - segmenting the market, selecting the right target markets, defining the value proposition, and implementation. Focused execution and incorporation of these 'fundamentals' into ongoing company processes, enables the winners to create sustainable market share and customer value.
Each of the above software market strategy 'fundamentals' has a challenge, that is, an issue or situation that can derail market strategy development or implementation. The four most prevalent challenges are clear focus, prioritization, realism, and commitment. As we'll see, awareness of the warning signs of such challenges and knowing how to proactively minimize their negative effects with prudent, specific actions is critical for sustainable market share success.
Clear Focus
The challenge of Clear Focus occurs when a company is evaluating which market offers the longest term potential. During segmentation, the attractiveness, long term viability, and potential of each identified market is assessed and then overlaid against the company's core competencies, product vision and technology to narrow down the list of potential markets. Frequently multiple markets present themselves, yet based upon the company's core competencies and product vision, only one market is viable.
Clear focus becomes a challenge when a company believes it should pursue more than one market. Pursuing multiple markets almost always defocuses a company, exhausts precious resources and, at its extreme can cause the company to lose its vision and momentum. The Clear Focus challenge is best resolved by using a pre-agreed upon fact-based methodology used to identify what the right market opportunity is. Management must also have the guts to pursue only that market.
Prioritization
The prioritization challenge arises in the second 'fundamental' -- target market selection. When a company faces a number of attractive target markets, management must decide on which few to pursue. This is a time for honest understanding of the Company's ability and an in-depth knowledge of each target market's potential. By assessing each target market's attractiveness in terms of number of sites and their growth rates, the company's competitive position, and buyer characteristics and then mapping them against the company's core competencies and resources, the priorities appear. Frequently however, either management can't agree which target markets should be the highest priority or they unrealistically believe they can simultaneously pursue many target markets as a hedging strategy.
Despite the natural tendency to want to pursue many target markets believing this will generate the most revenue and share as fast as possible, lack of prioritization diffuses any effort executed and risks success. What typically results is lower revenue than expected and any market shares gained are too thinly distributed to create significant levels of penetration and momentum.
The Prioritization challenge can be resolved if the target market selection process is predicated on impartial, fact based analysis. The key is to gain broad buy-in to a credible process that analytically evaluates, prioritizes and selects current and future target markets.
Realism
The challenge of Realism rears its ugly head in the value proposition fundamental. Frequently the most difficult of all the challenges, it occurs when value propositions are built on unrealistic perceptions about the product and target markets. All too often, a company presumes it knows why the customer will buy or has an unrealistic assessment of its core competencies. The challenge comes home to roost when sales forecasts are repeatedly disappointing and field feedback runs counter to management's assumptions about how the market would react to the product.
Firmly based on the core competencies of a company, a value proposition should be developed from the perspective of the benefits it delivers to the target market - through their eyes, using their words. A compelling, ìoutside-inî value proposition leverages those differentiating attributes of a product which cannot be easily duplicated by competitors and which are considered 'of value' to and affordable by the target market(s).
The key to resolving the Realism challenge is to not allow a value proposition to be used unless the market will accept it. When developing the value proposition, it should be tested by asking - what is the product's benefit, what business problem is it solving, who is the audience, and what value is it to the target buyer? This is commonly referred to as 'in market' validation, where the value proposition is tested within the company's current and/or proposed target markets. Up-front market validation allows the value proposition to be refined, giving the company confidence it will impact the market as planned. It also spares the company the very public exercise of post-launch value proposition refinement that typically results in market confusion and lost momentum.
Commitment
The last challenge is Commitment, which commonly occurs during strategy implementation. After the market strategy has been defined through setting pricing, promotion, product definition, and distribution tactics, the challenge of commitment can arise when the market shifts. The Company may begin to doubt the foundation it has laid and resort to a series of 'bolt-on' short-term reactionary tactics in response.
Markets, technology and buyers do and will change as a result of competitive actions, technology adoption, maturation, and economic factors. The correct course of action in the commitment challenge is to separate and understand the effect of the company's programs from the affect of market evolutionary moves. If the market strategy foundation and ongoing processes were properly developed, the mechanisms are in place for detecting and assessing early market shifts before the rest of the market recognizes that the landscape has changed and long before reactionary moves become necessary.
The four 'fundamentals' of software market strategy provide an elegantly simple, long-term foundation and process for success. However, they are not one-time activities just as the four related challenges are not one-time issues the company faces. The key is implementing methodology into on-going processes. Using a proven market strategy methodology, and knowing the warning signs of the challenges and what to do about them, can put the odds in your favor as you pursue sustainable software market share.
Christine Crandell is president and co-founder of NBS/New Business Strategies, a market strategy firm.
We're New Business Strategies. We Listen. We Craft. We Deliver. Other Published Works - Information on Speaking Engagements
© 2007 NBS Consulting Group, Inc. d/b/a New
Business Strategies |
 |
