If you’re around long enough, then changes in your current target market will impact you and your business. It’s unavoidable. The ability to evaluate new markets is a skill that every entrepreneur will eventually need to develop.
When you boil it down to the essentials, evaluating a new market involves answering a few key questions:
- Given your resources, can you reach enough buyers with your sales and marketing efforts?
- Do these potential buyers have a painful problem that you can help them solve?
- Have they already spent some time and money trying to solve their problem?
- Realistically, are they willing to pay for the solution(s) that you can provide for them?
For a market to be solid, the answer to all of these questions needs to be yes. If you’re currently evaluating a new market, which of these questions can you answer now?
Of course, getting real answers to some of these questions also requires engaging with that market directly. You’ll need to speak with potential clients.
Does this mean launching an extensive market survey and speaking with hundreds of potential buyers across a large market? No, I don’t think that’s realistic for most of us. I suggest that you start by researching a smaller market segment that you think might be viable in light of the four questions above.
Here’s a personal example to illustrate the process I’m talking about here. I currently own two businesses. For my executive search business, I started researching mid-sized consumer packaged goods (CPG) companies with well-established marketing departments and nationally distributed food and beverage brands. By the way, I didn’t focus at all on gigantic CPG companies like Coca-Cola, Procter & Gamble, etc.
What did I discover in my marketing research travels? First, there were many mid-sized CPG companies already paying executive search firms sizable fees to help them recruit talent for their marketing teams.
Did they have significant problems that I could solve for them in a distinctive way and stand out from my competition? Yes, many of them were dissatisfied with the services that larger executive search firms were providing. They told me that these firms seemed to consider mid-sized CPG companies like them to be second-class clients. This translated into slow, often inconsistent service.
They also told me that large executive search firms often failed to recruit the big company marketing candidates that they wanted. Why? One reason is that those larger search firms recruit marketing talent for many of the world’s biggest CPG companies. As their clients, those same big companies are now off-limits for them to recruit marketers from.
In the midst of my research, I came to realize that a small, specialized search firm like mine could thrive while taking on many fewer corporate clients than my larger competitors. By minimizing the number of top marketing candidates that would be off-limits for me to recruit, I could give mid-sized CPG companies the broad and deep access to big company marketing talent that they wanted.
I decided to go after this new market with my sales and marketing efforts. Over the years, my small firm became a thriving, mature business serving these companies.
From late 2012 into early 2013, I went through a similar market research process for a second business I wanted to launch — the sales and marketing mentor practice serving solo professionals that you find here. This was obviously a very different market for me. With that said, the research process that I used in the past told me that it held great potential. To make a long story short, my newest business is on target for rapid growth.
Of course, you and your business are unique. But the questions that I outlined above still need to be answered if you want to properly assess the viability of a new market.
Would you like to have a sounding board as you consider launching your own market research project? if so, send me an email at slahey@stephenlahey.com and let’s begin the conversation.