Unlocking the full market potential is somewhat analogous to opening a door lock. For the market’s door to wide open, the key’s ridges (all the components of your value- proposition) must match the configuration of the lock’s pins (the market).
The Lock Or The Key – A Matter Of Strategic Choice
As a “marketsmith”, at the highest strategic level of decision-making, you must first decide whether to innovate the lock (the market) and hence shape a whole new type of demand, or simply make the key (the product/service proposition and associated marketing mix) for an existing “lock”. Typically, configuring your product/service to match demand is relatively easier and faster, but also less rewarding and sustainable than shaping the market. For example, for auto-makers, improving the efficiency of gas vehicles was a much simpler strategic choice than Tesla’s to create demand for and develop electric vehicles.
This article deals with re-inventing the marketing mix (the key) to match market demand (the lock), being the default status of the market between cycles of revolutionary, market-disruptive innovations.
This approach entails performing two distinct activities: on one hand, figuring out the ever-changing “combination” of the marketplace which is essentially an exercise in market research (field and desk) and, on the other hand, conceiving a value-proposition and marketing mix to match that configuration, which involves a great deal of product management and organizational leadership.
Organizations need professionals with the knowledge, skills and tools (marketsmiths), and, as important, to empower them to do their work.
If It Is that Simple, So Why Do Organizations Struggle To Reach Their Full Potential?
It’s simple all right, but the devil lies in the details of execution.
- Firstly, figuring out the ever changing market’s configuration is not easy. It requires advanced capabilities in market research and analytics. These involve collecting firsthand marketing intelligence by being fully immersed in the sales activities and interacting with all market participants (buyers, channel partners and all other stakeholder groups) as well as conducting extensive desk research. The first will provide you firsthand insights into the pulse of the market and the dynamics among the market participants, and the latter will provide you the macro-perspective which you will need to understand the market trends over time, past and future. All this data needs to be then fed into a database specifically designed and continually upgraded, to capture it, process it and to generate accurate insights and meaningful answers to all sorts of managerial questions (strategic and operational).
- Secondly, re-designing the value-proposition and associated marketing mix (service/product portfolio, distribution channels, promotion mix and pricing) requires first-class organizational leadership. Without strong working relationship between the front-line and Product, Marketing and Pricing groups, the organization will never be able to adapt all the components of its value-proposition to match the market’s realities in a timely fashion.
- Thirdly, this is a highly dynamic situation that involves constantly moving parts. It’s not enough that you hit the right combination once because the market side is continuously changing, which necessitates relentless effort on your side to keep up and remain in-tune.
- And finally, in small and medium enterprises, it may not be easy to attract professionals with such advanced business and product development and leadership capabilities. In large organizations, complacency, inertia, complexity of scale and power play are all factors that may come in the way of timely action.
Symptoms Of “Lock-Key” Mismatch
Organizations fail to unlock the full market potential because at a given moment in time, one or more components of their marketing mix is out of alignment with the specific sector(s) which they target. Figuring out that you have a misalignment issue is rather simple compared to diagnosing and fixing it.
- New Product / Service – You will notice that success remains sort of localized, scattered and opportunistic in nature. The product/service is not really able to take off, being crippled by those components that are not in full alignment with the market’s configuration.
- Established Product / Service – You will see your market share erode, signaling that the market has taken some sort of turn and something in your marketing mix has derailed. This is bound to happen during the life-cycle of all products. The real danger is when the organization fails to spot issues of misalignment before it’s too late, misdiagnose the issue or insist on the wrong fix. History is rife with once market leaders who lost their leadership or even ceased to exist altogether because of these pitfalls.
Here are a few common examples of misalignment scenarios.
1. Portfolio Mismatch
This may generate from either product/service over-design or under-design. The first will result in waste of development resources and causes complexities in promotional activities, and the latter will put you at competitive disadvantage and cost you missed opportunities.
Your goal is to ensure that you have a strong product/service proposition for for every viable market segment and that you eliminate any redundancy from the portfolio that does not address the specific need(s) of the target market.
2. Distribution Mismatch
This may result from choosing the wrong distribution strategy (direct or indirect) or aligning your organization with under performing channel partners.
Your goal is to ensure that your distribution channels, direct and indirect, are “battle ready” i.e they can carry your proposition to the target market(s), they command the highest share in their respective market(s) and that you, as an organization, claim the lion’s share of their business.
3. Promotion Mismatch
Every audience group has different buying motivations and reasons according to a different rational. Make sure that your core value-proposition and related marketing material is encoded in the language and tuned to the receiving “frequency” of your target audience.
4. Pricing Mismatch
If you got the first three right, you should be able to get away with some misalignment in pricing (within reason). Otherwise, every misalignment in the three previous components of your marketing mix will have to be compensated for with lower pricing.
That said, the price you can claim, in a competitive environment, will always remain the product of the intensity of demand, on one hand, and the abundance/scarcity of supply alternates, on the other.
The Work Of The “Marketsmith”
There is some good news and some bad news to this. The bad news: there is no substitute or short-cuts to the know-how. In other words, you have to make your own key, there’s no passe-partout. Figuring out how-to perform each of those activities is both industry and business-line specific and you must learn and refine your approach through practice.
The good news is that the know-what can be explained.
Step 1: Figure Out The Configuration Of The “Keyway” i.e. The Market
Even the world’s best strategist cannot come up with a half decent plan without reliable market intelligence.
Ideally, you want to have an individual or a small group of individuals (maximum of three) who will take on the task of collecting data and processing it into intelligence. She/he will have both the operational and strategic mindsets, as well as strong competencies in sales, market research, database management and analytics. They are the people who will move between the market (collecting pieces of the puzzle) and the analytical process (re-designing it as needed to capture and process the collected data to produce meaningful insights).
The output of this step is an understanding that will inform the next, strategic planning.
Step 2: Craft Your Strategic Plan i.e. Fabricate The “Key”
Now that you have figured out the market’s configuration, you need to fabricate a key that fits it.
This is an iterative, two-phase process that involves auditing the various components of your current marketing mix for potential misalignment (presenting opportunities for further development) and developing strategies to address them.
The product of this step is a living strategy document that spells out the go-to-market activities and provides the marching orders for the R&D, sales and marketing organizations.
Step 3: Execute And Keep Fine-tuning.
Try it out: take your adjusted key (proposition) to the marketplace and see if it works.
If you did a good job in steps one and two, you are bound to see some immediate breakthroughs in the market’s response. Otherwise, it is something that you missed either in your understanding of the market’s configuration or in crafting your proposition. Whatever the case may be, you’ll sure know.
As always, different views or comments can only help expand and refine this understanding, and therefore are always welcome.