4 Ways to Use a Market Map

Tactical innovators assess their environment through the lens of a Market Map and listen to needs through the voice of the customer, enabling a proactive response to any market change.  I would argue that for every type of business, there are at least two paths to growth: (1) compete more effectively within existing segments or (2) identify new, high value segments where you can be successful.  Here are four ways a Market Map will support either approach to increase revenue.

1. The Market Map Drives Market Sizing and Segmentation

As you know from my most recent post (Market Maps = Better Product Decisions), the Market Map provides a structural view of the markets in which your products and services compete. This handy framework forces a logical assessment of the market informed by the various angles on which you compete.  This, in turn, drives detailed customer segmentation for each of those angles and once compiled, results in a market taxonomy that lends itself perfectly as the structure for bottoms-up market sizing.

1. The Market Map and Product Roadmap Go Hand-in-Hand

With a Market Map it’s easy to see where your competitors are concentrated and what solutions hold their focus.  Through this lens, gaps in your product portfolio will quickly become apparent.  A Market Map can serve as an excellent vehicle to either validate or help you fine-tune your product development roadmap. In other words, the Market Map helps you be confident that you have made the correct decisions about where to invest so that you can compete successfully in an existing segment or expand into new segments.

1. The Market Map is Your Guide to Competitors’ Moves

The Market Map provides a framework to gather and organize data to drive tactical decisions in response to actions taken by your competitors.  But do you truly understand the “why” behind these moves?  For example, if a competitor acquires another company in your space, can you easily determine what they may have gained from the new product set or technology platform?  Was the move motivated by the need to expand into a new part of the value-chain?  The Market Map will shed light on these questions and help you come up with the right response to any move a competitor takes.

1. The Market Map Uncovers Partners or Acquisition Targets

Building new products from scratch may not be the best path to rapid growth in today’s fast-paced business environment.  If acquisition or partnership is the answer, a well-constructed Market Map can narrow your search and highlight the best companies to consider.  In this case, one of our manufacturing clients was interested in a new opportunity segment and realized the best path to market entry was indeed an acquisition. Together, we developed a Market Map that provided an informed, customized acquisition-screening filter to identify companies to investigate further.

Now that we’ve covered just four of the practical applications of the Market Map, stay tuned for future posts that pair this useful framework with the Voice of the Customer.

Do your competitors' customers hold the key to your pricing strategy?

Setting the price is one of the more complex activities we undertake when launching a new product or service.  As a starting point to evaluate pricing, we tend to triangulate three variables: cost, competition (price), and contribution.  These three dimensions alone are not sufficient, however, and each by itself is limiting.  Product development & management research suggests that many companies struggle with pricing.  Even best-in-class companies are stuck in the 3-dimension mindset and once in the market, raising price is not easy.  Price, in fact, is a way to innovate and getting it right has never been more important.

But, we know there is a fourth dimension that informs value-based pricing and the truth lies in what customers are willing to pay.  Understanding your competitors’ customers will help you uncover answers to the following questions:

• If your product or service is superior to the competition and potential customers view it that way, can you charge a premium?
• Do you know where you stand, beyond price, relative to your competitors’ products?
• How are you positioned against alternatives and what other information might help you set the right price?

For years, companies have been telling us that they collect and monitor competitive pricing. When we review their data, it is usually public information available from published price sheets and their competitors’ websites.  Real competitive pricing is not being collected at the customer level.  If companies had the discipline to investigate what their competitors’ customers actually pay, they would find a treasure trove of information to validate the price/value mix and help inform other key marketing and product management decisions. How you collect this information ethically and where you start are two key questions every company should ask before beginning.  How you use this information is where the power lies.  Customers can value the benefits of a product or service subjectively and this may differ by company and sometimes even by the corporate purchaser.  Understanding how your competitors’ customers measure value and utility will provide you with insight to establish better pricing and promote your product or service to win deals and grow revenue.