All You Need to Know Before Planning the Business Development Strategies
Before developing your business growth strategies, there are several variables which you must firmly comprehend that can help gain a much needed advantage in the early market.
As mentioned in several previous posts, the most ideal place for businesses that have the potential of appealing to a wide customer base is in the mainstream market. That is where majority of the population lies, and ultimately the greatest opportunities for growth and profits.
With that said, the sheer number businesses that fail each year serves as proof of the difficulty of breaking into the mainstream market. Countless innovative businesses have fallen while trying to enter the mainstream market. Ask Google Glass. Ask 3D TVs.
One of the reasons for the difficulty is that the mainstream consumers are often very reference based. They will not buy a product until they see other people like them using it. They don’t want to be the first to try a new innovation, they prefer products that have already been tried and tested by other people.
They want to purchase from companies that are established market leaders. The prefer whole products over the ones that struggle to meet expectations. They have very many demands, which, if not met, gives them a reason to turn down the purchase. If your products have a potential of appealing to a wide range of consumers, then it is advisable to lay down business development tactics that will help you breakthrough to the mainstream.
The Technology Adoption Life Cycle model breaks down a typical market for new and innovative products. Understanding the model will help set up more strategic marketing plans and tactics which respond directly to consumer expectations. The underlying logic behind it has been successfully used by tech giants like Uber and Facebook, and continues to be used by many other growing startups. The model was discussed at length in a previous post (The Most Effective Guideline for Marketing Innovation), but just to recap, here’s the illustration:
The Technology Adoption Life Cycle Model:
The Gap in the Model
The Technology Adoption Life Cycle demonstrates the introduction of new and innovative products to the market by targeting specific consumer groups, one at a time; starting from the left all the way to the far right on the curve. The early and late majority groups represent the mainstream market – with promises of the greatest profit margins, but unlike the earlier groups, are the most difficult to penetrate.
Consumers in the mainstream market will generally not buy until a product has been tried, tested, and has several pre-existing users who they can refer to. This creates a puzzle; how do you go about with selling to a group of people that will not buy your product, unless others like them have already bought? How do you appeal to the first set of customers?
As illustrated on the model, there is a gap situated right between the early adopters and the early majority. The gap signifies the difficulty of crossing over to the early majority (the mainstream consumers), and also represents the pitfall where many new businesses often fall. Businesses that fall into the gap while trying to access the mainstream market often face challenges such as a lack on new customers, several competitors fighting for the same space, limited access to financial services, very slow growth (if any), etc. A venture that stay in the gap for too long may never manage to find its way out. Please go through this post for a deeper explanation of why the gap exists and how to successfully get across it.
Forming Strategic Alliances and Partnerships
“POWER is essential for success in the accumulation of money. PLANS are inert and useless, without sufficient POWER to translate them into ACTION. POWER may be defined as ‘organized and intelligently directed KNOWLEDGE.’ Power, as the term is here used, refers to ORGANIZED effort, sufficient to enable an individual to transmute DESIRE into its monetary equivalent. ORGANIZED effort is produced through the coordination of effort of two or more people, who work toward a DEFINITE end, in a spirit of harmony. POWER IS REQUIRED FOR THE ACCUMULATION OF MONEY! POWER IS NECESSARY FOR THE RETENTION OF MONEY AFTER IT HAS BEEN ACCUMULATED!” – Napoleon Hill, Think and Grow Rich
Let me use this paragraph to briefly go over the downside of partnerships.
You see, the challenge with partnerships is that they often look better on paper than they perform after the agreements have been signed. The companies coming in to form the alliance naturally have differences that are distinctive to their individual set of values, culture, procedures, etc. Such differences are often exposed after the partnership has begun, and leads to risks of friction and disagreement. For instance, the decision cycle of one company may be within a span of few days; whereas the other partnering company requires endorsements from several board members before reaching a decision. And that could take months. That whole process would certainly annoy one partner.
Yes, partnerships do have their challenges, but does that mean that they should be disregarded? No. Two heads are better than one, of course, but operating with two heads is more complicated that operating with one. Partnerships that are most likely to succeed are the strategic ones which only focus on particular elements – in line with the goal of developing a ‘whole product’. If one of the business’ goals is to breakthrough to the mainstream market, then the first and perhaps most important requirement is to sell products that are ‘whole’. Such products often out-do their competitors by simply being more compelling to buy.
The purpose of partnerships should be to help fast track the formation of products that will be a perfect fit for the established target market segment. Such partnerships should be seeked out as early as possible. They should be anticipated by looking at whole product solutions that could potentially enhance the buying experience of the core product.
Alliances whereby each party brings in a different set of skills and resources have numerous advantages. The Partners can share the decision making responsibilities and help each other out when need be; can help each other gain exposure in adjacent segments; can benefit from the facilitation of easier or cheaper production and operating processes, etc. It is highly advisable to consider establishing a strategic alliance while planning your business development strategies. A Carefully curated partnership will open up doors that help with the creation and marketing of whole products, which in turn will enhance your chances of success in the mainstream market.