3 Ways Market Mapping Can Help Fuel Future Growth: What You Need to Know.
Whether you’re adapting to the “new normal” or just looking to identify new pathways for future growth, there’s never been a better time to refresh your market intelligence to prepare for what’s next. The global pandemic has acted like both an emergency brake and an accelerator — ramping up adoption of some trends and creating abandonment of others. These changes have left many to wonder: What’s next? And how can I position myself to be proactive about business decisions?
Earlier, in our blog post, “Preparing for the New Normal,” we examined how to assess your business environment and position it for success in light of COVID-19 challenges based on four general states. Some businesses were “amplified,” like essential services that went into overdrive as a result. Others were displaced, disrupted, or evolving. Today, regardless of how your business was affected, it makes sense to take a fresh look at your market so you can prepare for the future.
Let’s take a look at how market mapping can help you identify the current forces of change that may impact your business and how you can navigate them successfully for future growth.
Part I: MARKET SIZING ANALYSIS
To understand what’s happening in the marketplace, you first have to understand and define who your market is, and you can do this by engaging in a market mapping exercise.
Market mapping helps you understand the future growth for your market at three levels:
1. Target Market
Your target market includes all of the products you make today and all of the products that your competitors sell. When we look at a target market, we can identify the rate at which it’s growing, as well as the percentage of that category growth that your company is currently capturing. With those two metrics in mind, you can identify if you’re performing on par with the category average or if you’re underperforming. Let’s pretend for a moment you are an apple farmer. To assess your target market here, we would look at the overall apple market, the performance of each of the apple varieties you sell, and, if possible, the performance of their competitor’s business.
2. Serviceable Market
The serviceable market is where you find your portfolio extensions; things your company could make with a focused effort in the next 3-5 years as part of your future growth strategy. Sticking with our apple example, to expand in the serviceable market, the apple farmer could create cider, donuts, or apple butter to not only extend the life of their product but also enable consumers to enjoy more apple products on more occasions – therefore increasing opportunities to buy and enjoy your product. Offerings like these are just a few steps away from what you make today and could expand your current portfolio without significant investment or long time frames.
3. Addressable Market
The addressable market is the broadest lens within your market map. You will look at any adjacent industries that your company could enter as part of your future growth strategy by making new products to serve them. For example, if your business today sells apples, you might expand to offer cheese or peanut butter to create a snack box for busy people on the go. Here you will look for new pools of profit your company can tap into with products, services, or experiences that you do not make today.
What’s your market map?
In summary, market mapping is a diagnostic tool used to take a look at how your business is performing and explore where your next source of growth might come from, whether it’s more of the same or different than what you make today. Its other value is in helping you establish a baseline, which you can use as a benchmark to measure future growth.
It’s almost like creating an inventory: if you were the owner of a small business, you would take a list of all the products you have for sale to see what’s selling well and what’s not selling well. Armed with that information, you could assess how you would need to shift to run your business in the future profitably. Market mapping provides this kind of foundational level-set and helps you ask some great questions: What opportunities do we have with our stock and trade? Are we going to meet or exceed our financial targets with what we sell today, or are we going to need to look elsewhere? It’s essentially a sizing activity to understand where the profit pools are in your category and where you might reasonably source additional revenue for your business.
Part II: MARKET LANDSCAPE ANALYSIS
When you look at market mapping, you’re taking the pulse of what is happening today. But once you’ve established that foundation, you can start to project what may happen in the future and how your business may respond to that.
Based on your market mapping results, scenario planning can start to define the forces of change — the “pushes” and “pulls” — that may shift the business landscape in different directions and ultimately affect your profits.
THRIVE defines “pushes” as external trends or changes in the competitive environment that may push your company to adapt to new business circumstances or new product/service entrants. These are considered pushes because they’re not demands that a consumer or a customer personally puts on a business, but they are things that are happening that may steer the dynamics of a market in a new direction.
For example, let’s say one of your competitors develops a brand-new product. That’s going to change the competitive landscape because you are no longer competing against the older model that your competitor was selling; now, you have to consider the new device’s new features and capabilities. In light of that, some of the benchmarks of how you measure your product’s competitiveness will change because of the latest market dynamics created by the competitor. The same would happen if they made changes to their pricing strategy. Maybe your competitor is still selling the same old product, but they decide to slash pricing by 20 percent. How would that affect the way your product or service and its price is perceived in the marketplace?
We also consider trends as pushes. When we look at trends, we consider both consumer trends and broader social and demographic trends. We are looking for movements that have gained critical mass or momentum. A cohort of younger people entering the workforce, for example, would undoubtedly shift the marketplace considerably. But so would widespread adoption of technology. Take, for example, the shift we’ve seen with video conferencing. Now, it’s not just used for business meetings; we use video calls to connect with our doctors, our friends, or even our elected officials.
Put simply: the competitive environment and trends are all examples of market forces that might push a company to adapt its offerings to new circumstances that can drive future growth. Often we use secondary research to identify these pushes. It’s essential to consider multiple angles. Some examples of the right places to identify pushes include syndicated trends, resources, financial reports, demographics reports, and other broad sources that look at environmental concerns or public health.
Conversely, THRIVE defines “pulls” as consumer or customer needs that create demand for a new product, services, or experience. Pulls are the market forces that the people who buy your product are asking your company to offer. For example, the growing demand for plant-based and organic foods in the food industry, expanding the market for “clean” foods. Recognizing this shift in consumer demand, many companies have developed offerings to expand these opportunities. Conversely, this shift in demand toward “cleaner” foods has a corresponding decrease in demand for conventional or processed food – prompting other companies to decrease investment in this area. While food is just one convenient example, we can see how shifting consumer and customer demands have power as a market force, impacting how your current offerings are perceived — and what you may want to offer and drive growth in the future.
Many pulls are unique to your product or your category. So, when identifying and defining “pulls,” it makes sense to get close to your consumer or customer and listen to what their needs are. One way we like to identify the pulls for a particular business is by doing primary research. For example, scheduling one-on-one conversations with your consumers or customers and listening to what they have to say is a great starting point!
When you take this next step and examine the forces of change at work on your product or business, you can start to understand where the opportunities and risks might be for your future growth strategy.
Once you’ve mapped your market, you’ll be able to see where your business has room to grow. If you’ve done the exercise correctly, the market mapping should enable you to see multiple potential growth pathways. To visualize the entire landscape of possible things your business could do, you’re going to want to develop an opportunity framework. It creates a cohesive view of where future growth can happen and how you can create and capture value with your business today. Allowing you to assess your options for growth based on different variables, like feasibility, viability, desirability, so you can determine the most impactful direction for your business to move forward.
So, stay tuned for our next post: We’ll be sharing exactly what an opportunity framework looks like and how you can create one for your business.