There’s nothing more discouraging than sinking your time, energy, and money into a project that no one seems to want.
Economics tells us the importance of supply and demand, but how does demand come to exist? How can we create demand for innovative products and services? And, how should marketers adapt in a climate with little to no competitors?
The answer is in market development.
This article will explore how demand is created through innovation and ways marketers can adjust and align their go-to-market strategy to acquire customers from their non-existent, or non-competitive, industry.
The Notion of Utility & Providing More Value
What makes something “in demand”? How does a product or service suddenly become so desired it forms a market? And lastly, what makes a product better or worse than its alternatives?
The answer has to do with the notion of utility, such that a product or service out-performs its alternatives (becoming the ideal choice).
Think of a horse and a car — a classic example of utility at play. When humans tried creating a faster means of travel, they sought out ways to build a faster horse; perhaps altering the horse’s diet, exercise regime, etc. Through innovation, cars were introduced and they radically changed the way we commute. The utility of a car outperformed the utility of a horse, increasing demand for cars.
But what increases a solution’s utility? Where can entrepreneurs and innovators examine to increase the benefit of their product or service? According to W. Chan Kim & Renée Mauborgne, the authors of Blue Ocean Shift, entrepreneurs should look into the buyer experience people have with their product.
The 6 Layers of the Buyer Experience
Let’s examine the buyer experience and highlight ways a product or service can be improved. According to Kim and Mauborgne, there are 6 different layers of the buyer experience:
- Purchase. The experience someone has when buying the product and paying for the product.
- Delivery. The experience someone has when the product is shipped, arrives, and is opened/unboxed. In most recent years, a subtle change to the e-commerce scene has been the inclusion of notifications when a product is ordered, shipped, is out for delivery, and has arrived.
- Use. The experience someone has when actually using your product and realizing the benefit it provides.
- Supplements. The things, experiences, or processes that the product or service alleviates or complements through ownership or interaction with the product or service.
- Maintenance. The amount of time, energy, and money required to maintain the longevity of the product or service, if needing to at all. Think of service notifications now built into cars; prompting you when your car requires service.
- Disposal. The experience someone has when disposing of the product or service. This might be in the form of waste-friendly materials, a discount on their next order, or a clearly defined end-date for a service contract.
At each layer, entrepreneurs should think about ways they could improve the utility, function, and perceived value of their product or service.
What Needs to Happen in the Marketing Strategy
When it comes to truly innovative solutions, there are seldom many people that are considered to belong in that market.
Let’s revisit the example of the horse and car again. When the car was first introduced, would their target audience be car buyers? No, because the audience of car buyers didn’t exist. This is why we need to look at the markets and customers that are adjacent to new innovative markets.
The art of the strategy is to unlock pathways for more customers to enter your market. Imagine a small pond with a few fish in it. Sure, we could cast our lines and catch lunch, but we want to add more fish to our pond, allowing brighter days and a promising future. The activities included in this type of strategy fall under the scope of market development.
The 4 Types of Customers Marketers Should Target
Now that we’ve covered (1) how demand comes to exist, (2) how products and services can be altered to serve more utility, and (3) the pieces of the marketing strategy that need to happen, we can start building out the next step: identifying who to target.
In this section, I’ve included the types of customers (technically speaking “noncustomers”) marketers should target when developing out their execution plan / go-to-market plan.
1. In-Market Customers
These are people who are currently shopping for your innovative product or service. Given new products don’t have many customers in-market, this pool of customers is likely to be very small.
The marketing tactics for this type of customer are pretty standard. Marketers will focus on activities like ebooks, email nurtures, product catalogs, and more (generating leads). Salespeople will then work leads, moving them closer towards a sale. Customer success reps will focus on renewing existing customers.
2. Soon-To-Be Customers
These are people who currently reside in an adjacent market to yours. Fortunately, they are about to enter your market on their own accord. They have experienced the pains that you have, know the problem with current solutions, and want a better product. They are on the hunt for your unique product.
The marketing tactics for this audience would include messaging and advertisements for specific rarely searched keywords. The goal wouldn’t be to reach a large number of people, rather to tap into those who are searching for a solution. Imagine if someone searched a very specific term, then received customized language via a YouTube advertisement that spoke explicitly to the problems and frustrations with current solutions — that’d be powerful.
3. Refusing Customers
These people deny the possibility that a better solution might be available. They belong to the adjacent market that emphasizes the ‘old way of doing things’ and are very reserved by the idea of switching solutions. They will be a tough cookie to crack, but it is doable.
Marketing tactics for this audience need to be very results-oriented. This means plenty of customer reviews, testimonials, customer logos, company awards, and more. The goal here is to build trust and to speak to relevant people that influence their decisions; allowing them to buy into the new innovative solution.
4. Unexplored Customers
These people simply don’t know your solution exists. They also only know a little bit about the current mainstream solution and alternatives. For them, no brand loyalty has been established yet and they’re open to exploring solutions online or from their peers.
When developing marketing tactics for this audience, imagine how you would promote your product or service if your solution had become the mainstream solution for your industry. The marketing activities would simply express your innovative solution as standard or run-of-the-mill, eliminating the perception that the solution is risky or uncommon and instead emphasizing the casualty of the solution’s usage. In many ways, the activities you choose to do here should be similar to what you do with the first customer type, In-Market Customers.
For Startups: Calculating the Total Addressable Market (TAM) for Your Innovative Solution
The last part of this article is for the tech-savvy, venture capital-driven startup founders.
When delivering your pitch to investor groups or accelerators, you will likely be expected to include your TAM. For innovative solutions, this number will be difficult to calculate.
My suggestion is to gather an estimate of each of the customer types listed above — extracting revenues from competitors, alternative markets, and research available online — to draft a summed estimate of the total amount of money spent on solutions of your product’s nature over a given range of time.
TAM != In-Market Customers
TAM = In-Market Customers + Soon-To-Be Customers + Refusing Customers + Unexplored Customers.
Thanks for Reading
I’m Colin and I have an unhealthy obsession with marketing.
I’ve studied business, marketing, computer science, CRMs, and analytics in order to dissect and understand sales and marketing operations.
As a result, I now teach marketing at Cape Breton University and share my findings with fellow managers and business owners.
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