My previous blog discussed the intricacies of taking an existing product to a new market, highlighting the potential need for modifications to ensure a good market fit. Unbeknownst to you, at least at first, this effectively puts you in the riskiest category of all – introducing a new product to a new market.
Launching a new product in a new market is fraught with Unknown Unknowns, elements you may not even realize you need to consider. Let's delve into some key points that need to be considered to avoid the potential (and significant) pitfalls of this high-stakes strategy.
Unknown #1: Your Customers' Technical Needs and Price Ceiling
A thorough market analysis is the cornerstone of introducing a new product to a new market. This step is non-negotiable. The assumption is that you've identified a potential new market, and now you need to be sure about your customers’ requirements. We know it's crucial to understand the technical needs of potential customers, so ask yourself, “Does your solution satisfy their needs?” Another equally important aspect is pricing. Have you done your homework on the customers' willingness to pay? This isn’t a question to ask them; it's all about the perceived value. Understanding the value of your offering and knowing the ceiling price in this new market are critical. Misjudging this can lead to pricing yourself out of the market or, worse still, under-pricing your product and delivering poor, unsustainable margins or completely failing to communicate your value effectively, ultimately resulting in a failure to get traction in the new market. Helping companies to really understand the Value Discovery process is one of the critical paths to success.
Unknown #2: Is Your Existing Channel Strategy a Fit for the New Market?
When considering your channel strategy, there's a natural tendency to assume that your existing channels will seamlessly fit the new market. For example, you might think your current sales team can adopt the same approach to customers that they use today. This is a very dangerous assumption. It is a new market (to you), so don't presume you know the best approach. Understanding your customers' needs also includes discovering how they buy and the channels they need to succeed in that market. Adapting your approach to customers wants and needs is necessary to avoid costly mistakes.
Unknown #3: Regulatory Requirements in the New Market
Entering a new market often means navigating unfamiliar territory, such as regulatory landscapes. Have you thoroughly researched regulatory compliance requirements? And don’t forget about formal standards in this market, it might not be a legal requirement but customers see these specifications as "hygiene factors”. Ignoring this step can lead to significant restrictions or repercussions, or even worse, finding out too late that you cannot conduct business at all in the new target market. Ensure you understand all regulatory and formal standards obligations before moving forward.
In Part II, I'll discuss additional pitfalls to avoid as you approach launching your new product into a new market.