What kind of Business Are You?

What is your state of readiness to supply your market?  Do you anticipate what consumers need or want? Are you prepared to move your customers to the next stage of the market e.g. electric cars or 5G?

To answer these questions you need to know what type of business you are and what is the position of the market life span.

Only with that information at hand can you adopt a market strategy that is appropriate and get that strategy applied with the correct timing.

You need to forecast your environment: Decide at what point you want to grab the market. Do you want to intercept the market at a certain stage of its life span or do you want to lead and direct the market?

This means that there are several types of company in a market. It also destroys the myth that ‘First in is best dressed’. take the early 80’s home video market: Betamax was first to market, and some still consider it a superior quality option, but VHS was able to intercept the market with a cheaper, better distributed product.  VHS won the home video format battle and Betamax was consigned to the history books.

Being the prime mover in a market is not always an advantage.

In every market there will be a number of companies and as the market life cycle progresses different businesses will rise to prominence as others decline. Like everything else, markets have entropy.

Businesses in a market can be classified under one of four categories:

  1. Market Scopers:  These are the innovators who create new markets and who operate at the start of the market life cycle.  they create new product, services and distribution channels. They have a go to attitude and scope out a market rather than aiming to satisfy it. the following lessons can be taken from Market Scopers:
    1. Know the state of readiness of consumers for the market, the product or the innovation.  Sir Clive Sinclair scoped the market for home computers and had extraordinary success. He tried to scope the market for electric vehicles but did so on false assumptions and the C5 was a disaster.
    2. Know how big the market is or could become.  Focus on realised demand not latent demand.
    3. Know how the market wants to buy the product.  For example, who buys carpets over the internet?
    4. Know what price the market will bear, so as to maximise returns.
  2. Market Makers:  These businesses operate in the early growth stage of the market.  They are the creators of a mass market e.g. Henry Ford with his aim to make motoring a practice for the masses.  These businesses generally garner the largest market share and become market leaders.  They create ‘best value’ but are often insufficiently agile to withstand the pressure as a market segments.  Often these businesses are driven by product development rather than market change. These are growth stage market leaders.
  3. Market Changers:  These businesses aim to move the market elsewhere by forcing their competitors to modify their offer.  Market changers are companies like Tesla which has pushed established car manufacturers into the development of electric vehicles.  These companies focus on technology and price/quality analysis.  They look to provide services unavailable elsewhere. They can force the existing market into decline.
  4. Market Exploiters:  These companies are fast followers of technology.  Many ‘market disruptors’ are market exploiters.  They take advantage of market fragmentation as disparate segments emerge.  They develop ‘new best value’ through branding and new service functionality.  Exploiters follow a market follower or market challenger strategy.

Different types of company need to target different market stages for market entry.  timing into the market is critical where consumer needs and market segments are continually changing.  A major factor is the rate of market progress and its taxonomy. This is how quickly consumers adapt to changing market technology: Do you target early adopters or laggards?  You also need to be aware of how quickly consumers change their definition of best value in a market.  For example, how many consumers would now buy a car that doesn’t have Wi-Fi or an iPod dock?

Time and Technology

The hype relating to market disruptors is now somewhat reduced as compared to a couple of years ago but it is still the case that market disruption is a major component of many new businesses.

So what is meant by ‘disruptors’?

Disruptors are entrepreneurs who aim to enter existing markets through leveraging the benefits of new technologies on that market.  So if you have a plan to deliver Pizza via an app, or to sell Books through a website, or to distribute music by digital download, then you are a disruptor.  Some of the biggest businesses in the world could be classed as market disruptors, Amazon, Deliveroo, Uber, AirB&B, Tesla, etc.

There are two aspects to market disruption:

  1. The technology
  2. Time.

In fact there is a triad of components to technological disruption; money, quality and time. The implementation of technology in the marketplace has to be a set quality (that demanded by target customers).  It takes money to ensure that quality; and it also takes time to develop that quality.

Recently, Dyson abandoned their project to develop an electric car.  The proposed vehicle was a disruption product.  It was reliant on experimental solid state battery technology. In announcing the project, James Dyson stated his plan to launch the new car in 2021. Many in the automotive sector believed that such a deadline was overly ambitious and that solid state rechargeable batteries would not be commercially ready until the middle of the next decade, at the earliest. Dyson’s 2021 deadline was clearly a rush to market, and that rush risked the product not meeting the expected quality.

This tale mirrors the Sinclair C5, the 1980’s electric recumbent tricycle.  People expected Clive Sinclair, the home computer pioneer, to produce a quality, useable transport solution. Instead they got a pedal car with low power and limited range.  One of the primary reasons for the C5’s failure was the new, experimental batteries designed by Sinclair, were not ready at the time of the C5’s launch.

Technology does not just mean product technology.  There is the technology needed to produce new products (e.g. new machinery such as 3D printers) and then there is technology for support functions – e.g. Artificial Intelligence being used for support calls.

Time to market is clearly a factor on the ability of a firm to have a hold on the development of a market.  The recent rise in the Tesla share price; the firm is now worth more than Volkswagen; signifies that, at least in the minds of city traders, that Elon Musk’s car firm has a technological lead.

Technology is also a measure of customers perception of your status in the market.  Often firms with the best technology are seen as market leaders (whether or not that perception is true).

When discussing time, there is time to market, but there is also the timing of market entry.  Often being first to market is a primary incentive, especially when intellectual property; such as patents and designs; is prominent.

Disruption through technology isn’t just the creation of software apps.

There is industrial technologies, such as the creation of long-life egg powder for cake mixes; or the creation of lightweight but toughened plastics for football boots; or the creation of high capacity memory chips for USB memory sticks and memory cards.

There is workplace technology.  This doesn’t just mean robots on the production line.  It is the application of scientific principles to marketing. For example, the development of graphene for flexible mobile phone screens.

There are four roles for workplace technology:

  1. Improving the speed of an activity;
  2. Improving the precision of an activity;
  3. Overcoming limitations
  4. Reducing Costs

All of these feed in to improving productivity.

Time is important because it is, in today’s world:

  • You need to meet customer expectations faster;
  • People expect ‘best value’ to be delivered faster.

it is a question of relative time, to absolute time.  Dyson’s 2021 deadline was an issue of absolute time.  he may have been better concentrating on relative time.  rather than setting an arbitrary deadline for his batteries to perform, he may have been better concentrating on ensuring his batteries were the most effective and efficient before those of competitors met those criteria.

Consumers attitudes also change over time; and changing consumer perceptions and attitudes is fundamental to marketing.

Rushing to market can be a big mistake.  Take Betamax video tapes as an example. Betamax format was first to market in the home video recorder market but VCR tapes became the market standard.

Being too late to market can also be an issue.  An example is Sony minidisc. This format was the first for digital downloading of music, and it was a better portable offer than compact disc as it was less prone to jumping.  However, Minidisc was launched just as MP3 players hit the market, which used memory chips which made the ‘disc’ bit of the technology redundant.

In 2003, Stalk and Hout wrote that time is the next competitive advantage.  This led to a humorous comment that marketing success was like going to a dance where success in getting a partner relied on being first there and being best dressed.

The best approach is to consider how relative time gives you a competitive advantage.

Rush to market and your technology may not be of the quality demanded by consumers.  It may not be perfected.  Alternatively, if you are a technological laggard, your competitors may beat you to the punch.