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My product management toolkit (17): Assess market viability

Whether you’re a product manager or are in a commercial or strategic role, I’m sure you’ll have to assess market viability at some point in your career. For that reason, I wrote previously about assessing markets, suggesting tools that you can use to decide on whether to enter a market or not.

A few weeks ago, I listened to a podcast interview in which Christophe Gillet, VP of Product Management at Vimeo, gave some great pointers on how to best assess market viability. Christophe shared his thoughts on things to explore when considering market viability. I’ve added my sample questions related to some of the points that Christophe made:

  1. Is there a market? – This should be the first validation in my opinion; is there a demand for my product or service? Which market void will our product help to fill and why? What are the characteristics of my target market?
  2. Is there viability within that market?  Once you’ve established that there’s a potential market for your product, this doesn’t automatically mean that the market is viable. For example, regulatory constraints can make it hard to launch or properly establish your product in a market.
  3. Total addressable market – The total addressable market – or total available market – is all about revenue opportunity available for a particular product or service (see Fig. 1 below). A way to work out the total addressable market is to first define total market space and then look at percentage of the market which has already been served.
  4. Problem to solve – Similar to some of the questions to ask as part of point 1. above, it’s important to validate early and often whether there’s an actual problem that your product or service is solving.
  5. Understand prior failures (by competitors) – I’ve found that looking at previous competitor attempts can be an easy thing to overlook. However, understanding who already tried to conquer your market of choice and whether they’ve been successful can help you avoid some pitfalls that others encountered before you.
  6. Talk to individual users  I feel this is almost a given if you’re looking to validate whether there’s a market and a problem to solve (see points 1. and 4. above). Make sure that you sense check your market and problem assumptions with your target customers.
  7. Strong mission statement and objectives of what you’re looking to achieve  In my experience, having a clear mission statement helps to articulate and communicate what it is that you’re looking to achieve and why. These mission statements are typically quite aspirational but should offer a good insight into your aspirations for a particular market (see the example of outdoor clothing company Patagonia in Fig. 2 below).
  8. Business goals  Having clear, measurable objectives in place to achieve in relation to a new market that you’re considering is absolutely critical. In my view, there’s nothing worse than looking at new markets without a clear definition of what market success looks like and why.
  9. How to get people to use your product – I really liked how Christophe spoke about the need to think about a promotion and an adoption strategy. Too often, I encounter a ‘build it and they will come’ kind of mentality which I believe can be deadly if you’re looking to enter new markets. Having a clear go-to-market strategy is almost just as important as developing a great product or service. What’s the point of an awesome product that no one knows about or doesn’t know where to get!?

Main learning point: Listening to the interview with Christophe Gillet reinforced for me the importance of being able to assess market viability. Being able to ask and explore some critical questions when considering new markets will help avoid failed launches or at least gain a shared understanding of what market success will look like.

 

Fig. 1 – Total available market – Taken from: https://en.wikipedia.org/wiki/Total_addressable_market

1000px-tam-sam-market

Fig. 2 – Patagonia’s mission statement – Taken from: http://www.patagonia.com/company-info.html

screen-shot-2017-01-20-at-07-21-29

Related links for further learning:

  1. http://www.thisisproductmanagement.com/episodes/assessing-market-viability
  2. http://www.mindtheproduct.com/2013/05/poem-framework/
  3. http://smallbusiness.chron.com/determine-market-viability-product-service-40757.html
  4. https://en.wikipedia.org/wiki/Total_addressable_market
  5. https://blog.hubspot.com/marketing/inspiring-company-mission-statements
 

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What is psychographic segmentation?

As a product person, I’m always interested in segmentation as there’s no such thing as a universal customer with the same characteristics or behavioural traits. There are many different ways to identify and target a specific group within a population, and I came across “psychographic segmentation” as a way of segmenting your target audience.

Psychographic segmentation feels very similar to behavioural segmentation, but it also takes into account some of the psychological aspects involved in buying or using a product. These are some of the factors that you can look at when applying psychographic segmentation:

  1. Social class – This aspect divides the population into groups based on the income generated by the Chief Income Earner. This factor is taken into account by the UK Office for National Statistics when they work out the “Social Grade” to determine people’s media consumption and purchasing power (I’ve added a more detailed overview of social grades in Fig. 1 below).
  2. Lifestyle – The key thing that I learned about the lifestyle segmentation model is that there’s no set way of segmenting people based on their lifestyle. There are, however, a number of factors that one can look at. For instance, activities, interest and opinions form a key part of one’s lifestyle. Advertising agency Young & Rubicam invented the so-called 4C model which is often used as a lifestyle classification model. The full name for this model is Cross Cultural Consumer Characterisation and it outlines 7 different personality types and related lifestyles (see Fig. 2 below).

Main learning point: Especially when you’re doing your market research and thinking about the customer segment to concentrate on, psychographic segmentation can be a very valuable tool. It helps you to think about the demographics and behaviours of the target customers that you’re creating a product or service for.

 

Fig. 1 – “Social Grade” overview – Taken from: http://www.ukgeographics.co.uk/blog/social-grade-a-b-c1-c2-d-e

  • Social Grade AB: Higher & intermediate managerial, administrative, professional occupations
  • Social Grade C1: Supervisory, clerical & junior managerial, administrative, professional occupations
  • Social Grade C2: Skilled manual occupations
  • Social Grade DE: Semi-skilled & unskilled manual occupations, Unemployed and lowest grade occupations

Fig. 2 – Young & Rubicam’s 4Cs model – Taken from: https://frameshortfilmjamie.wordpress.com/category/young-and-rubicam-4cs/

  • The Explorer – Need for change, discovery and desire to be different.
  • The Aspirer – Looks at how others view them, tries products for the visual looks and focuses on their status.
  • The Succeeder – Strong goals and tends to be responsible. An aggressive attitude to life as they look for control.
  • The Reformer – Intellectual and tolerant. Doesn’t buy products just because they’re new, the reformer looks for enlightenment.
  • The Mainstream – Desire to fit in with society. Sticks with value for money, striving for security.
  • The Struggler – Has the ‘You Only Live Once’ approach. Focus on the present, looking for a sense of escape.
  • The Resigned – Has unchanging values. Is likely to stick with what there’re familiar with.

 

Related links for further learning:

  1. http://www.marketing91.com/psychographic-segmentation/
  2. https://www.examstutor.com/business/resources/studyroom/marketing/market_analysis/8_psychographic_segmentation.php
  3. http://www.marketing91.com/behavioral-segmentation/
  4. https://blog.udemy.com/behavioural-segmentation/
  5. http://www.ukgeographics.co.uk/blog/social-grade-a-b-c1-c2-d-e
  6. file:///Users/Marc/Downloads/4cs.pdf
  7. https://frameshortfilmjamie.wordpress.com/category/young-and-rubicam-4cs/

 

 

 
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Posted by on September 13, 2015 in Product Marketing

 

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Book review: “Crossing the Chasm”

I recently read both Crossing the Chasm and Big Bang Disruption, which are two books covering a similar topic: how do you position and sell innovative products in fast pace market?

“Crossing the Chasm” by Geoffrey A. Moore was first published in 1991 and talks about how to bridge the “chasms” which can occur in the traditional “Technology Adoption Lifecycle” (see Fig. 1 below). This traditional model depicts the transition from a market solely for “innovators” and “early adopters” to reaching a mainstream audience.

In his book Geoffrey A. Moore, describes two cracks in this traditional bell curve. Firstly, a chasm between “early adopters” and the “early majority”. An approach to market that works for early adopters might not work for more mainstream users of the product, or vice versa. Secondly, Moore talks about a chasm between the early and the late majority, pointing out that each market has its own dynamics.

Moore’s advice with respect to crossing these chasms sounds fairly straightforward: “make a total commitment to the niche, and then do your best to meet everyone else’s needs with whatever resources you have left over”. I like how Moore then goes on to break down customer segments into related target-customer characterisations and scenarios (see Fig. 2 below).

Once you’ve established the specific market niche that you want to target, you can then start creating a strategy for developing this market. Moore provides a very helpful market development strategy checklist (see Fig. 3 below).

The other key thing which I picked up from Crossing the Chasm is the “Whole Product Concept”, which idea was first described in The Marketing Imagination by the late Theodore Levitt. This concept is quite straightforward: There is a gap between the marketing promise made to the customer – the compelling value proposition – and the ability of the shipped product to fulfil that promise. The Whole Product Concept identifies four different perceptions of product (see also Fig. 4 below):

  1. Generic product – This is what’s shipped in the box and what’s covered by the purchasing contract between the seller and the buyer.
  2. Expected product – This is the product that the consumer thought she was buying when she bought the generic product. It’s the minimum configuration of products and services necessary to have any chance of achieving the buying objective of the consumer.
  3. Augmented product – This is the product fleshed out to provide the maximum chance of achieving the buying objective.
  4. Potential product – This represents the product’s room for growth as more and more ancillary products come on the market and as customer-specific enhancements to the system are made.

Main learning point: Things have changed quite significantly since Geoffrey A. Moore first wrote “Crossing the Chasm”. The pace of new technology introductions has probably increased tenfold since the first publication of the book, with businesses concentrating hard on making technology products as accessible and mainstream as quickly as possible. “Crossing the Chasm” nevertheless contains a number of points which I believe are almost timeless: thinking about target users and their scenarios, and the concept of a minimum product configuration that fulfils customer needs.

Fig. 1 – The Technology Adoption Lifecycle by Joe M. Bohlen, George M. Beal and Everett M. Rogers – Taken from: http://blog.ftfnews.com/2012/11/01/transforming-uncertainty-into-opportunity/

talbellcurve_single1

Fig. 2 – Geoffrey A. Moore’s template for creating a target user characterisation and scenarios – Taken from: http://torgronsund.com/2011/11/29/7-proven-templates-for-creating-value-propositions-that-work/

Template

For  ____________ (target customer)

who ____________  (statement of the need or opportunity)

our (product/service name) is  ____________  (product category)

that (statement of benefit) ____________ .

Sample(s)

For non-technical marketers

who struggle to find return on investment in social media

our product is a web-based analytics software that translates engagement metrics into actionable revenue metrics.

Scenario / A day in the life (before)

  • Scene or situation – Focus on the moment of frustration. What’s going on? What’s the user about to attempt and why?
  • Desired outcome – What’s the user trying to accomplish and why is this important?
  • Attempted approach – Without the new product, how does the user go about the task?
  • Interfering factors – What goes wrong? How and why does it go wrong?
  • Economic consequences – So what? What’s the impact of the user failing to accomplish the task productively?

Fig. 3 – “The Market Development Strategy Checklist” – Taken from: Geoffrey A. Moore – Crossing the Chasm, p. 99

  • Target customer
  • Compelling reason to buy
  • Whole product
  • Partners and allies
  • Distribution
  • Pricing
  • Competition
  • Positioning
  • Next target customer

Fig. 4 – “The Whole Product Concept” by Theodore Levitt – Taken from: http://technotrax.tumblr.com/post/93541189402/classifying-market-problems  

original metaphor

Related links for further learning:

  1. http://blog.ftfnews.com/2012/11/01/transforming-uncertainty-into-opportunity/
  2. http://www.huffingtonpost.com/jeff-bussgang/scaling-the-chasm_b_6478622.html
  3. http://torgronsund.com/2011/11/29/7-proven-templates-for-creating-value-propositions-that-work/
 

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The what and why of programmatic marketing

The term “programmatic marketing” is relatively new. Ben Plomion, VP Marketing at Chango, first wrote about programmatic marketing back in 2012. In this article he expands on the ‘what’ and the ‘why’ of programmatic marketing. Ben’s piece formed a great starting point for me to learn more about what programmatic marketing means and what its benefits are.

Let’s start with the ‘what’:

Wikipedia provides a nice and concise definition of programmatic marketing: “In digital marketing, programmatic marketing campaigns are automatically triggered by any type of event and deployed according to a set of rules applied by software and algorithms. Human skills are still needed in programmatic campaigns as the campaigns and rules are planned beforehand and established by marketers.”

I’ve broken this down into some specific elements:

  1. Events – Marketers can set rules around specific ‘events’ which they expect to trigger specific marketing activities (e.g. a display ad or an email). An abandoned online shopping cart is a good example of such an event. For instance, I receive an email with a subject line that says “Do you still want to buy a white pair of Converse All Stars” after I’ve abandoned this product in my shopping basket.
  2. Automatic triggers – Once an event has been selected, an automatic trigger can be created. For instance, if I search for “blue cashmere” jumpers, I’ll be presented with display ads for the blue cashmere jumpers on other applications or sites that I visit or browse.
  3. Rules set by marketers – There’s a strong human element to programmatic marketing. Marketers need to fully understand the customer journeys and metrics related to their product or service. This understanding will help you to make sure the right marketing activity is triggered, for the right customer and at the right time.

Why? What are the benefits of programmatic marketing?

  1. It’s automated – By automating buying decisions, marketers remove the friction of the sales process (including humans placing buying orders) and reduce their marketing costs.
  2. Organising data – A programmatic marketing platform allows marketers to better organise their data and create highly targeted marketing campaigns. The goal is to avoid wasted clicks or impressions. Programmatic marketing helps to target those consumers who have (expressed) an intent to buy, and who are likely to covert into the desired behaviour.
  3. Targeting and personalisation – Programmatic marketing helps in targeting specific user types or segments, having a better understanding of user activity and interests. Programmatic marketing increases the likelihood of consumer action by showing each user a personalised message. The goal is to present users with a more customised call-to-action based on their recent browsing behaviour, for example, or other anonymised data that you know about them.
  4. Reaching consumers across channels and devices – Similar to marketing based on user behavioural data (see my previous point), you can use programmatic marketing to understand and tap into which channels and devices customers use as part of their experience.

Some programmatic marketing techniques to consider:

  1. Dynamic Creative Optimisation – Dynamic Creative Optimisation (‘DCO’)  allows marketers to break an online ad apart into individual pieces, and to create different pieces for different audiences. With these dynamic elements, you can easily rotate the layout of the ad based on user data (see Fig. 1 below). For example, if we know that a user has been looking at cheap flights to Orlando, we can tailor the ad accordingly (see the Travelocity example in Fig. 1 below).
  2. Shopping cart abandonment email campaigns – Every retail or transactional site collects data on users who don’t complete the checkout process. Abandoned shopping cart emails are sent to those customers who added products to their cart but failed to check out. Customers can fail to purchase for a whole a number of reasons, varying from deliberate (e.g. decision not to purchase) to circumstantial (e.g. the website crashed or the session timed out). Sending a users an email to remind them of their abandoned shopping cart is a great way for businesses to act on this data (see some examples in Fig. 2 and 3 below).
  3. Programmatic site retargeting – Programmatic site retargeting (‘PSR’) is designed to increase revenue from someone who has already visited your site or expressed an interest in your product. As the aforementioned Ben Plomion explains here: “PSR crunches all that data and creates a score that determines how much to bid to serve an impression for that user via an ad exchange, allowing marketers to target leads on the cheap”. It’s about using data such as resource pages on your site that a person has visited, or where the user came from, to serve a highly targeted and relevant ad on the favourite site or application of the user.

Main learning point: After having dipped my toe into programmatic marketing, I feel that there’s much more to learn about how programmatic marketing works and about how to do it effectively. Some of the programmatic marketing techniques seem fairly obvious. However, I guess the challenge will in collecting, understanding and selecting the right data to drive your programmatic marketing activity.

Fig. 1 – Good examples of Dynamic Creative Optimisation – Taken from: http://www.adopsinsider.com/ad-ops-basics/dynamic-creative-optimization-where-online-data-meets-advertising-creative/

CDO 1

Fig 2 – Example of an email to remind people of their abandoned shopping cart – Taken from: http://www.shopify.co.uk/blog/12522201-13-amazing-abandoned-cart-emails-and-what-you-can-learn-from-them

Fab

Fig. 3 – Example of an email to remind people of their abandoned shopping cart – Taken from: http://www.whatcounts.com/wp-content/uploads//Hofstra.png

Hofstra

Related links for further learning:

  1. https://www.thinkwithgoogle.com/intl/en-gb/collection/programmatic-marketing/
  2. http://en.wikipedia.org/wiki/Programmatic_marketing
  3. http://www.adopsinsider.com/ad-ops-basics/dynamic-creative-optimization-where-online-data-meets-advertising-creative/
  4. http://digiday.com/platforms/why-programmatic-marketing-is-the-future/
  5. https://www.thinkwithgoogle.com/intl/en-gb/interview/moneysupermarketcom-activating-customer-data-with-programmatic-marketing/
  6. http://www.mediaweek.co.uk/article/1227382/programmatic-marketing-trends-watch-2014
  7. http://www.fanatica.co.uk/blog/programmatic-marketing/
  8. http://blog.clickwork7.com/2014/12/11/programmatic-versus-native/
  9. http://www.256media.ie/2014/10/smart-content-marketing/
  10. https://medium.com/@ameet/demystifying-programmatic-marketing-and-rtb-83edb8c9ba0f
  11. http://www.shopify.co.uk/blog/12522201-13-amazing-abandoned-cart-emails-and-what-you-can-learn-from-them
  12. http://www.clickz.com/clickz/column/2302627/how-programmatic-site-retargeting-can-give-marketing-automation-a-superboost
  13. https://retargeter.com/blog/general/real-time-bidding-and-programmatic-progress
 

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