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A Pass / Fail Test for Any New Market


If you are considering entering a new target market, with anexisting or new product or service, it makes sense to firstsystematically analyze the market in question via somefundamental market evaluation criteria. It is not onlyrational but most cost effective to determine if a new marketpursuit makes sense for your company before any significantresources are further applied to the effort.

A "pass or fail" test of your targeted market is recommendedwith your company's core management team collectiveinvolvement. Discussing the attributes of a given market andfurther analyzing the business logic behind your intention toparticipate in a new market will generate some veryenlightening conversation among your key decision makers.Having various management functions present for the discussiongenerates the most effective, broad base perspective,appropriate "next step" for this strategic decision.

Besides further justifying or reducing your intentions to entera new market, weighing all the same attributes of any onetargeted market candidate against another target markets ofconsideration can lead to a pivotal decision for the futuredirection of your company. The opportunity cost of choosingthe "wrong" or "least rewarding" target market, given limitedcorporate human and financial resources, can make or breakyour collective ability to meet or exceed your company's shortand long term growth objectives. Again, effectively utilizinga simple, systematic evaluation checklist made up of some ofthe market attributes listed below can be most time efficientand cost effective.

Our list of market attributes cover various business sectorsand should not be considered a complete listing. To make thisevaluation exercise most productive for your management team,first evaluate this list for relevancy and then add whatevernumber of additional categories or attributes that correlateto your company's collective business priorities, resources,risk/ reward tolerance levels and growth objectives.

MARKET PRODUCT / SERVICE LINE ATTRIBUTES:
* Market has a viable need for product application advancements or transitions
* Market is not dominated by short product life cycles
* Market allows for effective competitive advantage without extraordinary design, engineering or research cost
* Market allows for effective competitive advantage without extraordinary testing, certification or performance compliance issues
* Market offers opportunities for relatively high product / service gross profit margins
* Market does not require a large number of products or services to effectively compete
* Market share is gained more from product value or by high value service
* Market product/ service applications have worldwide demand
* Market product/ services are compatible with existing company core competencies
* Market product/ service offerings can be legally protected
* Market generally does not present extraordinary financial liability exposure
* Market demand is not extraordinarily seasonal or difficult to forecast

MARKET CUSTOMER ATTRIBUTES:
* Market offers a diversified mix of key customer product / service users
* Market offers financially stable customers
* Market offers relatively consistent purchase loyalty
* Market has existing product/ service users who will purchase other related offerings
* Market is supported long term by fundamental economic and demographic growth

MARKET SERVICE ATTRIBUTES:
* Market does not require an inordinate amount of after-the-sale service
* Market can be supported by a centralized customer service location
* Market does not require extensive service certification from 3rd party entities
* Market does not proliferate extraordinary product/ service warranties
* Market service requirements are not hazardous to company personnel
* Market does not require extraordinary distribution requirements
* Market share can be augmented with effective e commerce tactics

MARKET COMPETITION ATTRIBUTES:
* Market is dominated by well known competitors and suppliers
* Market is not dominated by one company (> 80% market share)
* Market has reputable competition, a quality image and history
* Market offers competitors that would be future acquirers or acquisition candidates
* Market is not targeted for international penetration via pricing tactics
* Market requires a reasonable level of financial and technical resource barriers to entry

MARKET GROWTH:
* Market has a proven history of growth
* Market has a high probability of long term future growth
* Market offers traceable causes of growth
* Market has worldwide growth
* Market has regional growth niches
* Market growth cannot be negatively affected by existing or pending legislationJustification of entry into any new market or niche thereofinvolves effectively identifying all viable competitors,relevant market attributes, key market participants and theirmarket shares. Being able to strategically apply thisqualified information with respect to your known companyfinancial, technical and human resources can result inextraordinary business growth opportunities.

If you want to further quantify this analysis you cannumerically weight each market attribute with your ownspecific market attribute priorities and then give numerical"grades" to any or all new market entry candidates tocalculate a weighted value for each new market opportunity.

Evaluating new business opportunities should be a well thoughtout, straightforward, iterative process. Beginning theevaluation process with a simple tool to justify furtheranalysis is a prudent procedure. The more effective youranalysis, the greater the probability your strategic decisionswill maximize return on investment.

About the Author:
Mark Smock is President of http://www.business-buyer-directory.com,the FIRST international business buyer directory of its kind.Business Buyer Directory provides a non-traditional means forproactive business buyers to locate businesses for saleworldwide that meet their exact registered purchase criteria.

© Athifea Distribution LLC - 2013