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Michael Kapp has 20 years of high tech product marketing and product management experience and is currently VP of Marketing and Product Mgmt. for Control Solutions, a leading supplier of Enterprise Mobility  Solutions and Automatic Identification and POS equipment.  

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Thursday
Jul312008

Success in the Suicide Cell

Many product managers are familiar with the Ansoff Matrix, although they may not know it by name.  The matrix provides a simple framework for analyzing growth opportunities, using the dimensions of markets and products.   As one moves from existing products and markets to an adjacent quadrant, risk increases.

The most risky quadrant, labeled diversification in the matrix, is where a business introduces a new product into a new market.  Also called the suicide cell, this quadrant represents the highest risk of failure.  Some analysts estimate that the probability of success in this quadrant is as low as 5%.

The obvious message for business is to stay out of the suicide cell.  This is echoed by Geoferry Moore in his Crossing the Chasm bowling alley analogy.  Moore advocates growth by aiming for adjacent pins - introducing another product into your existing market or finding a new market that also needs your existing product with minimal modifications.

However, despite the odds, there will always be companies operating in the suicide cell.  Startups often introduce new products in a market that they are just entering.  Likewise, established companies can not resist the temptation of developing a new market, which they will hope to dominate, based on the promise of a new technology.   The tremendous rewards that come to those who succeed will ensure an endless rush of companies into this high risk zone.

So how can we improve our odds when introducing a new product/technology into a new market.  I suggest that there are four critical factors necessary for success:

1.  Long Term Commitment/Staying Power

When introducing a new product into a new market, it is important to have realistic expectations for the time and resources required to be successful.  This is even more critical if new technologies are involved.   In this environment, there are a lot of unknowns.  There is a good chance that the business plan will underestimate the risks, the competition, the investments required, and the time required to achieve profitability.  It is therefore important that the management team has a long term commitment to the endevour and access to funding sufficient for the long haul. 

2.  Implement Tactics to Quickly Learn Market Requirements

Key to success in a new market is understanding the requirements of a new set of potential customers.  Being new to the market yourself, this is especially difficult.  You will need to understand the industry and major players, gain access to them and master the industry jargon.   The quickest way to do this is to hire one or more employees with experience in the targeted industry.  Targeted market research,  trade show attendance, industry associations and partnering with other companies already in the industry will also be helpful in getting your company up the learning curve as quickly as possible.

3.  Create a Whole Product Solution

Borrowing from Geoffery Moore again, it is always important when introducing a new product to create the whole product solution.  That includes the supporting integration services, after sale support and services, application software, etc. that will be needed for customers to achieve the desired return on investment.  While early adopters and visionaries may be willing to devote substantial internal resources to fill in the gaps of an incomplete solution, the mass market will require a more straight forward and easy implementation.   A classic case of this is Apple's I-Tune store, which was a necessary ingredient for the meteoric success of the Apple I-pod.  It may be necessary to enlist partners to create all of the components of the whole product solution.

4.  Build Credibility in the New Market

You may have a great product and still not be gaining traction due to lack of credibility in the new market.  Customers are more trusting of the established players, and either are not aware of your company or are afraid to take a risk.  In addition to a targeted marketing strategy that includes consistent trade show exhibiting, and other marketing elements such as email blasts and direct mail, there are two excellent strategies to gain credibility.  The first is to establish and publicize success with important reference accounts.  The second is to partner with other companies that have already earned credibility in the market.  I have had success with this strategy in my current company.  We recently entered a new market and alligned with the leading accounting software companies in the industry to resell or refer our software.  The strategy accounted for more than half of our revenue in the new market.

Hopefully, you will find this posting to be helpful.  If you have achieved success in the suicide cell, please share your story. 

 

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