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Hello fellow launchers, and welcome to this month’s edition of The Launch Pad Newsletter.

May’s newsletter is about developing your market strategy for launching a new product.
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Feedback and questions are welcome. Send to: ckitcho@launchdoctor.com (note: This Opt-In email newsletter is sent monthly. If at any time you wish to Opt-Out from the distribution list, reply to this email requesting removal. Your name will be removed immediately.)
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The Launch Pad
May 2003
DON’T SWEAT THE SWOT

When I was an MBA student, I had to endure the same painful lessons as the thousands who had come before me. I had to learn the 4 Ps, the 5 hats, the GE matrix, and all those other little gimmicky tools that you forget by the time the ink is dry on your diploma. But the worst one of all, the one that absolutely turned my brain into knots, was SWOT analysis. I rapidly came to the conclusion that it was designed for one thing: to increase anxiety. I swore that I would never use it in the real world if I could help it. Luckily, I was able to avoid it most of my entire career. Even when I later taught at the MBA level, I told my students that if they ever turned in a SWOT analysis on any term paper or group project, I would drop them a whole grade. Okay, then. You know where I stand.

Mired in SWOT
For those of you lucky enough to have escaped exposure to SWOT, it stands for Strengths, Weaknesses, Opportunities and Threats. The first two are company-internal factors, and the latter two are external factors. SWOT analysis is most often used in developing market strategy for a new product and conducting competitive analysis, usually in group settings where people are brainstorming and trying to decide where to start. If you go through this exercise, you will have a list of your company’s (or product’s) strengths and weaknesses. You will also have a list of market opportunities and competitors. The problem is, it ends there. You’ve got the lists, but what do they mean? If your strengths map one for one with opportunities, you have it made. If your strengths are different than your competitors, you’re also in good shape. However, what if things don’t match? What if you have some great strengths, but they don’t correlate with market opportunities? Essentially, that’s a dead end. Suppose one of the competitors has the same weakness as your company; does that mean you should remove the weakness from the list and not worry about it, or take the competitor off the list? (Goodness, I hope not!) What do you do with the weaknesses, now that they’re right there in front of you in black and white? Maybe you set up a task force to deal with those weaknesses. Maybe those weaknesses have nothing to do with the product you’re about to launch, so it doesn’t matter. In that case, you’ve only created more problems to deal with, when all you wanted was to figure out the best market strategy! It goes on and on and on.

Escape to Common Sense
Coming up with a market strategy for a new product doesn’t have to be this complicated and frustrating. It’s really very simple. There are three primary concerns: customers, product, and competition. It amounts to answering these questions:
1) Who and where are my customers?
2) Will my product meet their need?
3) Who else could sell something similar to that customer, and how many are there?

Customers Rule
By the time you’re ready to develop your market strategy, you should know your target customer backwards, forwards and upside down. You know everything about them and where to find them. Therefore, your market strategy must state how you are going to reach your customers and how to get their attention. (Remember, your customers ARE your market.)

Pushing Product
If you based your product specifications on customer need initially, than you are already ahead of the game. If, however, you are like many, many high-tech companies, you may be looking for a market for this cool thing you are developing. In that case, you may have to develop awareness of your company and product first before you can sell to your target customer, which will impact your market strategy. You need to familiarize your target customer with your company and you need to define how your product’s functionality and features will map to the customer’s value proposition.

Pesky Competitors
There are a thousand ways to do competitive analysis, but I prefer to use an approach that looks at the competitive environment first, then the competing companies, then the products from those competing companies. Competitive environment means the number of companies that are in the market niche that you’re targeting. There may be many and so the market is fragmented, or just a few entrenched competitors, or maybe it’s very new and there are only one or two there. (For more details on this concept, refer to chapter 5 of my book “From Idea to Launch at Internet Speed”.) Once you’ve identified the competitors, study a few of them to find out how they operate as a company. Are they financially sound? Do they have a defined product roadmap? The last step is looking at the competing products from those companies and how they compare one for one with your product.

All Together Now
To put it all together, you need to sit down with your marketing team and have available the information on your customer, your product and the competition. You know where your customers are; how can you reach all of the ones you want to reach? How does your product fit the customer’s value proposition? Who’s in your market space and what are your differentiators? Those are the questions that your team needs to discuss. At the end, you should have a market strategy, which is (drum roll, please):

A high-level set of statements that describe how market share will be captured and how competitive advantage will be maintained. If it’s a new target market, they also include the timing of market entry.

Quick and Quirky Example
Your mission is to develop a market strategy for your company’s first entry into a new market. For years, your company has developed and sold remote control devices for the home electronics market. Now, you are venturing into the medical equipment market, where you hope that medical personnel and patients will use your remote controls in a hospital or at home.

You have two types of customers: medical personnel and patients. Medical personnel can use the remotes to change settings on medical equipment in a patient’s room without having to stand next to the patient’s bed. So, when Mrs. Winthrop buzzes for the nurse for the tenth time to get more pain medication, the nurse can use the remote from the hall to adjust the machine without having to endure yet another tirade from the cranky patient or negatively affecting the nurse’s track record for bedside manner. Patients who have medical equipment at home can use a different version of the remote that controls not only their medical devices, but also can tie in to their TV or CD player. (The development team is fine-tuning the design a little so that Mr. Jones can’t accidentally turn up the speed of his respirator when he thinks he’s turning up the volume on the TV.)

As far as your product, well, admit it. Your company has an established product looking for a new market, so you have an uphill climb to make sure your products meet the need of your two groups of customers. However, you may have a slight advantage in that your customers most likely have used your company’s remote controls at home; maybe you can leverage that!

Competition? What competition? Well, probably every medical equipment manufacturer on the planet. They’ve probably already figured this out, and so have a little remote that is customized to work with their little device. But yours works with everything! Okay, you have a differentiator.

So, you meet with your team, and this is what the group comes up with for your market strategy:
We will enter the market by finding a hospital that’s willing to participate in a product trial for its medical staff and their patients who have home medical devices. We will build our market share gradually from there, adding other hospitals over the course of the first two years. We will build and maintain competitive advantage because our remote is truly universal and can work with devices from multiple manufacturers.

Happy strategizing, and don’t sweat the SWOT!

Catherine Kitcho
The Launch Doctor