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    Home > Resource Sites

    Market Share Forecaster Aids in Market Decisions


    One of the hardest decisions a CEO or marketing executive has to make concerns entering a new market. No matter how much research is done before committing resources to a new market, it's always been impossible to know just how successful a new venture will be.

    A new Web-based market analysis tool has recently become available that reduces the risk of making decisions about entering new markets. Market Share Forecaster helps marketing executives forecast sales and market share, as well as determine a successful pricing strategy.

    What is a "New Market?"

    At first you might think that entering a new market only occurs every few years. However, decisions about new markets come up all the time.

    Entering a new market can take many forms, such as:

    • Selling existing products in a new geographic market.
    • Selling existing products into a new industry.
    • Launching new products in existing geographic markets
    • Expanding into new distribution channels
    • Entering business partnerships with distributors, resellers, or other channel partners.
    • Expanding sales of existing products to a new demographic segment of the market

    These are just a few of the challenges faced by marketing executives when expanding into new areas — and frequently there are multiple unknowns that create uncertainty and risk.

    The fact is that other companies are already selling products into the market segment you are considering entering. So shouldn't that reduce the risk of entering a new market? No, it actually increases the risk because in addition to reaching new customers, you also need to overcome competitive pressures.

    How I Avoided Failure by Using Market Share Forecaster

    A few years ago at my previous company I used an early version of Market Share Forecaster to avoid a tremendous failure.

    We had been growing well in our existing market, and had kept a large competitor from entering our market. With that success under our belts, and reaching saturation in our existing market, we explored entering a new market. We researched the market and competitors, surveyed potential customers, and evaluated revenue and profitability models for the new market. It would be hard, but we were confident we could achieve a significant market share in the new market.

    We finally decided to commit marketing and sales resources to enter the new market. There is always a 6-12 month period that doesn't produce positive results from making a change like this. However, after a few months we experienced greater resistance than our research had indicated.

    I had an opportunity to use that early version of Market Share Forecaster to evaluate our situation. I entered the data about the new market, the largest competitor in that market, and a few other factors we knew about the market.

    The program's analysis immediately predicted that we could not achieve the revenue and market share we needed to be successful.

    I then used Market Share Forecaster to model a few other scenarios that were based on committing additional resources to the new market. No reasonable scenario I tried indicated we could succeed.

    Well, I pulled the executive team together and we decided to cut our losses and discontinue our efforts in the new market.

    Did we waste resources before running the Market Share Forester analysis? Yes. But what's more important is that we were able to avoid the continual ramp up of resources in trying to break into a market where we couldn't succeed.

    The Bottom Line is the Bottom Line

    So how can you benefit from using Market Share Forecaster?

    Many companies enter new markets and achieve an acceptable level of revenue. However, revenue generated in a new market is not the only measure of success. In fact, profitability is much more important in the long term than revenue.

    We've all seen companies, especially high-tech companies, spend several times their revenue as they enter a new market. Venture capitalists and other investors won't allow that to continue for very long.

    It turns out that forecasting market share for a new market is just as important as forecasting revenue. This is because market share is correlated to profitability. The greater your market share, the greater the awareness and acceptance of your products — which translates into lower marketing and sales expenses per dollar of revenue.

    So, while traditional market research can be good for predicting revenue from a new market, you need another tool to predict success. You need to use Market Share Forecaster to predict not only revenue, but also your expected market share and which pricing model will generate that level of revenue and market share.

    Web-Based Market Analysis Service

    Unlike expensive single-user analytical software, Market Share Forecaster is available as a Web-based service for a modest subscription.

    Web-based analytical tools like Market Share Forecaster make it easy for a team to collaborate in real time on these decisions.

    I'm working with a new client who is looking at choosing one of three possible new market scenarios. Their executive team is in different cities, and I will be using Market Share Forecaster to help them work together on making this very important decision.

    However, before we attempt to model other markets with Market Share Forecaster, we will model their existing market so they will see why they dominate their existing market. We'll enter information about their current market, customer acceptance, and the strength of their competitors. Seeing the Market Share Forecaster reports about their current market will help them understand what has led to their success.

    And, since Market Share Forecaster is a Web-based service, I'm sure the CEO and his team across the country will test a variety of scenarios during conference calls to see how they can grow into other markets — and do it profitably.

    Check out Market Share Forecaster (www.marketshareforecaster.com) and see how well it does with your existing market. Then, as you spot opportunities to enter new markets, just enter data about the new market and competitors to get a quick forecast of your overall success.

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