Strategy #1: Engage an Adjacent Industry with Similar Requirements

Assuming your product has achieved a Product Market Fit (PMF) in its core market, the most accessible markets are likely those that lie adjacent to it. To accurately identify which adjacent market is suitable, it’s vital to conduct a Core Competency Assessment, a concept proposed by Richard Kaung of River International.¹ This assessment facilitates a thorough understanding of your core customers, capabilities, and assets before you formally approach new markets. In the process, you document your core competencies, aligning them across the business. It’s essential for these competencies to be acknowledged as key long-term differentiators, not only by your team, but also by customers and competitors.

A business selling solutions to the manufacturing industry utilizing continuous processes, for instance, might consider the pharmaceutical industry as an adjacent market to chemical companies due to operational similarities. However, the pharmaceutical industry’s unique regulatory requirements for manufacturing may present challenges for this organization. Therefore, understanding potential industry competency gaps as a dependency is important.

Why Core Competency Matters:

• It can be applied to multiple adjacent markets, proving its true competence.
• It provides substantial perceived benefits to the customer, affirming its utility.
• It’s difficult for competitors to replicate, confirming its unique value.

Recognizing your core competency is fundamental in understanding which adjacent markets your company and its products are likely to succeed in.

Strategy #2: Sell Your Offering to New Personas

Companies with technical offerings often limit their sales to technical departments such as information technology (IT). If the focus on the business value story remains purely technical, it becomes challenging to sell the solution outside the IT department. By understanding both the technical and business metrics providing value to the line of business, a company can target the line of business buyer directly. Maximizing the value of an offering is rooted in capturing metrics across departments, particularly lines of business, which are usually profit centers versus cost centers in an organization.

With evolving buyer roles, target personas shift. For instance, the emergence of the Chief Marketing Officer rose in the mid-1990s through the mid-2010s² while the Chief Data Officer became more common in the era of cloud computing. C-Suite titles change as business initiatives are born on the heels of technology trends. As a prime example, Chief Metaverse Officers are a combination of responsibilities across this new route to market including marketing and commerce to drive growth. Innovation is the engine behind new personas, with each having unique sets of challenges and opportunities for business.

Strategy #3: Expand Geographically

A company’s expansion into new geographic territories can yield remarkable outcomes if executed correctly, although it is a gradual process that demands meticulous planning, investment, and execution. A new geographic expansion plan, particularly global, must come with a centralized support system that hubs can leverage to ramp and provide guidance on an ongoing basis. Key considerations suggested by Gartner for international growth³ include:

Go slow to go fast: Start by establishing a foothold in one country before moving to another. This approach allows you to understand the local market and adjust your strategy as needed.

Know when to redirect: Be ready to adjust your plans when required. The market landscape can shift rapidly, demanding a dynamic strategy.

Localize marketing assets: Adapt your marketing assets to the local market, culture, and language. What works in one country may not necessarily work in another.

Appoint a local promoter: Engage a local promoter to navigate the new market and make valuable introductions.

Potential risks like differing regulations and standards, language and cultural barriers, infrastructure disparities, and pricing issues should also be taken into account in the planning phase. Other threats with even less predictability, including prospects of geopolitical conflicts and likelihood of supply chain shortcomings should be considered early in the process, especially for businesses who are risk-averse.

Strategy #4: Ecosystem Partners – New Revenue, and Possibly a New Business Model

Business partners, as part of “routes to market” in a go-to-market plan, can be a sales, marketing, services and product extension function for a company. Partners can be strategic for a business to support revenue generation, strengthen a brand, provide service or extend a product portfolio, typically beyond an organization’s reach. Ecosystem partners as a new source of revenue is the focus for this fourth strategy of finding new markets and buyers. Also note that partners support the three strategies outlined above. We will cover business partner models and taxonomy in a subsequent paper.

A partner is a new source of revenue, when they also become your customer. This new revenue source potentially changes the business model of an offering, the sales motion, pricing model and also the resources necessary to support it. Some examples of this business model include independent software vendors (ISVs), embedded systems where your capability is classified as other equipment manufacturer (OEM) as well as, selling to digital process services companies (outsourcers). Cloud computing gave rise to a complex network of ecosystem partners supporting a pattern of technology built on platforms which has opened tremendous opportunity.

“A platform is when the economic value of everybody that uses it, exceeds the value of the company that creates it. Then it’s a platform.”

-Bill Gates

Considerations for seeking new sources of revenue through these types of partner models include similar sales and marketing programs to differentiate your offering, enablement, as well as technical resources needed for solution design, supportability and adoption. If a company has multiple business models where a partner is also a customer, determination of how they will be supported by sales with clear alignment of incentives is imperative.

Summary

Seeking market expansion by finding new markets and buyers with an existing portfolio of capabilities can be a viable strategy, provided a company has achieved product market fit and considerations for how to implement the strategy are carefully weighed. Crossing industries, entering new geographies, building new relationships and possessing the necessary skills to be successful across teams are key factors. While strategic planning is central to these decisions, markets are dynamic, particularly now with emerging technologies becoming a driving force for new players who can compete and win against larger competitors. Not dissimilar to the evolution of cloud native SaaS companies born during the great recession, we will see a rise of new AI-first companies who will win, by competing on the market edge.