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fail to realize rewards from doing so. When someone advocates a focus on a market that doesn’t pass that test of reasonableness (and there will always be such advocates), ask them to finish a presentation to the Board of Directors that starts with a slide saying “We are dominating our targeted markets, but unfortunately, those markets are small, shrinking, and unprofitable”. That deck will never appear, and you can move on to look at markets that have attractive scale, growth, and profit potential. But that is not the only thing to consider in evaluating markets. As the example above suggested, it is very important to determine how well your firm’s competencies and position fit with the factors important to that market. In the case study, the fit was poor. Expertise in producing high-value Better-Best products was a poor fit for markets that were looking for highly-efficient, low-cost producers of rather standard Good-Better products. That was a serious problem for the firm in the case study. And while matching well to the factors that drive customers’ purchase decisions is critical, there are other business drivers of similar importance. Another firm with which I worked was considering targeting an industry that was moving much of its

“It is very important to determine how well your firm’s competencies and position fit with the factors important to that market” 52 |

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R&D and design work to Asia, mostly to India and China, a region in which that firm had few resources and almost none that specialized in development or design. At minimum, that lack of fit ensured that the time frame for achieving success would be medium to long term, at best, and that a focus on the firms in that industry would require quite a bit of catch up. A similar consideration involves the existing relationships with firms across candidate markets. If you have strong existing relationships, that provides a head start for strategies involving focus. If not, it is certain that any strategy involving focus (or other elements) will take some time to achieve customer penetration and will require supplanting the existing major suppliers. Long term strategies can be good, but only if they are recognized as long term and the firm selecting them has the appetite and resources to stay the course. Still another firm with which I’ve worked had developed some strong competencies in energy efficiency in its products, a result of its own focus on sustainability. As it considered target markets on which to focus, it realized that some target markets had a similar business driver, and that their expertise would play well in those segments. A match in such business drivers is another good reason for considering a market for focus. A contrary example involved a firm that was considering a number of markets that were highly regulated. It recognized, fortunately early on, that it had no expertise or experience in working in a highly regulated industry, a factor that

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Dec 2013

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