14 okt The crux of a successful idea
The registrations have been opened and the 2019 Philips Innovation Award is well underway! A fundamental strategic resolution you – as an entrepreneur – have to make, is defining the precise market in which you think your idea will add the most value. Finding your best market fit is an important next step and a key part of drafting your business plan. Hudson’s Bay’s recent bankruptcy in the Netherlands illustrates the importance of a well-defined market. As the Canadian warehouse chain’s failure in the Netherlands was, among other factors, caused by focusing on the wrong market segment. Choosing the right market segment is of crucial importance to companies all over the spectrum, from large MNC’s to small start-ups.
Some of the things to consider when defining your market are the following:
Whereas bigger companies often target large and extensive markets, start-ups can benefit from focussing on niche industries. Within such markets it is possible to customize your product or service to the specific desires and needs of that niche.
Opting for a specific niche market can be beneficial for growth, however it is important to consider a market that has growth potential as well. Dominating a small niche market can be a lucrative source of growth, however if it is a dead-end market, the growth will be limited by the size of that specific niche.
Once having chosen a segment that you think best suits the qualities your product/service has to offer, the next step is to assess whether this specific segment can generate sufficient revenue. Examining the number of competitors in the segment is an example of assessing your segment. If virtually no competition is present, this could signify that no one has (yet) succeeded in monetizing the segment.
These are just some of the few things to keep in mind when choosing your market. However, every industry is different and so is every idea and company. Finding a good fit is a crucial part of the success of a company, so it is important to select a segment whose customer demands best fit your idea. Because in the end, the crux of a successful idea is fulfilling consumer’s needs!