Maximize the return on your marketing investments by prioritizing market development
Maximize the return on your marketing investments by prioritizing market development
Glendale, California-based ServiceTitan created the field service management category by focusing on a narrow industry vertical—plumbing, HVAC and electrical trades—before expanding its target market and becoming the operating system of choice across all trades.
Around the same time, some 7,500 miles away in Israel, Monday.com launched its specialized project management tool before developing an extensive partner program and creating a new category for mainstream markets like CRM.
While these two companies differ in how they accelerated growth, each took deliberate steps to develop a market for a new product category. Such an aggressive, calculated pursuit of growth, called market development, can be built into the go-to-market (GTM) strategy. This turns marketing into a value creation engine for the business.
Market development harnesses strategy, sales and marketing resources to develop a market for a new product category. This, of course, is the ultimate goal of B2B tech companies introducing new technology. (And it’s just as relevant to mature businesses that want to sell an existing product into a new market or to a new group of buyers.)
In B2B tech, these disciplines come together in a single functional role—product marketing. That often puts product marketers in the position to most effectively apply a market development strategy and plan.
While many companies today are already adept at marketing, such as value-based messaging or persona-based buyer analysis, they can still fall short when developing a new market. After all, what’s visible—for example, flashy collateral or a website with all of the bells and whistles—is not ultimately what’s most impactful in GTM execution for a product in its own new category.
You can prioritize market development activities in a way that builds on and extends your existing marketing investments:
Standard segmentation doesn’t always account for the market of prospects or customers who are likely to adopt a product at different points in its lifecycle. While this type of marketing can capture the attention of some likely early adopters, it may also fixate on the theoretical total addressable market (TAM). This runs the risk of making your product a small fish in a big pond. It can also lead to downstream marketing activities that aren’t always optimized for impact.
Instead, consider where you are in the diffusion of the new product category. Then, determine the most viable segment to target to move quickly through the diffusion curve. This advanced market development approach prioritizes a niche strategy, which is all about being a big fish in a small pond. Advanced product marketing plays a role here in a variety of ways, including:
Traditional marketing often defines distinct buyer personas and end-user personas, if they are different from the buyer. Step up your approach by considering the unique psychographic profile of a group of buyers—a combination of psychology and demographics that makes their marketing responses different from those of other groups.
Consider, for example, two EVPs of HR at two mid-sized companies who are evaluating software that tracks applicants through the hiring process:
The first EVP is an early adopter “visionary” in her position (per Geoffrey Moore’s Crossing the Chasm framework). She’s looking for a product that makes applicant tracking significantly faster, even if it disrupts other business processes.
The second EVP is a “pragmatist” when it comes to tech adoption. He is more interested in a product from a proven market leader, even if the improvement in productivity it offers is on a lesser scale.
A strategy based on psychographics will flow through to positioning, messaging, prospecting and more.
The standard marketing mindset sometimes treats messaging as a “tool” rather than a process. Over time, this can cause leaders to deprioritize messaging in favor of other sales and marketing activities perceived to be constantly in motion, such as marketing spend.
Ensure that positioning is aligned with the market opportunity by developing it within the context of diffusion and psychographics. Crucially, you need to get the positioning right while also understanding why it must be changed if it’s already worked.
This may be counterintuitive to some who feel that “if it ain’t broke, don’t fix it.”
For example, expanding into a market of “pragmatist” buyers who prioritize the proven reliability of an application representing a new standard would require different positioning than what has worked well in the past with “visionary” buyers, who prioritize innovation and order-of-magnitude benefits in products they are considering.
Prioritizing growth at an early stage can result in a scattershot sales and prospecting strategy. While it might seem promising in the near-term when such an approach yields an opportunity, focusing the same time and resources on a defined market will ultimately yield a customer base in a common market. This can be an important wedge when developing a new market category.
Resist the urge to deviate from your target market. A niche strategy enables you to focus on:
While conventional marketing activities focused on customer acquisition can create value by generating new opportunities, there’s often a tendency for marketing to focus on investments normally in the domain of “corporate marketing,” like branding or lead gen.
To drive user adoption and retention, focus marketing resources on activities that take the lifetime customer value into account. This will cause you to consider whether existing customers are realizing the value/claims of the product that got them to buy. This of course impacts retention and expansion. It also feeds back into the customer acquisition cost, lowering it by generating customer references.
You can also hook and keep users with tactics that include:
The conventional corporate marketing approach views partnerships as a supplemental activity. They’re seen as a low-cost, low-risk way to generate additional revenue streams.
Step up your approach to partnerships by viewing them as essential. After all, they can help you realize your market development vision. Consider the following steps:
As ServiceTitan and Monday.com illustrate, an effective go-to-market strategy must include a plan to quickly grow a new product category. Each of these companies deliberately employed the market development tactics best-suited to their needs. In doing so, they effectively cultivated a niche before targeting mainstream adoption. As a result, they deployed marketing resources for value creation rather than merely a downstream cost of doing business.
Learn more about how you can leverage advanced product marketing tools and expertise to realize your business’ vision more quickly.
Adam Aftergut is the principal of West97 Marketing, which provides on-demand product marketing and sales enablement for industry-leading B2B SaaS enterprises and startups that market and sell their products to Citibank, Disney, General Motors, Kaiser Permanente and many other market leaders. Adam’s unique approach brings together value-based messaging and consultative sales methodologies with high-impact, enterprise-class deliverables tailored for each client’s needs, goals and strategic context.
