What Market Are You Really In?

I wrote a week or so ago that Apple didn’t see itself in the computer market, but that the mobile communications market was part of its core business. Sure enough, during the launch of the iPad, Steve Jobs commented that Apple were now the world’s largest player in the mobile devices market.

One of the best ways to drive growth for your business is to have a clear view about the markets you play in. Like with Apple, these may change over time, as technology, customer behaviours and competition changes.

Kodak is struggling because, for too long, it continued to believe it was in the film processing market, not the mobile devices market. Olivetti made the mistake of believing it was in the typewriter market, not the word processing market.

If Kodak’s and Olivetti’s executives had been able to make this perceptual leap much earlier, like Steve Jobs and his team did, they would have been much better able to deal with the rapid changes that brought their companies down.

Understanding what your real markets are, requires you to answer these three questions:

1. For what purposes do your customers and users use and derive benefit from your products and services, and how is this likely to change in the future? For Olivetti, the purpose was to prepare and share written documentation, and the introduction of digital technology was likely to affect both these activities.
2. What alternative or substitute products and services could and do they use, and how is this likely to change in the future? Olivetti was up against the pen and pad and manual typewriters, but even by the 1970s word processing applications were being developed.
3. What complimentary products and services are available to your customers when they purchase from you, and how is this likely to change in the future? By the 1980s the complimentary products and services were rapidly changing from paper and ink, to personal computers, floppy disks and memory cards.

As you can see, once you have answered these questions you are likely to have a very different view of your market.

To begin with, it’s likely to be much larger than you think, with more existing and potential competitors to consider. It will also be more uncertain as it requires you to anticipate future changes and dynamics.

All this will make your market more difficult to predict, messier and more difficult. At the same time, however, it will also have far bigger and more interesting possibilities and opportunities.

To my mind, this is part of Steve Jobs’s genius. He recognises markets aren’t defined by products but by customer experiences. As technologies develop and converge, customers will demand and respond to new and better experiences.

This has meant that Apple has shifted its perception of its market from the personal computer to a much bigger and dynamic market, which is now called the mobile devices market.

What market are you really in?

© Stuart Cross 2010. All rights reserved.