Identifying the addressable market

In marketing there is a statement that is thrown around a lot – “find a niche in the market”

This is a very powerful statement. It clearly helps to identify a piece of the market , that you can “own”, if you are successful. It’s always better to own a small pond than to be a small fish in the ocean. Even P&G which has multiple billion dollar brands in its stable, has clearly identified niches for each of its products. So the statement is absolutely current.

I will just like to put a small caveat to the statement and make the statement read – Find a niche in the market and also find if there is a market in the niche.

Let me explain this with a real life experience. When I had just joined a company, fresh out of University, I was given a product which was basically about selling process control equipment . It was a very sophisticated product for its time. We created a solution using this product which we executed on a couple of sugar plants, very successfully. So I was given the responsibility to go out in my territory and target all the sugar plants and sell this solution, because we had found a “niche” in the market, which others were not targeting.

The solution which we had executed, was done on a very large sugar plant, while most of the sugar plants in my territory were small capacity plants. In addition these plants didn’t even have electric panels in the boiler room, so how would they even install such a sophisticated process control equipment. (This led me to create a Maxim for myself – if there’s no road in the town that you are going to sell, you don’t try to sell a luxury car.)

Coming back to the topic at hand – what I realised was that we had a niche in the market which none of the other process control companies, at that time, were targeting, but the market was just made up of 10 odd companies that we could sell to. No one else could afford us. So eventually we wasted a lot of energy and eventually got out of the market.

So now whenever we talk about identifying a niche in the market- in which we want to target our product or service – I want to always check how much is the addressable market. Combined with the questions that I raised in the first 3 parts of this series, if you don’t find an answer to this question correctly then you will waste a lot of time and money.

In the technology based businesses, especially if you are getting in a new technology, you also need to identify if there are enough companies who are using the earlier version of the technology or if there’s requisite infrastructure to incorporate your new technology. To give an example of this, if you are bringing in a SaaS product, one of the pertinent things to check out is – do they get enough network bandwidth across all their offices, so that they can utilise a SaaS based model. If you are trying to sell this product where network bandwidth infrastructure itself doesn’t exist, then even if you have identified a niche in the market for your SaaS product, you won’t be able to succeed because there aren’t enough companies who have the bandwidth to utilise the product.

This is a critical piece in planning your marketing activities. Let me know how you go about identifying the addressable market.

Till next time then.

Carpe Diem!!!

P.S: In case you would like to get my checklist for launching a new technology based product or service in the B2B market, drop me a message.