You’ve developed a new technology, and it’s solid. No one would blame you for falling in love with its features — its feeds and speeds, its bells and whistles. But if you want to identify a profitable target market, you’ll need to swallow a bitter pill: No one cares about your product's features.
“Technologists find this very hard to believe,” said Kate Mackie, PhD, distinguished senior lecturer, McCombs School of Business at the University of Texas at Austin. “But the market only cares whether the technology can solve a problem that’s causing pain.”
At the school’s M.S. in Technology Commercialization program (MSTC), Mackie teaches a class on the role of marketing in the commercialization of a technology, including a module on identifying your market.
She walked us through important considerations:
Interview your tech team. Interview the team that developed the product, asking them to describe the problem they think it will solve from the customer’s perspective.
“Tell the developer, ‘Ok, this is the do-da and its features are exciting,’” said Mackie. “Then, help them understand you don’t want to know about its features. You want to know what problem it solves. You may have to say it four times, but this is important.”
Interview your customers. Next, Mackie suggests reaching out to at least 20 potential users whom you believe may have the problem your tech solves. In speaking with these potential users, maintain that laser focus on the problem — like, for instance, cost overruns (unexpected costs in excess of your budget):
What is your problem, or ‘pain,’ regarding cost overruns?
How expensive or inconvenient are your cost overruns?
How are you currently solving that problem?
What don’t you like about how you’re solving that problem right now?
Ask probing questions, said Mackie: If you find that the problem costs an interviewee a million dollars annually, find out how and why that is.
Find patterns. As multiple people weigh in, patterns will emerge — smaller groups who define the problem similarly. You may discover a group that’s using cumbersome workarounds. Another might have outsized expenses related to the problem. This will form the basis of your segmentation.
Apply the “Goldilocks principle.” In reviewing these segments, determine the market that’s “just right” for your company according to these considerations:
Pain. When a segment is experiencing pain, it means they have a compelling reason to buy your solution. Know, too, that a target segment that has lots of pain will be less sensitive to price, said Mackie.
Market size. This is about finding the right-size market for your company. If you go after a market that’s too big, you won’t be able to keep up with it.
“You want a market that’s big enough to make money on but small enough for you to dominate with the resources you have at your disposal,” said Mackie.Competitive intensity. How many competitors are pursuing that segment? Look for a segment with lots of pain — but few competitors vying for its attention.
Market access. Consider the points of access you do or don’t have. Do you have the right distribution channels to reach this segment? Have these customers heard of you already? If not, it’ll be expensive to capture their attention. Factor that in.
“Not many tech people say that this part of the process is their favorite thing to do,” said Mackie. “But it really should be the thing on their to do list. The vast majority of new products fail — and many of these fail because the company didn’t do the research to find that ‘just right’ market.”
The M.S. in Technology Commercialization (MSTC) is a one-year master's degree program focused on technology, business and innovation at the University of Texas at Austin’s McCombs School of Business. Learn more about MSTC.
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