Learn how to target adjacent markets with smart risk-taking
Here are three ways marketers can move into new markets while staying true to their core audience.
Two running enthusiasts founded Nike in 1971 and created the first pair of Nike shoes using a waffle iron. Nike has come a long way since then – between the design of the signature swoosh, creation of the slogan “Just Do It” and endorsement from legends including Michael Jordan, the company has risen to a dynasty. One factor particularly contributed to Nike’s success: their repeated movement into new fitness markets in a specific, scalable way. Through targeting adjacent markets, Nike expanded its reach into new sports (mountaineering, for example) and sets of customers (like young athletes).
Just like Nike, many of the world’s largest companies, especially software companies, can accelerate their success through expansion into adjacent markets – but it’s a feat that requires a high degree of intelligent risk-taking. With research illustrating only three percent of software startups grow into companies boasting an annual revenue of at least one billion, it’s clear many struggle to make it past an initial “growth spurt.” Software companies can’t afford to stand still; they need to evolve by constantly moving into new markets.
To target adjacent markets successfully, high-tech marketers can’t lose sight of their companies’ original target market – but they do need to walk a fine line between risk-taking and staying true to their core audience. Here are three ways marketers can practice smart risk-taking into new adjacencies.
1. Identify the right moves through customer insights
With a surplus of emerging technologies coming onto the scene, marketers can face decision-paralysis when it comes to choosing which tools to incorporate into their business and new markets to pursue. Customer-centricity is key. Cutting through the noise of overwhelming choice and buzzword technologies means zeroing in on customer buyer and budget trends to understand exactly which markets to target.
Because metrics have become the lifeblood of marketing, modern measurement tools make it simple to gain consumer insight, analyze granular data and find common threads. You can also glean insight into what’s working through digital marketing methods like customer email surveys. Ask your most loyal customers to share feedback on what products would make their lives easier or ways you could boost the value of a current solution. Human-to-human methods of gaining feedback work well in tandem – through in-person focus groups, for example, you can bring together a mix of loyal and newer customers to discuss trends and collect valuable insights. Gathering customer opinions through both digital and in-person methods can help you make an informed choice on a new adjacency to target that will both power your current customers and let you enter new markets.
2. Be willing to let go
Once marketers determine which adjacency they’ll target, it’s usually time to hand the reins over to a leader who “speaks the language” of this new market. This means giving up ownership and providing autonomy to new leaders, as well as letting the initiative run unencumbered from the core of the business. If you force integration of the adjacency into your core business, it will simply wither on the vine. Treat your new market like a small but mighty startup, and give it the critical safe space it needs to grow and build momentum.
This also means letting go of the pressure to tie to the mainstream right away. Allow your new adjacency to play out in parallel or perhaps even in competition with your core market.
If you watch the work of an adjacent market at your company and catch yourself thinking “I don’t like what they’re doing,” that might be a good sign – it signals you’ve stepped out of your comfort zone and can allow positive change to occur. Moving away from what’s familiar means getting used to new metrics, too. For new market entry, rather than tracking revenue, metrics or pipeline, consider instead measuring quality and use cases you can share with the broader market.
3. Keep your eye on your core audience
Marketing to new adjacencies successfully means staying true to your core market while taking calculated risks. One way to ensure you don’t lose sight of your original consumer market is to target just one new adjacency at a time. Focusing on only one at first will enable you to provide ample resources to leaders and marketers of this new adjacency so they can execute like a startup while you simultaneously tend to your core market of customers.
In Geoffrey Moore’s book “Crossing the Chasm” about marketing and selling high-tech products to mainstream customers, he covers the importance of starting small when it comes to targeting a new customer niche. He compares the initial phase of entering a new market to securing a beachhead in an invasion before you take a stand and build it from there. For example, Mark Zuckerberg built out Facebook’s marketing strategy by first starting small and targeting college students as primary consumers. Once he drove interest on campuses, he created enough of a presence to start expanding into other consumers across the world.
Successfully branching out into adjacent markets might mean making uncomfortable strategy shifts at first, but these changes will lead to the expansion of your core business. As long as you complete the transition to a new adjacency thoughtfully, your organization will reap the benefits – including an increase in consumer base, profit and brand awareness.