Are You About to Be Blindsided? Expanding Your Focus Can Reveal Valuable Insights
Here is an article I wrote for the American Marketing Association's 7 Big Problems blog series, based upon the content of my book, The Insight Discipline.
When your brand is the market leader, it may seem like the best strategy is to simply stay the course and reap the profits. But you could be at risk of being blindsided by forces that aren’t even on your radar now.
That’s where a marketing team at a global pharmaceutical firm found itself recently. The team had traditionally assessed their firm’s market position using Michael Porter’s classic Five Forces Framework, which focuses on these factors:
(1) competitive rivalry (number and strength of competitors);
(2) supplier power (how easily suppliers can raise prices);
(3) buyer power (how easily buyers can switch suppliers and/or drive prices down);
(4) threat of substitution (how easily buyers can find an alternative way of solving the need the firm fulfills); and
(5) threat of new entry (ease of new entrants to gain traction in your market).
Using these factors, the marketers’ analyses led them to believe they could expect smooth sailing for the next four to five years until their product went off patent; however, they were missing an important part of the picture. I asked them to conduct an ecosystem analysis—to go beyond just paying attention to the traditional industry players addressed in the Five Forces Framework. When I encouraged them to take the broader perspective inherent in ecosystem analysis and examine other dynamics in the external environment, they began to discover risks that could quickly derail their market-dominant position as well as new means to stabilize and extend their current market position.
For example, the team hadn’t fully appreciated the extent to which rivals were increasingly using “thought leaders” and other product experts to influence customers’ purchasing strategies. Nor did they realize the extent to which government and local agencies were increasingly likely to restrict the company’s ability to sell its product. In addition, it surprised the team how, outside the United States, country-to-country changes in regulations increasingly meant that the firm’s old way of doing business in many geographies would need to undergo significant change.
To gain insight into ways that your market position could change abruptly, try using this three-part exercise:
Identify about 15–20 key external industry players that could affect your business, such as industry and professional associations, regulatory bodies, elected officials, technology providers, industry and product experts, trade unions, community and social groups, single issue advocacy groups, etc.
Next, map out or list the most important relationships that you and your competitors have with those organizations and identify some of the major paths of influence: How are the industry players influencing one another, and what changes might result that could affect your business?
Finally, identify the opportunities for your company or brand team to play a more active role in influencing the industry players in ways that would help create or retain a favorable climate for your product or service.
Adding this kind of “political” or influence analysis to your product-centered analysis can yield valuable insights into not only how your marketplace may evolve but how your business can influence that evolution in your favor.
These insights could also help you leverage your resources more effectively. For example, the pharma marketing team discovered that although the company had research relationships with more than 50 universities around the world, no one was managing those relationships.
Moreover, the marketing team hadn’t realized that another department was routinely performing deep analysis of regulatory trends. As a result, the firm began to bring together resources from multiple departments (e.g. public relations, government relations, regulatory and demographic specialists) to collaborate on building a much more powerful understanding of industry dynamics.
I’ve developed a number of techniques such as these to help marketers get beyond the limitations of their traditional analyses to reach critical insights, which I’ve outlined in my new book The Insight Discipline: Crafting New Marketplace Understanding that Makes a Difference. I also encourage you to read and comment on my other AMA blogs.