4 Ways to decide if you are in wrong market

You will fail if you choose a wrong market.

I hope this is a self evident statement to you that you will fail if you select a wrong market. 

This does NOT mean to say you will succeed only by being in the right market. For that to happen, all the 3 basis of the strategic triangle have to be strong. The 3 bases being choice of the market, crafting of a value proposition and the go-to-market activities .

But market selection is probably the most important. I have seen - and been also involved in - turnaround of the fortunes of businesses only  based only on the principle of market selection. Remember everybody cannot be your customer because you cannot use a broad brush and chase everybody (like all furniture users, all car owners, all word processors, all people needing painting..etc) unless you are very big. For the rest of us you must focus and select only specific group of customers using the 4 principles given below.

Be in the market where you understand what is needed by market

# 1 : where you understand the customers well

• Unless you have a first-hand and insightful understanding of what drives the selected customers to search, sort  and buy things in the space you want to operate in; you are likely to make fundamental mistakes. 
• You are likely to incur costs which your are fond of - rather than those the customers are likely to see as valuable. You must do more of those things that really matter to the chosen customers and less of those things that do not really matter to such chosen customers. 
• In fact your incurring of any cost is justified only through your finding identifying and finding customers who are willing to pay a price for it. No cost, in isolation, is right or wrong... it purely and only depends on whether the customers want it and whether you can get such customers.

 Be in the market where you understand what you need to do

#2 : where you can be competent in the long run

• Are you confident of equipping yourself (machines, talent, offices, dealers, technology, location etc) to cater to the defined needs of such customers  in a better fashion than the options currently available to them? 
•  Are you willing and capable of continually investing in renewing your competence to keep pace with - if not to be ahead of - evolution of the market ?

Be in the market where you and customers can meet on price

#3 : if price is profitable to you & acceptable to customers

• Otherwise it will not sustain your interest in selling or the customer's interest in buying. 
• When customers leave, it puts an additional strain on your business to continuously look for new customers. It costs much more to continuously hunt for new customers than to retain existing customers. 
•  The customers finding your price acceptable and good value-for-money (not necessarily L1 or the cheapest) is the key to retention of the customers and profitable growth of your business.

Be in the market that gives you an opportunity to be what you want to be

#4 : if the direction of market development is OK with you

• If you select a market too small in size, your organization will lose its interest in serving them over the time. 
• If you select a market which is too big, you may find you may not have enough resources to continue catering to these customers and they may begin losing interest in you. 
• It is possible that the kind of technology and talent and infrastructure your customers may demand in future from you is very different than what your own aspirations and inclinations for your business are. 
• If your customers' ways are divergent with your ways, you may head for a divorce down the road and divorces are always painful.