Market attractiveness, what is that really?
How many times have you searched for the most attractive (growth) markets for your company?
How do you select the best segment or geography or consumer demographic and then in hindsight got it wrong and needed to adapt or change it?
Why is it so difficult?
- Not all markets are equally attractive to different players – it depends on your starting point and inherent capabilities
- Attractiveness is in the future – and we seldom forecast well
- Trends are broken by unexpected (singular) events (FUCA) – organizations and strategies are not built to handle disruptions
- Attractiveness is a multi-parameter assessment – we have trouble with anything more complex then 2 dimensions, especially if they are dynamic and not independent
- Attractiveness changes by our own behavior – our actions change the assessment (for yourself, but also for others (everybody jumps on the same trend …)
What do my own experiences suggest
I have made many good forecasts, but also my share of wrong predictions:
- two times in my career I have predicted the end of PVC as a large volume polymer – well, PVC is still here and growing for the applications where it is the best solution.
- Many years ago – not to long before oil prices soared even above $100 per barrel, I chose not to buy forward oil contracts at $20 per barrel believing that $15 should be the maximum.
- In the early 1990’s I advised our company not to enter the Chinese market for one of our businesses – to date that business is still struggling to gain its fair share in the largest market of the world.
So, what can you do:
Start by being aware of your limitations, check your approach against the above 5 risks. Make sure you involve multiple stakeholders – internal and external in your process.
Use both hard data trends ánd foresight techniques to forecast – create multiple scenarios with future milestones to monitor.
Allow extreme views and creativity around the obvious choices and be cautious in discarding to early. Then reduce complexity but do not simplify your logic.
After choosing to make sure you review frequently and build in skills to adapt to changes, because you will not get right the first time ánd the world will continue to through unexpected events at you.
Especially now with many scenario elements across health care – economics – politics – consumer behavior still open, a robust approach can help you step up.