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A
good market assessment will answer the most basic question about
your new idea: Will enough people actually pay for this new technology
to make developing it worthwhile? In the process of determining
this answer, you will also have the opportunity to learn a great
deal more about the technology's market environment:
The Customers
An objective market assessment will first and foremost identify who will actually
pay for the new technology. You must keep in mind that the intended user
of the new concept may not be the one to actually approve the purchase. In this
case, is the end user your customer, or is someone in management the actual
customer?
Just identifying customers is not enough—it is also important to profile
them, which includes determining their number. Customer analysis
needs to be as specific and quantitative as possible. It should
discuss where the customers are located, where and how they currently
purchase product, major factors in their purchasing decision, and
any frustrations with existing products.
The Competition
All products face competition! Anyone who says their technology has
no competition is not being objective in their assessment of the situation. If
nothing else, all technologies face competition from whatever approach is currently
in use. New products and
services also must compete with the customer's option simply to postpone or
cancel a buying decision.
Most technologies are developed to take market share from existing competitors
by offering an improved solution to the customers' need. Even products regarded
as "totally new" or "revolutionary," such as some pharmaceuticals or materials,
will likely displace an existing product or process. While these new technologies
may have a head start in the marketplace, they will soon attract competitors.
A thorough market assessment will identify and describe competitors in the field. Each competitor's strengths, weaknesses, and market penetration should be outlined in as much detail as possible. Your own technology must then be compared to each of these competitors in order to point out the competitive advantages of your technology. Current buyers of the competing technologies are probably your best source of objective information for this comparison, as they are the ones who will ultimately be asked to buy your technology.
Market Factors
Many technologies, especially those relating to industry, are
"path-dependent"—that is, as advanced as they may be, they
are slow to be adopted because of the substantial investment the
target market has already made in equipment and processes. Revolutionary
products sometimes fail owing to incompatibility with existing equipment.
Products must also fit into the overall purchasing strategy of customer
firms. Understanding these factors within a market greatly contributes
to the assessment of your new technology's commercial potential.
Suppliers
Every technology will, at some level, be dependent on suppliers. It is as important to identify and understand these companies as it is to identify the sales potential of the product. Disastrous decisions can result from a market assessment that identifies strong sales potential for a product, but fails to note that no existing firm can or will provide the needed components for the product in a timely manner or at the cost needed.
Distribution
As with suppliers, distribution networks can prevent a product from succeeding
even if substantial demand for the product exists. Comprehensive market assessments
must include an analysis of the distribution network that will move your technology
from production to the end buyer. This information, in turn, may suggest your
best chance of commercialization will be with an existing industry player as
a partner.
Political Context
The political context within the U.S. or other nations can be make-or-break factors
for new technologies. Given the nature of today's security and environmental
concerns, governments very often take an active role in fostering certain technologies
through grants or limitations on competing technologies. These
activities can change with administrations or legislatures, but they must be
considered as part of a full market assessment.
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