Today’s blog comes courtesy of Denise Wymore, owner of consulting service for cooperatives, Denise Wymore, LLC.
Breaking Into New Markets With Old Habits
By: Denise Wymore
You know that old joke about the two shoe salesmen who travel to a primitive village to check out a new market? One salesman comes back dejected and says that it’s hopeless because the people don’t wear shoes. The other one is really excited because there’s no competition and the market is wide open.
Some of the most successful salesmen in the last decade gave us products we didn’t know we needed. Many of the most popular we didn’t really need, but we wanted them. Think of the latest generation iPod Nano complete with video capabilities. Or the iPhone app Shazam that let’s you settle bar bets about the song that is playing on the juke box. Or the soy chai latte with extra foam.
Our organizational chart is designed to discourage innovation. Where’s the product development? Where’s research? Where’s the think tank and prototype lab? Instead of creating the demand, we tend to wait for it, read about it, review it, meet about it, budget for it, plan to plan to integrate it, legislate it and then…..market it.
I give you five different kinds of checking accounts. One to meet your needs. There’s the basic, direct, exclusive, select and of course the teen account.
Most marketing programs tackle product development around a broad demographic audience. A psychographic approach seeks to solve a problem for a particular (read narrow) group of people with a common bond.
Imagine offering a product that your competition wouldn’t dare offer. Like the Homeroom mortgage loan at OnPoint Credit Union that is only available to those working in an accredited educational institution.
The original credit union model did not target demographics. It targeted a small group of people – usually employees – who pooled their resources to help each other obtain what traditional banking would not approve. These tiny financial cooperatives had no competition. They made banks irrelevant. And that’s why they were so successful.
There was no credit score, no stand-in software to judge; instead their peers determined the character of the person and the purpose of the transaction. It was like borrowing money from your friends and co-workers, only less awkward. And with that came the shame of default. You paid your credit union first. Always.
Fast forward to the lives, works, worships in an 8-county field of membership. That’s a territory, not a target. The thinking was, if you become full service, you will have a better chance at becoming their PFI, so let’s keep adding services. The problem with that – the services added were already available. Take business accounts for example. Your credit union decides to offer them, to an audience that already has several options.
What’s the solution? Solve a problem. That’s it. The most innovative companies solved a problem that many people didn’t know they had. The obstacles existed, but were tolerated. Kind of like banker’s hours.
Perfect example of problem solving as innovation tool: Blockbuster Video. They started out renting video recorders and videos and selling popcorn, sodas and candy. It solved the problem of families spending way too much money on going to the movies. Even if you rented the recorder, it was still cheaper.
Blockbuster suffered from inertia however and created a problem that Netflix gladly and profitably solved. The late fees and driving in the rain to pick up or drop off the movie and not having the movie in stock. Then TiVo comes along and trumps Netflix by offering instant downloads of movies from Amazon.com, and of course Netflix and Blockbuster. The digital movie file is, to some degree, becoming a commodity.
The simplest way to break into a new market, is to solve a problem for a narrow audience. The story at the beginning, about the shoe salesman, did just that. These folks didn’t have shoes, didn’t know they needed them, and shoes definitely solve problems. They will market your product for you with positive word-of-mouth. Before you know it, everyone in the village will be wearing shoes – your shoes!
So, what’s your problem?
Read more about Denise here.