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Developing Your New Market Entry Strategy: The 3Cs Framework

Imagine you’re a large medical technology company carrying a wide range of healthcare products. You see huge opportunity in a new market. How do you decide what innovation to lead with, what products to offer, and what your market entry strategy should be?three_c_V2

Here’s a framework that can help you narrow the universe of possibilities. We call it the 3 Cs, which stands for Company, Customer, and Competition. All three are critical factors that converge to reveal the sweet spot for market entry.

Company: This is often the starting point for med tech companies. They see a lucrative market, want a piece of it, and figure they have something good that will sell there. The driver is the company’s desire for growth and their belief in the solutions they offer. The “company” factor narrows the universe by identifying three things: 1) Core competencies and existing assets that can be leveraged for entry into a new market, 2) New competencies the company wants to develop, and 3) New care areas they want to expand into.

Customer: This is about identifying and understanding unmet needs and meaningful problems customers care about, as well as needs and problems they may not be aware of yet. The driver is what customers desire and will pay for. Determining these things requires being really tuned in to your customers. The “customer” factors narrow the universe by revealing 1) what customers want and need and will buy, 2) what their hidden desires and aspirations are and  what better state they envision, and 3) what customers don’t want, don’t value, and won’t pay for.

Competition: The competition factor focuses on identifying what customer needs are and are not adequately met by competitors, and what solutions you have that are already provided by others in the market you want to enter. The driver is finding an open niche of sufficient size for your innovation to take hold. Generally, companies will stay away from markets where there is domination by one or two competitors – unless they are willing to make a huge investment to unseat market leaders. The “competition” factors narrows the universe by specifying 1) where there is space for innovation, 2) what solutions exist and which are still needed, and 3) where there is good growth potential.

The danger is that the company’s hunger to enter a new market can lead to rash decisions and action without a guiding strategy. To mitigate that risk, give serious consideration to customer desire and to the competitive space. That way you avoid being driven by company solutions and wishes, rather than customer problems and desires.

What’s your experience developing new market entry strategy? What were your decision drivers? What lessons did you learn?

More resources:

How to Grow Your Business with Customer-Centric Innovation

How to Get to Breakthrough Innovation: Desirability First!

New Product Innovation: How to Determine the Winners

 

Why Selling New Technology into Hospitals is Hard: Overcoming the Status Quo Bias

You’re pitching your company’s new device or software solution to a hospital. You believe your product is clearly superior to the outdated technology the hospital is currently using. You know they have the money to switch. Standard economic theory would predict that the hospital decision-makers would rationally choose your product since it would provide them with greater utility. But the hospital decides to stick with what they have. What’s up??

There are a lot of barriers companies face selling into hospitals. One of the most pervasive and misunderstood, is the tendency for customers to make non-rational decisions to stay with the products they have. By non-rational, I mean the decision is based on an emotional preference, not an objective judgement that the current technology is as good as or better then the new one. Psychologists call this emotional preference the status quo bias. It’s a big deal.

Research in behavioral economics shows the status quo bias significantly affects important life decisions like health care plan choices, selection of retirement programs, stock market investments, recommended medical treatments, and all kinds of purchase decisions. It’s one of several biases scientists have identified to explain what appears to be irrational decision-making.

Think about it in your own life. The food you eat, the places you go, the clothes you wear, the things you buy… how often have you stayed with the familiar rather than trying an alternative?

While there are many explanations for the status quo bias, here are three of the big ones:

  1. Uncertainty: Good or bad, clinicians or IT directors know what to expect from the technology they use now. Switching to your product means taking a risk; they don’t know if it will perform as promised. As the old saying goes, “better the devil you know than the devil you don’t.” Scientists call this loss aversion.
  2.  Transition costs: It’s not just a matter of buying your product, it’s also all the  costs – time and money – involved in switching from what they’re using now. Training staff, updating clinical protocols, adapting workflows- all these things go away when a hospital maintains the status quo.
  3. Minimizing regret: People feel worse about problems that come from changing to a new product (action) than problems that come from sticking with what they have (inaction). To avoid regret,  hospital decision-makers choose inaction and keep the technology they have.

How can you overcome status quo bias so that customers buy your superior technology?

  1. Connect emotionally: Acknowledge and empathize with the tendency people have to stay with what they know. Give relevant examples of when that has worked for hospitals and when it has backfired and led to significant negative outcomes.
  2. Recalibrate their status quo: Change the reference point from the status quo being doing nothing to the status quo being doing something. Make the case that most hospitals are switching to new technologies- that’s the norm. The question is which to choose, and when.
  3. Reduce their risk. Demonstrate that staying with what they have is the risker option because it guarantees negative outcomes (be specific, e.g. more IT downtime, unnecessarily complicated workflows, less time with patients, incompatibility with EMRs or other devices, etc.).
  4. Reframe transition costs: Recognize objections related to transition costs. Acknowledge those that are true, then dismiss the remainder with evidence of savings that will result from switching.

Try it and let me know what happens. When you can overcome the status quo bias in these ways – and you can! – customer trust and sales can increase dramatically.

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The classic from the founders of Behavioral Decision Theory: Kahneman, D., & Tversky, A. (1982). The psychology of preference. Scientific American, 246, 160-173.

 

 

 

Embracing Voices of Patients: The New Win-Win for Med Device Companies

I led a session called Voices of Patients at the Wireless Life Sciences Association’s Convergence Summit last week. Their stories were extraordinarily powerful, bit not extraordinary. So many patients don’t have a meaningful voice in their own healthcare, don’t have access to data their own body generates, and don’t know if they’re getting the right care or not. Continue reading Embracing Voices of Patients: The New Win-Win for Med Device Companies

Powerfully Communicate Your Impact: Lessons from … Bloomberg?!

We led lively workshops this week for folks at CDC’s Injury Center committed to strengthening how they communicate the results of their good work. Lots of active learning and candid discussion. And sharing…including my friend, colleague, and ace scientist David Sleet giving me a copy of the progress report on improving global road safety by Bloomberg Philanthropies. Check out how they conveyed their results. Continue reading Powerfully Communicate Your Impact: Lessons from … Bloomberg?!

Everything about Your Organization Talks. Everything.

Sure, it’s “only” a sewer cover in Portland Oregon, a.k.a. The Rose City. But it speaks to the reality that everything that an organization says and does either strengthens its image, or weakens it. Portland (the great city where my daughter Alyssa lives) is known as a place where roses grow like crazy, home of the Portland Rose Festival (other reasons here).

Think about the many little ways that you can communicate and reinforce your brand: How your people answer the phone, what your directional signage looks like, how you greet visitors, and if you’re a municipality, yes, even your sewer covers.

Warning Signs, Fines, and Risk Communication

Check out these two signs telling you about violation fines. Which one would influence your behavior more?Warning Signs

This is a common example of Behavioral Decision Theory (BDT) or Behavioral Economics, hitting up against the complexities of real life. Are we moved more by a message that tells us the minimum we’ll be fined for certain if caught, or the maximum we could be fined if caught? Continue reading Warning Signs, Fines, and Risk Communication