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How to Use Market Intelligence in Sales Decisions
by Paul Kellett, AIA Director or Market Analysis - AIA Posted 09/18/2008
Companies generally recognize the value of market intelligence in making sales decisions, but may not always be sure how to actually apply it. They understand that good products, no matter how well designed, don’t sell themselves. More specifically, they appreciate the necessity to achieve customer awareness of their products and address actual customer needs; for product development, they therefore base their decisions on external market knowledge primarily, instead of internal engineering capabilities exclusively. In short, these companies wish to minimize business risk with knowledge about the market, because - if not guided by market intelligence- they can fall victim to market uncertainty and rapidly deplete their limited sales resources. As this suggests, the main purpose of market intelligence is to guide resource allocation to maximize sales.
Before looking at specific ways of using market intelligence, let’s first define market intelligence and then consider the role market intelligence plays in the sales decisions of successful companies. By “market intelligence” we simply mean information gathered and analyzed about markets for purposes of maximizing sales. But of course unstructured information provides no guidance for sales maximization and so the market analyst must also piece together the information to present a uniform picture of the market.
Now assuming that a company is armed with coherent, consistent data on the market, how does it go about using that intelligence? There are at least seven, generic applications:
- Validation of Market Assumptions: Successful companies don’t simply make assumptions about the market; they test them with market data. Over the course of time, it is easy for an institutional, self-reinforcing mind set to develop that is based on conjecture, outdated findings about the market and/or a limited, unrepresentative set of customer interactions. Consulting fresh market intelligence allows companies to avoid this pitfall.
- Product Development: Companies with successful products are not inward-directed but instead outward-focused. Specifically, they look to market intelligence to learn about customer needs and use that as the basis for product development. In this way, they are able to avoid a “Field of Dreams” approach (“If we build it, they will come”) where product development is based mainly on internal engineering capabilities.
- Competitive Analysis: A distinct field within market analysis, competitive analysis provides intelligence on competitor capabilities, strategies, tactics, products and other critical information that companies must consider, as they go head-to-head for the same customers. A SWOT (strengths, weaknesses, opportunities and threats) analysis is a widely used tool in this field. SWOT analysis involves specifying the objective of the business and identifying the internal and external factors that are favorable and unfavorable to achieving that objective.
- Market Direction/Trend Analysis: Failure to consider the direction in which the market is evolving can result in the obsolescence of a company’s products. To avoid being left by the wayside, companies therefore use market intelligence to learn the market’s direction. Specifically, they use market intelligence to understand major trends and align their actions accordingly.
- Sales Strategies and Tactics: In successful companies, market intelligence is a major input to the sales strategies and tactics of the market plan. Market intelligence plays an important role in defining market targets and setting parameters for pricing, packaging and promoting products. It can therefore help answer important questions such as, “What market should we be in?”, “What segment should we target?”, “How should/can we differentiate our products?”, and “How should we position them in the marketplace?”
- Performance Benchmarking: Well-run companies also want to know how their sales performance (in terms of volumes and growth) compares to the market as a whole. They use market intelligence to form benchmarks, against which they can determine whether they are leading the market or falling behind. (Comparative growth rates and company market share are two commonly used metrics.)
- Market Opportunities: Because the best-run companies are by definition strongly growth-oriented, they are always on the outlook for new market opportunities. Market intelligence can uncover these opportunities by identifying under-served areas in the current market, new markets for existing products and new products that can open up new markets. These new opportunities can involve product extensions, repackaging and/or repositioning of current products, new geographic markets and altogether new products.
As these applications illustrate, market intelligence is an indispensable resource for minimizing market uncertainty and thus increasing the likelihood of sales success.
Of course, not all companies are created equal in terms of their ability to access market intelligence. Truth be told, market intelligence is expensive, placing it beyond the financial reach of many smaller companies. Fortunately, in the machine vision industry, this problem doesn’t exist. As a non-profit organization dedicated to the growth of the machine vision industry, the Automated Imaging Association (AIA) makes available a comprehensive, updated source of market intelligence at a cost considerably lower than other sources, the annual AIA market study.
As a result, AIA has assisted machine vision sales efforts for over a decade. Many companies have relied on the AIA market study as a helpful resource, particularly during economically challenging times. However, they may not have fully leveraged its contents for want of knowledge about how to do so.
To insure that these companies reap the maximum benefit from the study, AIA has recently prepared a primer, “How to Use the AIA Market Study to Maximize Sales”. To see how companies can specifically use the study for their sales efforts, we invite you to download the primer by clicking here: AIA Market Study Primer. (There is no charge.)
AIA wishes your company great success!
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