By Dr. Liam Fahey, ISBM Academic Fellow
When your brand is the market leader, it may seem like the best strategy is to simply stay the course and reap the profits. But you could be at risk of being blind-sided by forces that aren’t even on your radar now.
That’s where a marketing team at a global pharmaceutical firm found itself recently. The team had traditionally assessed their market position using Michael Porter’s classic Five Forces Framework, which focuses on these factors:
- Competitive rivalry (number and strength of competitors)
- Supplier power (how easily suppliers can raise prices)
- Buyer power (how easily buyers can switch suppliers and/or drive prices down)
- Threat of substitution (how easily buyers can find an alternative way of solving the need you fulfill)
- Threat of new entry (ease of new entrants to gain traction in your market).
But while the marketers’ analyses led them to believe they could expect smooth sailing in the next 4-5 years until their product went off patent, they were missing an important part of the picture.
I asked them to conduct an ecosystem analysis—to go beyond just paying attention to the traditional industry players addressed in the Five Forces Framework. When I encouraged them to take the broader perspective inherent in ecosystem analysis and examine other dynamics in the external environment, they began to discover risks that could quickly derail their market-dominant position as well as new means to stabilize and extend their current market position.
For example, the team hadn’t fully appreciated the extent to which rivals were increasingly using “thought leaders” and other product experts to influence the purchasing strategies of customers. Neither did they realize the extent to which government and local agencies were increasingly likely to restrict the company’s ability to sell its product.
In addition, it surprised the team how, outside of the United States, country-to-country changes in regulations increasingly meant that the firm’s old way of doing business in many geographies would need to undergo significant change.
For a simple explanation of a business ecosystem, check out this video
To gain insight into ways that your market position could change abruptly, try using this three-part exercise:
- First, identify about 15-20 key external industry players that could affect your business, such as industry and professional associations, regulatory bodies, elected officials, technology providers, industry and product experts, trade unions, community and social groups, single issue advocacy groups, etc.
- Next, map out or list the most important relationships that you and your competitors have with those organizations and identify some of the major paths of influence: How are the industry players influencing each other, and what changes might result that could affect your business?
- Finally, identify the opportunities for your company or brand team to play a more active role in influencing the industry players in ways that would help create or retain a favorable climate for your product or service.
Adding this kind of “political” or influence analysis to your product-centered analysis can yield valuable insights not only into how your marketplace may evolve but how your business can influence that evolution in your favor.
These insights could also help you leverage your resources more effectively. For example, the pharma marketing team discovered that although the company had research relationships with more than 50 universities around the world, no one was managing those relationships. Similarly, the marketing team hadn’t realized that another department was routinely performing deep analysis of regulatory trends. As a result, resources from multiple departments (e.g., public relations, government relations, regulatory and demographic specialists) were brought together to collaborate on building a much more powerful understanding of the industry dynamics.
I’ve developed a number of techniques such as these to help marketers get beyond the limitations of their traditional analyses to reach critical insights, which I’ve outlined in my new book The Insight Discipline: Crafting New Marketplace Understanding that Makes a Difference. I also encourage you to read and comment on my other blogs. and consider signing up for my course at ISBM on Advanced Market and Competitive Analysis and Insights
About the author: Dr. Liam Fahey’s consulting, teaching, research and writing focus on enabling organizations to win in the marketplace through enhanced marketplace intelligence and insight. Liam advises leaders, conducts workshops, consults to analysis specialists, and engages with work teams in all facets of generating and leveraging marketplace intelligence and insight.
Liam has an extensive academic background and 30 years of practical experience in a variety of industries around the world. His corporate clients include some of the world’s best-known brands and he has delivered executive education for more than 10 universities around the globe. His custom-designed intelligence and insight workshops have enabled organizations to develop a deeper understanding of their emerging and potential competitive environments; understanding that makes a real difference in their thinking, decisions, and action. The difference is reflected in the development of new points of view about the future, new strategy options, new modes of strategy execution, and new organization-wide capabilities.
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