by Soham Joshi
As an entrepreneur’s creative mind spins at amazing speeds and produces innovative ideas at the rate of thought, the constraints about what possible and what’s not possible blur away. The best ideas are often conceptualized without any barriers and limitations of the real world. In the initial phases of product development, an entrepreneur should dream big.
At the point where one feels there are enough ideas on the table, it is time to establish that link back to the real world. The link back to the world often hinges on two factors: Value and Cost.
Low-cost ideas oftentimes mean faster time to market. The sweet spot that any entrepreneur aspires to achieve is low-cost ideas that provides high value. These ideas present the least risky proposition from a financial perspective and are very likely to be funded by venture capitalists. A lot of the low-cost high-value ideas fall in the list of items that can be classified as non-discretionary. Ideas that fall in this quadrant are products like LED bulbs, shaving razors, shampoos, body lotions, protein bars, etc.
As one as expected, the maximum competition is also in the same bracket. The goal of every business is to become profitable at the earliest and low cost-high value products provide the perfect opportunity to achieve that objective.
The challenge with every new idea is to evaluate how saturated the market already is with similar products and how differentiating of a product idea does one have. It is always easier to penetrate the market with ideas that are differentiators and that help fill an existing gap in the current offerings.
Market research is very helpful in understanding what the existing products offer. The lesser the differentiation of the new product than the offerings of the existing market products the more the competition the product has to face. The red ocean strategy is a great tool that helps in the analysis in such scenarios.
The desired approach is to look for unfulfilled market needs by using a blue ocean strategy. The strategy helps you identify uncontested market space, be a market differentiator and make the competition irrelevant. This strategy of being the first to the market attracts non-customers by creating new demand that did not exist before.
Understanding the strategy is the first step to being the pioneer in the chosen market space. The next step is to be able to build a strategy canvas. The canvas not only puts the existing market conditions in perspective but also highlights the alternatives that cause market differentiation.
Watch these videos to understand the usefulness of the strategy canvas: