This month we'll look at how to understand the market and its infrastructure and why this is so important in establishing the appropriate segment partnerships.
Market segments are clearly defined and have established internal working relationships. They are interconnected by the exchange of money, information, services and products. The more clearly and accurately you define the segments, the easier it is to understand the relationship between the segments, the market and its infrastructure.
This is important because understanding the market and its infrastructure is key to establishing the partnerships and programs required to facilitate users' adoption of technology. Infrastructure Partners are part of a company's External Delivery Infrastructure (see May 1999). Infrastructure Partners help users select, buy and use technology. By utilizing Infrastructure Partners, vendors can achieve their objectives while minimizing the use of their most valuable resources money and labor.
Infrastructure Partners should not be limited to big consulting firms and technology companies. For one, access to these types of strategic partnerships may not be available to all vendors. Secondly, smaller, more focused partners generally possess specific knowledge and expertise that apply to users in that segment. Because of this, they provide tremendous credibility. They also have better access and interaction with the users.
For example, a vendor targeting the real estate industry needs to develop a knowledge base for that industry. First, for which types of users, or segments, within the real estate industry is the product best suited? Is it escrow agents, real estate agents, title insurance agents or IT? What product requirements do they have?
Once the vendor decides to target a specific group (i.e., real estate agents), there are still unanswered questions. Who do the agents work with? How do you most cost effectively reach them? What do you need to do to encourage them to actually use the technology?
A vendor could easily identify and respond to the needs of the segment by working with the following Infrastructure Partners:
- Associations (i.e., state and local chapters of the Association of Realtors) that set up, promote and fill educational and pre-sales events.
- Real estate certified instructors who provide pre-sales education.
- Technology companies that offer real estate specific products, such as real estate templates for Act!
- Resellers who sell products.
- Consultants and trainers who assist with the needs analysis, implementation and training for the real estate industry.
These partners are not only credible in the market, but they also have knowledge and insight into the market. For example, Qualitative Marketing has identified valuable real estate Infrastructure Partners for Microsoft, Toshiba, Kodak and Symantec through appropriate associations. This alliance of high-tech companies partnered with the Association of Realtors to co-sponsor educational seminars designed to increase the realtors' adoption of technology. Seminar leaders and instructors were recruited from within the real estate industry to lend their established credibility and visibility. In addition to increasing the understanding of the market, Infrastructure Partners can expand geographic and market presence by reaching qualified prospects who are outside the reach of corporate sales and marketing efforts. According to Charlene Stenger, Toshiba, this program "helped us reach customers we weren't reaching through our traditional channels."
Partners can also assist in establishing a market leadership position by influencing market dynamics. For example, following this program 56 percent of the agents had acquired a PC fax modem in their homes where previously very few had one. And, digital cameras, previously considered too expensive and unnecessary, became very desired items.
The creation of effective partnerships increases adoption and reduces costs. Ninety percent of seminar attendees said that the program helped them understand what areas of their business to computerize, motivated them to buy new technology and helped them select which products to buy. Seventy-seven percent reported that they had bought or were planning to buy the products recommended through the program. As a result, Toshiba achieved a 40-to-1 return on its investment.
Vendors and IT both must be careful in choosing their partners. Quality, not quantity, is the goal in successful partnership development. Partners should be willing, and able, to invest adequate time and resources to the program and the end users.
The process of cultivating an understanding of markets and their infrastructure is continuous and demanding. By creating and sustaining successful Infrastructure Partnerships, vendors can reap the rewards of developing this knowledge at minimum cost.
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