Whether the new market would pay for a better formulation
A corporate strategy team at a specialty chemicals company was preparing to enter a market next door to the one it already served. The company makes chemicals built for particular industrial uses, and it had one formulation its own technical team rated above anything else it makes. It had been weighing the move for a year. Entering would mean capital, hiring and a public announcement.
The assumption behind the move was the usual one: what the company does well at home will matter next door. An internal review can say how good a formulation is. It cannot say whether customers in the new market reward it. Published research could size that market and name who competes in it. What customers there buy on sits with the market itself.
We asked the people already selling in that market
We ran a workshop with three kinds of people from that market: technical specifiers, who write the requirements a product has to meet, former plant managers, who have run the processes it goes into, and sales leads from companies already selling there. We did not tell the room who the client was or what it makes.
We opened with one question: what wins business in this market? The room answered it before it knew who was asking. Only at the end did we describe the client’s formulation, so the two answers could be compared without one shaping the other. Everyone in the room had been checked for conflicts against both markets first, the one the company already serves and the one it was considering.
- Technical specifiers. They decide which products qualify.
- Former plant managers. They know what it really costs to make. A chemical industry consultant can only estimate that from outside.
- Sales leads from competitors. They know what customers pay for.
That market buys on service and approval speed
The room rated the formulation highly, then said it is not what customers there choose on. They choose on service, and on how quickly a new supplier can be approved. The companies already selling in that market were strong on both.
The client stopped the entry before it began. No capital was committed, nobody was hired and nothing was announced. The same session pointed to a different market where that formulation does matter, and that became the plan for the following year.
