As businesses turn to planning for 2021, I found myself discussing the characteristics of the Boston Consulting Group matrix with my two sons, one who recently finished a marketing degree the other studying economics.
The matrix was originally developed to categorise a company’s products or brands with a view to planning investment. However, it has been used by many businesses to help better understand their customers and market segments. It provides “... a comparative analysis of business potential and the evaluation of an environment," Management Study Group.
Explaining the Market Share vs Market Growth matrix is relatively simple for the stars and cash cows quadrants. I have a slight problem calling the low growth low market share quadrant members dogs. Owning a dog, I would suggest that donkeys is a better reference. Equally, donkey owners may take umbrage at this.
However, the real point of focus is in the quadrant marked question mark.
These are the don’t knows. The members in this quadrant have little market share, but they are growing. They are typically niche, yet the challenge is how do you pick the winners from this quadrant and turn them into stars, whilst making sure you don’t invest in too many who turn out to be donkeys.
After 40 years in IT, one realises that the whole industry is made up of niches. No one plays in the total market, not even the likes of IBM. Printers, laptops and desktops are now a huge part of the total market in which they have no presence. Equally mainframe, enterprise software and strategic outsourcing are part of a multi-billion dollar market that a majority of businesses do not play in. The fact the niche is highly valuable doesn’t stop it being a niche.
Analysing more closely, the market reveals the real winners are those who excel at managing their supply chains within each of the niches. No one business provides everything in the solution, even though they may invoice for it all. The supply chain from manufacturer through distribution, to reseller to customer, sees many other products and services added along the way by an increasing number of niche players.
As part of a cloud solution a server will find itself in a rack in a data centre. Here it will require power, comms, physical and cybersecurity. There’s at least four suppliers in this supply chain before you add the air conditioning supply chain. Then you need to add a cloud provider with an OS, a provisioning tool, some additional security options, some metering and billing software and some automation tools and storage. You might also need to consider an application with back-up and networking. To get here you need architects, deployment consultants, trainers and post implementation support teams.
There is opportunity for a lot of niches. Even more if it is a transformational project with live systems being migrated. And then there is vertical market knowledge; what works in HealthCare is different to what works in Retail or Manufacturing.
This increasing diversity in developing niche markets can be seen in the growing number of new partners joining Tech Data. In the UK alone we have over 7,000 partners and every day we get a new enquiry. A new AI based solution, a new retail application or a new healthcare development.
The Tech Data ecosystem programme is designed to help these new niche players accelerate their time to market by finding them established partners within the Tech Data network. It increases the likelihood that these start-ups can develop into stars with the support of our trusted partners, who have already established themselves in that category, by growing their businesses with us.
For more information about presenting your business at a future ecosystem event to find a star to partner with, or if you are currently a star and want to help develop others, please get in touch.
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