Achieving a Sustainable Competitive Advantage
Competition in the B2B financial services marketplace is nothing less than fierce. Businesses, therefore, need to identify new, untapped areas where they can differentiate themselves. In terms of driving awareness to new markets, players will need to place increased effort on developing integrated marketing strategies that include a strong content marketing plan.
Considering a New Approach
Blue Ocean Strategy is the strategy of creating “new market space that is uncontested.” The goal of a strategy like this is to:
- Find places where the competition is irrelevant
- Reconstruct market boundaries
- Create and capture new demand
- Avoid price wars and shrinking profits
Many in the financial services sell commoditized offerings to an industry with limited growth potential. A classic example is equities execution services. Players sell the same product (shares of stock) for the same notional value with the same core set of algorithms, the same pipes, the same end points, and the same execution platforms. In order to compete, you have to differentiate.
One way to differentiate your business is by selecting a new target niche. Read on to learn more about how. Once you identify the niche, a strong content marketing strategy can help support you in engaging your target buyers.
Competing on Price Can Hurt the Whole Industry
Back in 2006-2008, there were 4-5 complex event processing platform providers targeting the financial industry. All were chasing high-speed, algorithmic trading shops, and they were fiercely competing for the same projects.
There were actually plenty of blue ocean opportunities in surveillance, risk management, fraud detection, market data, and other use cases that these firms were ignoring. Eventually, they figured this out, but only after a very expensive 24 months fighting for the same few deals and permanently lowering the price ceiling for their the technology.
How Do You Differentiate a Product That’s Similar to Competitors?
When you’re faced with a highly competitive landscape, it’s critical to find new revenue opportunities and creative ways to differentiate in order to remain profitable. To do this, you have to re-orient. One way to find new markets is to focus on non-customers – companies/people who are not currently using your OR your competitors’ services, but who could benefit if they thought about their needs differently.
Re-define the industry. Once you’ve identified this untapped market, use a customer-centric marketing plan to help potential buyers understand how your product can make their lives’ easier.
A Strategy Canvas Helps Finds Uncontested Markets
The purpose of a strategy canvas is to help identify blue ocean opportunities that you can dominate — markets your competition is ignoring. This includes identifying those untapped markets.
A strategy canvas is very different than the typical SWOT analysis. It requires a realistic assessment of your product and your competition. (Note: A client’s internal team could also represent competition).
Background Research for the Strategy Canvas
To build a strategy canvas, you’ll need to do some background work:
- Define the core factors on which your industry competes
- Assess your existing target market to understand why they buy the products/services
- Identify who is outside that market circle (what Blue Ocean Strategy calls “refusing non-customers”) and find out why they don’t buy.
Consider “Refusing Non-Customers”
When building a strategy canvas, non-customers – customers who could potentially buy from your industry but don’t and who are not regulatorily prevented from doing business with you – represent huge potential insight into how to find a blue ocean. Consider the following:
- Why don’t they use the industry’s products/services?
- What are the assumptions that prevent them from using these services?
- What would need to be different before they would consider becoming a customer?
Build a Strategy Canvas Matrix
The purpose of the strategy canvas is to find your blue ocean opportunity. It captures the current state of play in the existing market so you can see the factors on which the industry competes and where competitors are investing. You compare this to other areas where you can diverge from the competition to open new tangential markets.
From your market research, build a matrix listing, including:
- Factors the industry takes for granted that could be eliminated
- This may include core factors that the industry has competed on for years, but are no longer so necessary, or which might not be necessary for a different niche.
- Factors that could be reduced below the current industry standard
- This includes functionality that isn’t really necessary. For example, latency isn’t very important in some types of trading.
- Factors that should be raised well above the current standard
- These factors might be status-quo, but could be shaken up to create a new standard.
- Factors that should be created that no one currently offers
- These factors are things no one expects, but that could transform the customer experience.
Of course, all of this must be considered within the relevant regulatory structure.
Hypothetical Strategy Canvas
Here is a hypothetical strategy canvas for a CEP company. In this case, the provider is not as strong in the algorithmic trading space and lacks the breadth of coverage in market data and exchange adaptors. But they have a few key people on their staff with a background in fraud detection, and they’ve landed a couple fraud detection deals that allowed them to incorporate this functionality into their offering. This is an area the industry has not yet chased. So it represents a blue ocean where the provider will encounter substantially less competition, and where the competition would be less relevant because they lack staff with the specialized background.
The development of a customized strategy canvas will give your company a clearer picture of your target market, how customer needs are being filled by current products/services, and the gaps in the current offerings.
From this information, you’ll be better able to design a customer-centric product road map and more effectively position your offerings to new markets. This will enable your company to better concentrate its resources on the greatest opportunities and achieve a sustainable competitive advantage.
Here is a link to tools from the creators of Blue Ocean Strategy. These will help you create your own strategy canvas.
Create a Blue Ocean Content Marketing Strategy
Your blue ocean will require a different marketing approach than the rest of your market. Here, you’ll need to create demand by educating customers about their needs, and convincing them to consider new approaches.
Your integrated marketing strategy will need to address:
- New positioning to reflect your shifted market focus
- Customer-centric messaging for the new target audience
- New buyer personas
- New media targets for public relations and content syndication
- Thought leadership angles to help drive awareness
- Content strategy to support the buying cycle
- Events that focus on the new market targets
- Customer-centric videos that help prospects advocate for your solution
When adopting a blue ocean strategy, you’ll need to develop new buyer personas to cover this new market. Buyer personas are examples of the different types of people involved in the buying process. Keep in mind that each stakeholder will have different business concerns that you’ll need to address in your marketing efforts.
Here is a buyer persona template to help you get started.
For more information on buyer personas, here are some articles:
A strong thought leadership program will be another component vital to the success of your blue ocean strategy. Quality thought leadership content helps position companies as experts in their space, particularly when they remain committed to addressing topics at the forefront of their target audience’s minds. For more information on thought leadership programs, here are a few articles:
- Facilitating The Buying Cycle With Content Marketing
- Content and Thought Leadership To Support The Buying Cycle
- Are You a Thought Leader or a Thought Follower?
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How We Help
PropelGrowth can help you with the research needed to create a strategy canvas and help you identify blue ocean opportunities. Some of the types of research we routinely do for clients include:
- Customer perception of your firm’s capabilities: How do they currently use your technology? What business problems does your technology solve? How does the use of your capabilities break down by user type? What are the key values they obtain?
- Competitive trends: What part of the market do you share with the competition? What areas are underserved by the competition? What areas are well-served by the competition? What areas are already commoditized and which represent opportunities for commoditization?
- Untapped innovation: Are your customers using or considering using capabilities in a way you’ve yet to consider? How can you expand your technology based on that information? Where can you add features and capabilities that will increase usage?
- Peripheral market opportunities: Where can you expand your business to create new opportunities in new and existing markets?