Finding adjacent market spaces is an attractive way to grow. Adjacent markets are not too far away from your core business in terms of channels, technology, price point, brand, etc. Adjacent means: lying near, neighboring, having a common border, touchable. Although chasing adjacencies can be distracting, it is a much easier to sell internally. Adjacencies seem more achievable than far out, ethereal white space opportunities.
Adjacent markets are even more appealing when you apply a systematic innovation method to it. Giving yourself the gift of novelty in a new market space right next to your own seems like the best of both worlds. The trick is finding the right adjacencies.
The starting point for thinking about adjacencies is to ask yourself, “Adjacent to what?” It is much harder to find adjacent spaces when you don’t have a clear understanding of your existing spaces. For this, I recommend a framework called The Big Picture developed by Professor Christie Nordhielm at The University of Michigan. The Big Picture outlines four quadrants that, when properly constructed, completely define any market category. Here is a visual of those quadrants.
Quadrant 1: New to the Category – these are customers who have the potential to use the product or service or have tried it but do not consume it in a sustained way.
Quadrant 2: Brand Loyals – these are customers who are 100% loyal to your brand.
Quadrant 3: Multi-Brand Users – these are customers who use a mix of your brand and competitive brands.
Quadrant 4: Competitive Loyals – these are customers who are 100% loyal to competitors’ products.
To find the adjacent spaces, we consider one of these quadrants at a time, and imagine extending beyond the bounds of the category in some close by, adjacent way. Think of it as taking the four quadrant Big Picture model and expanding it outward to create four new adjacencies. The key is to stretch, not leap beyond your inherent business model. Ask yourself these questions:
Quadrant 1 Adjacencies: Find out what substitute products the non-category users are using to fulfill the need. Where are they buying it? What complementary products go along with these substitutes?
Quadrant 2 Adjacencies: What other products do your loyal customers buy, perhaps at the same price point or to fulfill the same or similar brand promise?
Quadrant 3 Adjacencies: Find the insights on why multi-brand customers use both brands. Is it time dependent? Situation dependent? Why does it vary? What other products are used when the competitive brands are consumed. Why?
Quadrant 4 Adjacencies: What other category of products does your competitor sell? Why do they fit in their product line? How could they fit into yours?
Once you identify potential adjacencies, apply an innovation method to create new-to-the-world concepts. This increases the value of the adjacency as well as your likelihood of success in that new space.
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Very interesting take on innovation. Another point, is to make a small but innovative change to your existing product line or services.