Software Product Support Organizations must be Selective when Targeting Market Segments

6 Pages·1994·0.7 MB·English

INPUT
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A Publication from INPUT’S Software Product Support Programme - Europe
Vol.lNo. 12 December 1994
Software Product Support
Organisations must be Selective when
Segments
Targeting Market
Among the major considerations influencing purposes, each succeeding level after the first
support organisations when constructing is a subset of the preceding level.
business plans over the medium and longer
term are the size and growth potential of Exhibit 1 contains a partial illustration of
various markets. markets arranged in such a hierarchy.
Assuming that other criteria are met (not It is important to note that is possible to
least the capability of the organisation’s staff construct a large number of alternate
to offer an effective service to a given hierarchies for the purp)Oses of viewing any
market), then the questions of size and major market. In Exhibit 1, for example,
growth should be considered together rather countries are placed at the low'est level; for
than in isolation. A large market that is other purposes they could be placed at the
rapidly contracting, for example, will not be first, second or third level in another view of
viewed as favourably as a currently small the marketplace. For more sophisticated
market that is likely to grow vigorously. segmentation of the market, more than four
may
levels be required.
Ways of Viewing the European
Software Products Market Analysis of INPUT’S latest forecasts for the
European market for software product
For the purposes of illustration, this Research support illustrate how careful targeting of
Bulletin will consider markets through the market segments is preferable to high-level
medium of a four-level hierarchy. For analysis consideration of major markets.
)
©1994 by INPUT. Reproduction prohibited. MSSP-E
Exhibit
1
Possible Hierarchical View of European Software Products Market
1
2
3
I !
4
Source: INPUT
Finding Attractive Market Sectors In contrast Exhibit 3 uses a different
hierarchical view to show how one can locate
Exhibit 2 shows how by navigating through a market segment which is to be avoided
the levels of one possible hierarchy, one can because it is forecast to contract although
locate a desirable market segment 'whose overall growth is forecast for its major
growth potential is greater than the major market.
market of which it is a part.
2
©1994 by INPUT. Reproduction prohibited.
;
INPUT Research
Bulletin
Exhibit 2
Finding a Market Segment with High Growth Potential
/
Level Software
1
:
Products, Europe
Level 2: Support
Level 3: PC and
Workstation
Level 4: System
Software
Compound Annual Growth Rate, 1994 to 1999
Source: INPUT
Exhibit 3
Finding a Market Segment with Negative Growth Potential
Level
1
Software Products, Europe 7%
Level 2: 4%
Systems Software Support
Level 3; Mainframe
Level 4:
—9'
Germany
H
h
-10 10
Compound Annual Growth Rate, 1994 to 1999
Source: INPUT
3 ©1994 by INPUT. Reproduction prohibited.
INPUT Research Bulletin
Future Growth More Important than they may find food for thought in Exhibit 4,
Current Size which contrasts INPUT’S forecasts for the
European PCAVorkstation and mainframe
Exhibits 2 and 3 showed the importance of support markets.
considering the size of a marketplace in terms
of trends, particularly growth or contraction. In 1994, the mainframe market is significantly
larger than the PCAVorkstation market, being
In principle, rapid growth is attractive, rapid nearly twice its size. By 1999, however, the
contraction to be avoided. situation has changed radically; with the
PCAVorkstation market having overtaken the
It is also important to consider the absolute mainframe market in 1997 and now having a
size of a market. Whilst rapid growth is good lead.
attractive, a very small market may not be
able to satisfy the aspirations of a support The decline of the mainframe support market
organisation. is gradual, and over the six year period from
1994 to 1999 total forecast support revenues
On the other hand, a contracting market may
for mainframe support ($6,000million) are
be worth considering remains
still if it marginally greater than those for
relatively large. PCWorkstation
($5,8000million).
Support organisations must draw their own
conclusions based upon their own goals, but
Exhibit 4
Comparison of European Software Support Markets for PC/Workstation and
Mainframe, 1994 to 1999
INPUT Research
Bulletin
Many Ways
of Viewing the * Systems control
Marketplace
* Operations management
This Bulletin has illustrated various ways of
segmenting the software support * Applications development
marketplace, including:
-
Applications software:
• By software type:
* Cross-industry
- System software
* Industry-specific
—
Applications software
• Operating system:
• By Country
-
Proprietary
By Hardware
• platform:
— UNIX
and derivatives
— Mainframe
- DOS
- Minicomputer
- DOS/Windows
- PC and Workstation
-
OS/2
Other ways of segmenting the software
support market should be carefully considered • Supplier channel:
hy vendors who wish to identify markets
worth tackling. INPUT has observed the -- Hardware vendors
following methods of segmentation to be of
- Software vendors/ISVs
interest:
-
3rd party vendors (including professional
• Application sub-category:
services companies)
- System software:
This Research Bulletin is issued as part of INPUT’S Software Product Support Programme-Europe. If you
have any questions or comments on this bulletin, please call your local INPUT organisation or
Chris Cadman at INPUT, 17 Hill Street, London, WIX 7FB, UK, 44 (0) 71 493 9335.
5 ©1994 by INPUT. Reproduction prohibited.
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