As the bull market continues and proposed defense budgets are growing, most optics and photonics companies are reporting strong sales and a general sense of optimism. With that comes a new challenge, though: when your revenue base becomes too concentrated on a single industry or customer, your risk of market pull-back or decreased demand increases.
One of the “godfathers” of optics has a guiding principle that has helped him build his company, year over year: No more than 20% of their revenue can come from any one customer.
Another optics company has seen growing demand from one customer, which is requiring and enabling them to expand. This added capacity is both an opportunity and a challenge, as now they’re looking to build the pipeline in other industries for when that customer’s contract ends. Given a 12-month contract and long sales cycle times, the time to start filling that capacity is right now.
Every market has its own entry points, barriers, requirements, and drivers. The decision maker in the automotive industry has very different concerns than the typical buyer in medical devices. It’s critical to identify a hypothesis and test it early and often before investing in a product launch in a new market.
If you’re looking to diversify into an established market or application, we have written quite a bit on market research and positioning. It’s critical to understand market sizing, market requirements, and your target customer persona, and to develop a clear and compelling value proposition in the customers’ language.
But what if the market doesn’t know its requirements yet either?
In emerging markets, much is still unknown about:
- Regulatory environment
- Product adoption curve
- Price points
- Performance requirements
- Distribution channels & buying behaviors
Contract manufacturers who seek early entry into these markets must decide:
- Should we go all in with a single approach or put multiple irons in the fire?
- How soon is too soon?
- Is it scalable and profitable?
There are several ways that optics and photonics companies can overcome these uncertainties and gain traction in new markets. Read our 10 Keys to Achieving Early Sales in New Markets.
Our Positioning Guide can help you find your company's sweet spot in a new market. Download it here: