Market Mapping and Insight to Trends, Risks, and M&A Options

An understanding of the competitive environment and the key players within your sector is critical not only for insight into future trends and competitive threats, but also to better evaluate growth through m&a. Most executives have an in-depth knowledge of what is happening in their markets from years of experience in their industries, yet the exercise of “market mapping” validates general understanding, provides important contextual data, unearths lesser known players, and serves as a guide for development of growth strategies. We’d like to take some time this month to discuss the best practices and overall benefits of market mapping.

Market mapping is the act of identifying the key players within an industry or subsector. It is a practice that is both broad and specific at the same time: the scope is purposefully large – that is, to understand the competitive environment in your market – but the goal is to prepare far more than a mere phonebook or list of companies. While it is usually most productive to evaluate your current market and competitors, it is particularly valuable to map adjacent markets and regions in which you are not currently active, as these could be excellent areas of growth, or the source of future competitors. Understanding global markets and competitors can be especially helpful if regional expansion is a corporate imperative.

Developing the right framework to create your map is highly dependent on your business model and strategy. While it is certainly useful to have a full list of companies categorized by size and geography, it is most valuable to create a framework encompassing the breadth of products and services most relevant to your current and potential clients. The most helpful market maps are schematic diagrams: two or three dimensional charts with axes indicating the relevant characteristics (i.e. product offerings vs. size of players vs. global reach) populated accordingly by company names.

In addition to developing the framework, it is valuable to add contextual information about the companies you include. Your map should rate management teams, the strength of product lines/services, and the desirability of different client bases. Market maps can identify those who could be most beneficial to you in terms of strategic alliances, partnerships, and m&a opportunities. To better understand both opportunities and potential threats, it is worth considering how combinations would affect competitive outcomes. The market mapping exercise allows for a thoughtful glance around the corner to see what lies ahead. It can reveal windows of opportunity by looking at whether certain sub sectors are densely populated or open for new entrants.

Developing your market map requires deep knowledge and current data and requires ongoing dialogue with contacts in your industry. Put simply, tap as many experts as you can. Find out what others are saying, what trends are worth watching, and which companies provide the premier world-class service, products, and expertise in your particular market. Industry associations and regional / national conferences have proven very useful at this stage. Consultants and experts also provide valuable information about the strengths and weaknesses of competitors. Clients and potential clients are excellent sources of market intelligence as well. Find out their views on others in your market and whether those viewpoints coincide with your own. Which trends are causing disruptions and/or opportunities? Do you agree with their assessment? Differing viewpoints help crystallize your own conclusions.

Ultimately, market mapping is a disciplined exercise of codifying your knowledge of the industry. As a dynamic process, it requires time, resources, and expertise, which many growth companies do not have resident in-house. External consultants and, in larger companies, Corporate Development groups, can take a role in this exercise. Market maps are not static and need to be continuously refreshed to be most useful. General Atlantic teams are very well versed in market mapping due to our deep understanding of sectors, extensive network, and constant contact with new companies and experts. We prepare market maps for all our sectors and sub sectors of interest, which has proven very helpful to our portfolio companies. For assistance with your market mapping efforts, or for general information concerning the practice, please contact your GA team.