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Adjacent Markets from Technology Mapping

The purpose of an adjacent market study is to find new uses for existing products, processes or materials.

Traditionally, finding new markets involves brainstorming with executives and subject matter experts. Unfortunately, when you brainstorm inside a company, you also bring years of expert bias into the brainstorm as well. Some time ago, a mid-sized chemical company who made detergents for laundry, cosmetic and pharmaceutical applications wanted to find new markets for their products and needed a way to break out of the their "comfort" zone.

We employed a version of technology mapping, a business process, that helped identify new market opportunities and adjacent markets. The process is outlined below.

Process for finding Adjacent Markets with Technology Mapping

We will briefly review each of the steps in the process.

DEFINING KEYWORDS.    Defining keywords from a clients' patent portfolio involves inspecting the patent portfolio and finding the keywords which describe processes, materials, product features and product uses. Our client's patent portfolio revealed the following keywords and applications for their detergents:
  •  surfactant, detergent, clarifier, cleanser,
  •  toiletry, antiperspirant, hairand skin care, pre-shave, sunscreen, moisturizers, lotions, lipstick, conditioners,
  •  pharmaceuticals, and eye and throat oils.

DATABASE FROM KEYWORD SEARCHES    With keywords identified, we developed our patent search strategies. Our goal is a data set that is small enough to be easy to work with and large enough to contain a REPRESENTATIVE set of patents that were related to the problem. The table below indicates how we approached the problem of building a surfactant or detergent database for the study. We actually employed the search strategy number 5 with 7,184 patents to build our study database.

Study Database from Search Strategy Five

ADJACENT MARKETS FROM IPC CODES.    One way to identify new or adjacent markets is to segment the database using IPC codes (or US classes). The IPC codes (or US classes) represent the knowledge management system employed by the patent offices to categorize inventions. A graph of patent count vs IPC code number is quite easy to produce and can reveal opportunities quickly. The graph below shows the top 75 IPC codes in the study database. The blue codes are the main codes found on our client's patents. All others represent adjacent markets that may warrant further investigation.

Adjacent Markets from IPC codes

ADJACENT MARKETS FROM TEXT CLUSTERING.    Using the titles and abstracts of the study database, we employed text clustering to identify keywords that may represent adjacent markets. Our desktop text clustering tool (from Accumo) found 84 main clustering terms and thousands of more complex terms. For our purpose of finding adjacent markets, we will focus only on the main clustering terms.

A force-directed graph can show the relationships among the keywords. The chart below illustrates the clusters found AND the relationships among the cluster keywords. In this picture, the size of the circle indicates how often the cluster word is found in the study database. The distance between two circles indicates the relationship. For example, surface, compounds and material (in the center of the picture) are very closely related words and they are near one another on the chart.

In the cluster picture, we coded clusters that are related to the clients' interest in blue. Then, we inspected the chart to find cluster words that might indicated adjacent markets and coded those green. Some potential adjacent markets for the client include pesticides, herbicides, cements, films and inks. Can you find others?

Adjacent Markets from IPC codes

ADJACENT MARKETS FROM EXPERT RESEARCH and TECHNOLOGY MAPPING    Adjacent markets can also be identified using expert research and expert opinion . Expert research comes in several forms including:
  •  brainstorming with executives and/or area experts,
  •  using marketing research or interview techniques to find similar spaces, or
  •  inspection of searches of scientific papers, patents or the worldwide web,

Brainstorming and/or market research can be used to identify new markets successfully. However, our goal was to look broadly at uses for surfactants and detergents using technology mapping to break away from expert bias and silo thinking. To accomplish the goal, we chose to build a technology landscape using a combination of IPC code information, text clustering information, market structure information, AND expert analysis.

We stated with the patent study database that is broadly based and contains a representative set of patents. Then, we organized the information using a market-technology focused taxonomy with a tiered structure.

Markets are typically defined by marketing research. In this case, markets included any application of surfactants or detergents.

Categories represent the technology stack or applications of the technology. A technology stack includes ingredients, materials, processes, methods and product features arranged in a manufacturing sequence, but in our study of adjacent markets we focused on applications of surfactants or detergents. We adopted categories from market research and a much older study of surfactant applications.

Adjacent Markets from IPC codes

Segments are sets of specific solutions that belong to a category. A segment is defined by as set of keywords or key phrases. As a result, a segment contains companies, organizations and individuals who are pursuing specific solutions for the problem of the segment.

To build meaningful segments, we also employed "adjacent word analysis". Adjacent word analysis is a technique to find specific sub-segments based on important keywords. Adjacent word analysis starts with keywords describing process, materials or product features and asks what words modify (lead or trail) that keyword in our database. Often, adjacent word analysis finds unique segments that are not normally part of traditional marketing research vocabulary.

As an example of the utility of adjacent word analysis, consider the keyword surfactant. In our database, the keyword surfactant returns more than 3000 records. Such a segment is too big to be meaningful, but we can build meaningful segments if we seek the words that modify and lie just to the left or right of the keyword "surfactant". Some examples (from top and most frequent to the bottom and less frequent):
  •  LUNG
  •  ESTER
  •  IONIC
  •  OXIDE
  •  HLB
  •  ACID
  •  SALT
  •  TYPE
  •  BASED
  •  and more.

In this example study, we built a total of 192 segments using a combination of expert analysis, adjacent word analysis keywords from IPC codes and text clustering. You can access the model which contains this and other model information by signing into adjacent market for surfactants model via simple form.
algae and biofuel

With segments established, we can now make measurements to find the areas most active or connections between segments that lead us to new markets or adjacent markets.

One way to find things that are moving rapidly is to employ a Vitality Plot. A Vitality Plot show which segments are growing fastest or slowest relative to the database itself. Since our database is only five years long, anything that shows rapid growth needs careful management attention! The Vitality Plot for our surfactant or detergent adjacent market study is below. Inspection of the picture below and the model shows that the most active (lower right and red) areas seem to deal with polymer materials. Superabsorbent polymers are an especially active theme.

Yes. It's a little hard to read, but you can see a larger version in the model.

adjacent market ratings with the vitality plot

One important product feature of laundry detergents, a segment in which our client participates, is flow-ability. No one wants to have clumps fall into the washer. To investigate segments that connect to the flow-ability segment through common patents, we use the technology stack visualization.

In the technology stack visualization picture below, we have connected segments which contain patents in common with the flow-ability segment. Notice that flow-ability is connected to several segments in the laundry category, but is also common to agricultural themes, foods, electronics, paper,lubricants and a few others. If our client's specialty detergents can assist with making the products flowable, we have discovered possible adjacent markets. Naturally, we can extend this type of analysis to many product feature areas to find adjacent markets.

You can see the larger version of this picture by logging into the model.

adjacent market by connecting segments on the technology stack

We can even use the study database to identify key competitors in segments that may represent interesting adjacent markets. To see likely competitors we can use the company matrix table. On this table, segments are arrayed along the top and companies, organizations or inventors are displayed long the left. A white square indicates that the company in that row did not participate in the segment. Increasingly dark blue indicates more participation and red indicates the high level of participation.

The segment vs. organization table is useful to see where specific organizations participate. It can be used to find organizations that participate in more than one segment, the big, powerful competitors. It can also be used to find potential partners or acquisition opportunities that might smooth entry into an adjacent market space. With this information to start and a little additional research, a decision about participating in adjacent markets can be made with confidence.

You can browse the complete company matrix for this study by logging into the model through the model access form.

adjacent market competitors from the company matrix

EVALUATE AND DISCUSS ADJACENT MARKET CHOICES. THEN DECIDE.    For our client company, the analysis identified several possible new markets and provided enough information to prioritize further investigations.

Cosmetics    The client participated in this area somewhat, but a few new possibilities were identified.

Inks    Inks and ink-jet methods are a high-tech industry with specific needs that a specialty manufacturer could meet. However, the volume of detergent employed is very small, an economic barrier for a detergent maker.

Cement    The idea that cement could be an outlet for a detergent maker was a surprise for both client and analyst. Further study is needed to determine if our client manufacturer can meet the needs of this area.

Fuels & Gasoline    Gasoline and other fuels include detergents. The client makes detergents with no sulfur and on combustion could yield carbon dioxide and water, a potential non-polluting advantage. Additional study was needed to verify the assumptions.

Agriculture    Laundry detergents and agricultural pesticides have at least some delivery features in common. For example, both must flow easily and detergents can play a role in forming the particles needed for delivery. This area was also an unexpected adjacent market and needs additional study to determine if our clients manufacturer can meet the needs of this area.

THE DECISION AND ACTION    At this point, several new options have become clear. What remains is to decide what to do and to build a team to make it happen.

SUMMARY    Identification of useful adjacent markets using technology mapping is a business process that does not need to involve guesswork. Adjacent markets fall naturally out of analysis of a technology landscape. The process outlined for identifying adjacent markets can also reveal partnering, licensing or acquisition opportunities. It can also be used to identify opportunities for licensing intellectual property.