Hit ‘em where they ain’t.
Wee Willie Keeler

You may not have heard of Wee Willie Keeler, but he changed baseball.

With over 63 at-bats between each strikeout over his career, he could bunt any ball pitched to him. Because of him, baseball stopped allowing unlimited bunt fowls and made one with two strikes a strikeout. He hit .300 16 times and .400 once. His record of 206 singles in a season stood for over 100 years. When Joe DiMaggio set his 56-game National League hitting streak, he broke Keeler’s 45-game record. He used one of the largest bats in the league, weighing up to 46 ounces.

And he did it all despite his diminutive size of 5’ 4 1/2” and weighing just 140 pounds.

His famous adage of “hit ‘em where they ain’t” applies not only to batting but also to marketing new products. It makes little sense to try to copy a competitor and offer a virtually identical product for a lower price when one can offer the market a new item that it wants, doesn’t have, and can afford.

To do that, we’ll need to describe our markets thoroughly.

In the case below, we’ll start with a fully assembled dataset describing the USG purchases of air-to-surface glide bombs (brown) and missiles (blue) over the 20 years beginning in 1997 and ending in 2016.

Imagine we are trying to sell a new missile. What can we give the market that it doesn’t already have?

In (A), we plot the range of the missiles in the set on the horizontal axis and their prices on the vertical axis. Instantly, we discover a critical fact: a substantial gap in missile prices. The USG has purchased cheaper and more expensive devices; it stands to reason that they might buy a new missile within this space with the appropriate features. In the same plot, we see that a similar opening exists relative to the range of these devices.

Figure (B) offers the same kind of insight that (A) does while looking at a different independent variable, launch mass. While the price gap in (B) is the same as in (A), in this view, we discover a sizable gap in the market’s launch masses. By interpolation, given that it performs well, a new product with mass in this gap will likely find a market.

(C) finds that the market for Air-to-Surface missiles has Upper and Inner Demand Frontiers. If we wanted to build, say, a missile that could sell as many as 28K units for an average price of $300K over 20 years, we find (once we do regression analysis considering 1) mass, 2) speed, 3) range, and 4) quantities sold, and set the Values for those first three independent variables, not shown here) this market has a Product Demand Curve that forms for each item. With a slope of -0.208, it is analogous to an 86.6% learning curve.

Thus, if a supplier can demonstrate a steeper learning curve than that throughout the program, they have the potential to meet their 28K unit limit goal at $300K along the Upper Demand Frontier.

#hypernomics #pricetowin #gapanalysis