Assessing the Market and the Competition for a New Product or Service Andy Mindlin REALWORLD Marketing, Inc. andy@REALWORLDmarketing.com TEL +1 714-377-6312.

Assessing the Market and the Competition for aNew Product or Service

Andy MindlinREALWORLD Marketing, Inc.andy@REALWORLDmarketing.comTEL +1 714-377-6312

Presented to UCI Graduate School of Management Center for Entrepreneurship and InnovationJanuary 9, 2013

Assessing the Market and the Competition for a New Product or Service

About the Speaker

25 years experience in Marketing;Emphasis on Startups and New Products

Core Experience• Procter & Gamble (Brand Management)• BA in International Economics, Vanderbilt University, Phi Beta Kappa

Recent Experience• Co-founded fabless semiconductor company• Served as Vice President of Marketing & Sales• Raised $13 million in venture capital

Current Activities Include• Helping business leaders solve marketing problems• Serving on corporate Boards• Mentoring students at UC Irvine Paul Merage School of Business• Judging UC Irvine annual Business Plan Competition

1. In the Business School?

2. Taken business classes?

3. Started a business before?

4. Anything particular you want to learn tonight?

Quick Questions

What We’ll Cover

As advertised• How to Assess the Market• How to Assess the Competition

Plus• Nomenclature• Examples• “9 Questions every business plan should answer”• “How the Judges Will Assess Your Business Idea”• Your questions

Why it’s Important

“What’s wrong with most business plans? (They) waste too much time on numbers and devote too little to the information that really matters.”

William A. Sahlman

Harvard Business ReviewJuly-August 1997, p. 98Based on research of over 100 startups and their original business plans

“If you want to speak the language of investors, base your business plan on… the four interdependent factors critical to every new venture:”

The People

The Opportunity

The Context

Risk and Reward

Situation Analysis

• Have a new product idea• Potential seems strong• Need money to build it• Other next steps not certain

Start at Ground Zero

• Look at some fundamentals

• “Basic blocking and tackling”

• In marketing, translates as:1. Know who your customers are

2. Listen to them

• Consider alternate “paths to market”

Where We Want to Go

Sales, Funding, Management Support

Alternate Paths to Market

Typical Technology Path

Prototype

Patent

Alternate Paths to Market

Typical Technology Path

Prototype

Patent

Market Oriented Path

Customers

Profit

Principle

Marketing (defined)

Going to the marketTo learn what prospects will buy,then creating & delivering that product...when, where and how they want it

Our CompanyOUTSIDEThe Market IN

Why do Companies Fail?

“The company had fallen into the classic trap of building a product it thought customers ought to like – instead of what our customers wanted to buy.”

Why SuccessfulCompanies FailBy John J. Cullinane

Based on the history of Cullinet Software, Inc., the first software company to be listed on the New York Stock Exchange, and reach $1 billion dollars in valuation.

It got caught in the rapid technological changes of the 80s, resulting in a sale to Computer Associates for $400 million.

Keys to Success in Marketing

1. Know who your customers are

2. Listen to them

The rest is execution.

Now Today’s Goal is in Sharper Focus

• It’s not just“assess the market” and“assess the competition”

• This is a criticalsuccess factor towards“getting what we want”

Assessing the Market

1. What do we want to learn?

2. What will we do with the information?

3. How do we gather the information?

Three Key Questions Precede Research

What do we Mean by “The Market?”

A market is people exchanging goods & services(for value)

Key to an investor, because this is where customers part with their money• One of two key transactions investors care about

“The market” can be described as consisting of 3 components1. Customers2. Competitors3. Dominant Trends (that affect us all)

Investor needs to know:

“Who is going to give you money for what you propose to do?”

CustomersAnswer the key questions (“5 W’s and 1 H”)• Who are they?• What are they?• Where are they?• When do they buy?• Why do they buy?• How much do they buy? (How much? How often?)

Consider both the “many” and the “few”

Competitors• Who are the major players?• Who are the newcomers?• Who’s probably working on the same thing?

We’ll discuss more on “Competition” later

Investor needs to know:

“Who else is after these same dollars?”

Investor needs to:

Gauge the “attractiveness” of this market

TrendsAnswer the key questions• Size?• Direction?• Growth?• News?• Regulatory?• Financial?• Needs (Pain)?

How do we Gather This Information?

Starting with General Information• Market Analysts

Gartner/Dataquest, Forrester Research, Yankee Group [Fee, but may pity students]

• StockbrokersMerrill Lynch, Goldman Sachs, E*TRADE, Schwab

• WebGoogle www.google.com [Go ahead, enter a question]About www.about.com [Like asking a web librarian]Hoovers www.hoovers.com Manta www.manta.comInc. Business Resources www.inc.com Yahoo! Finance finance.yahoo.com [Find a public company in

the same space and readreports on their market]

• GovernmentEconomic Indicators www.commerce.gov Census, Demographics www.census.gov Edgar Database www.sec.gov/edgar.shtml

[You’re paying for it, use it;but take care to avoid settling for “numbers”]

How do we Gather This Information?

Getting Specific Information• Ask prospects• Pump your network• Ask your coach, mentor and angel for suggestions

If you don’t have several, find and adopt them• The specific answers are usually out there

For almost every market there’s a– Market research report– Industry analyst– Industry (trade) magazine– Trade association– Trade show

• Ask a librarian (degrees in Information!)

World Population =

Source: US Bureau of the Census

http://www.census.gov/population/popclockworld.htmlJan 9, 2013

How to Connect With Anybody on the PlanetIt no longer takes even "Six Degrees of Separation”

“3 Degrees of Separation”

is based on this principle (www.LinkedIn.com)

Degrees of SeparationQty

People You Know 1918 1918 1People They Know 1918 3,679,683 2People They Know 1918 7,058,552,093 3

Number of People You

Can Connect to

7,058,552,093

If the Market isn’t There yet

Gauge the opportunity somehow“What was the market for bottled water before Perrier?”

• Who knew?

• And the “% of homes dissatisfiedwith the taste of their water”

But you could have quantified the:

Market for “liquid refreshment”

Gauge the opportunity somehow“What was the market for overnight delivery before Federal Express?”

• Who knew?

• Also could get testimonial quotesfrom responsible people whohave the problem

But you could have quantified the:

Business spending on urgent communications

Gauge the opportunity somehow“No one ever asked us to design aMini-Van”

• Who knew?

• Again, testimonial quotes from responsible people who have the problem would add support

But you could have quantified the:“# of moms with kids” and“% dissatisfied with station wagons”

Market vs. Target Market

Market• The set of all actual

and potential buyersof a productor service

Target Market• That group of people

pre-disposed to buying

Market

Market Target MarketFocusing on people

pre-disposed to buying

Target Market (Example)

• Get specific• Telegraph that your sales force knows exactly where to aim

#Handset Manufacturer

Market Share

Key Contact

Title Phone E-mail

1 Nokia 27% Zac R. New Technology Sourcing Manager 214-555-7383 zac.r@nmp.nokia.com

2 Motorola 16% Janeice W.General Manager, Personal Networks Group

508-555-4000

3 Ericsson 11% Tom D. VP, Business Operations 919-555-7000 tom.d@ericsson.com4 Samsung 6% Muzibul K. Director of Product Management 972-555-7000 mk@sta.samsung.com5 Panasonic 6% Jim M. R&D Manager 770-555-6000 jm@panasonic.atlanta.com

6 Siemens 5% Gerhard S.RF Development Manager, Mobile Phones

+49 89 555-4630 gerhard.s@mch.siemens.de

7 Alcatel 4% Richard S. Program Manager richard.s@alcatel.fr8 Philips 3% Don G. Director of Strategic Development 510-555-0655

9 NEC 3% Russ M.Product Manager, Wireless Engineering

972-555-7441 mr@ccgate.dl.nec.com

10 Mitsubishi 3% Shuzo K. VP, Engineering 619.555.8800 shuzo.k@cmtsd.mea.com

11 Hyundai 1% Young Ki C. General Manager +82-555-639-7912 younk@hei.co.kr

12 Kyocera 1% Darin H. Program Manager (858) 555-2283 h@qcpi.com

13Audiovox (Toshiba)

NA Jim P. VP, Engineering 516-555-3300 jp@audiovox.com

14 NeoPoint NA Mark C. Program Manager 858-555-6675 mc@neopoint.com15 Sanyo NA Kuichi T. 201-555-2333

16 Denso NA Jim K.Director, Hardware Development Group

760-555-3331

17 LG NA Curtis W. Manager, Field Engineering 619-555-5325 cw@lginfocomm.com18 Acer NA Irwin C. V.P., Wireless Technology Center 858-555-9988 sc@apa.acer.com

19 Globalstar NA Clemons K. Product Manager 858-555-1121

Charlie’s New Business Success Factors

1. Pick a BIG market

2. SEGMENT it

3. EXECUTE better than anybody Arnold O. Beckman

Founder of Beckman Instruments, Beckman Coulter

Inventor of accurate and easy-to-use scientific instruments that revolutionized the study and understanding of human biology

Market Segmentation

Dividing a market into

distinct and meaningful

groups of buyers…

who might merit

separate products and

(or) marketing mixes

What to do With the Information

• Not just:– “Gather information”– “Report”– “Deliver a plan”

• Goal is to PERSUADE

How do we Show What we Learned?

• Following are a few examples of“Assessing the Market”

• Likes? Dislikes?

IC Market Make-up Today

SiRiFIC’s Addressable Market

Competitors by Segment

Real Property

Facilities

Maintenance

Fleet/Vehicles

Fixed Assets

IT Assets

PropertyManagement

Help Desk

Assessing the Market – Guidelines

• Be curious– Ask a lot of questions

• Be resourceful– Let it be an indicator of how you’ll

solve the problems that come up in your business

– “China Morning Post”

• Recognize that professional investors know more than you do– So you can never know

enough about your market

Remember the Keys to Success

1. Know who your customers are

2. Listen to them

The rest is execution.

Listening to Customers (2009 BPC)

• Surveyed 2009 BPC participants– 64% interviewed prospective customers; 36% did not

• Of THOSE WHO DID– 94% said it was valuable (67% said “very valuable”)– 80% were surprised at what they learned

• Of TEAMS THAT WON AN AWARD(1st, 2nd, 3rd, 4th)– 100% listened to customers– 100% said it was “valuable”– 90% were “surprised” by what they learned

Benefits of “Listening”

1. “You get a third party perspective on your product, providing feedback & request for things you may have overlooked”

2. “Getting actual testimonials from customers for the pitch;3. Understanding what is important to customers and focus on it4. Get a reality check of the market and its state to accept the product or not”5. “Know what they really want and don’t want”6. “We got to verify our secondary research”7. “Validated or debunked certain assumptions”8. “Identifying opportunities to make our business idea more unique and

competitive.”9. “It gives an understanding of the customers' needs”10. “Learned price point of our product”11. “Understanding our markets and where we would be most effective”12. “Face to face interaction”13. “Being able to refine and fine-tune the product”14. “Got a better understanding of the costumer needs and helped update our

business model accordingly”

Top ExcusesPreferred to wait untilwe have developed theproduct further [29%]

Hesitant to revealIntellectual Property [29%]

Didn’t know any to call; didn’t know where to find them [26%]

Didn’t feel comfortable(calling strangers; asking questions) [13%]

Why Teams Didn’t Listen to Customers

Top Excuses What to Do About ItPreferred to wait untilwe have developed theproduct further [29%]

• “Why bother if they’re not interested?”

Hesitant to revealIntellectual Property [29%]

• Focus on “what” you do, not “how”

Didn’t know any to call; didn’t know where to find them [26%]

• Pump your network(e.g. coach, professors, LinkedIn)

Didn’t feel comfortable(calling strangers; asking questions) [13%]

• Failure here costs nothing!• It’s ok, really!• Have 1 teammate try it once

Why Teams Didn’t Listen to Customers

Tips for “Listening to Customers”

1. Decompress (not selling anything)

2. Write out your intro & questionsin advance

3. Appeal to their sense of helpfulness (ask for "help")

4. Understand that people generallylike new ideas...and they've beenin your shoes

5. Respect their time(set and declare a time limit)

6. #1...get referred in(Charlie Baecker suggested I call you)!!!

Assessing the Competition

1. What do we want to learn?

2. What will we do with the information?

3. How do we gather the information?

Three Key Questions Precede Research

Your Approach is a Key Issue

Not recommended• “We have no competition”• “There is nothing like this”

Alternatives to Consider• Who does this exactly?• Who does something somewhat like this?• How is this problem solved currently (and by whom?)• Who else is competing for the same (budget) dollars?

Your Biggest Competitors Will Include

1. Doing Nothing (DN) [Leaving the money in their wallet]

2. Home brewed (DIY) [“Boss, we can build that”]

Recognize this in your plans• The key isn’t just to gather information and “report”… • But to make a PERSUASIVE case

That you can get people to part with their money(instead of giving to others, or keeping it to themselves)

How do we Identify the Competitors?

Be a customer• Online

• Ask around

Ask the customers• “How do you solve this problem currently?”• “Who are their competitors?”• “Who else (have you heard) is working on this?”

[Get on Google or About and look for someone to solve the problem]

[Find a trade journal and call the editor, asking “who does this?”]

How do we Find out More About Them?

If they’re public• Get their annual reports• Look at their web sites• Attend industry conferences (attend their

presentation)

If they’re not• Check out their patents (www.uspto.gov)• Ask VCs and other investors in the field• Look at their website for open positions• Ask recruiters who they’re hiring• Call them and ask for information

Know Their Present and Future

Competitive Product roadmap (example)

How do we Show the Information?

Summary charts are great• Again, go beyond

“sharing information”

• “Make a point” that you canbe #1 in your niche

• Examples follow

• Likes? Dislikes?

Competitive Summary

Competitive Details

XeroCoat vs Competitive Technologies

Product Offerings by Company

Dräger offers the broadest range of monitors to care providers

How do we Present the Information?

“Perceptual Map” of the marketplace• Marketer’s favorite tool

• A graph that simplifies the often-confusing competitive landscape

• It is an elegant visual communication device

• Show the competitive set• Arrange them along axes indicating what

customers care about

Perceptual Map of Beer Market

Perceptual Map of the Attributes

Perceptual Map of Beer Market

Perceptual Map of the Products

Summary

What we Covered

As advertised• How to Assess the Market• How to Assess the Competition

Plus• Nomenclature• Examples• “9 Questions every business plan should answer”• “How the Judges Will Assess Your Business Idea”• Your questions

9 Questions Every Business Plan Should Answer

1. Who is the customer?

2. How does the customer make decisions about buying this product?

3. To what degree is this a compelling purchase for the customer?

4. How will the product be priced?

5. How will we reach all the identified customer segments?

6. How much does it cost (time & resources) to acquire a customer?

7. How much does it cost to produce & deliver the product?

8. How much does it cost to support a customer?

9. How easy is it to retain a customer?

Source: William A. Sahlman, "How to Write a Great Business Plan“, Harvard Business Review, www.hbr.com

Use the “New Business Idea” Evaluator

• Tool to evaluate new business ideas you’re considering

• Identifies the “Critical Success Factors” for a new venture

• Rate each idea (1 thru 5) in eachbox provided

• Compare the ratings for several ideas• Where you can’t rate an idea highly…

– Those are areas that need improvement– Before putting in much time or money– Or asking others to do so

Questions

Andy Mindlinandy@REALWORLDmarketing.comTEL +1 714-377-6312

Assessing the Market and the Competition for a New Product or Service Andy Mindlin REALWORLD Marketing, Inc. andy@REALWORLDmarketing.com TEL +1 714-377-6312.

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