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Assessing the Market and the Competition for aNew Product or Service
Andy MindlinREALWORLD Marketing, [email protected] +1 714-377-6312
Presented to UCI Graduate School of Management Center for Entrepreneurship and InnovationJanuary 9, 2013
© 2013 REALWORLD Marketing, Inc.
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Assessing the Market and the Competition for a New Product or Service
© 2013 REALWORLD Marketing, Inc.
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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
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1. In the Business School?
2. Taken business classes?
3. Started a business before?
4. Anything particular you want to learn tonight?
Quick Questions
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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
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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
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Situation Analysis
• Have a new product idea• Potential seems strong• Need money to build it• Other next steps not certain
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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”
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Where We Want to Go
Sales, Funding, Management Support
Idea
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Alternate Paths to Market
Typical Technology Path
Prototype
Patent
???
???
Sales, Funding, Management Support
Idea
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Alternate Paths to Market
Typical Technology Path
Prototype
Patent
???
???
Market Oriented Path
Customers
Profit
Principle
Sales, Funding, Management Support
Idea
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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
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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.
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Keys to Success in Marketing
1. Know who your customers are
2. Listen to them
The rest is execution.
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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”
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Assessing the Market
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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
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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)
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What do we Mean by “The Market?”
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”
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What do we Mean by “The Market?”
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?”
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What do we Mean by “The Market?”
Investor needs to:
Gauge the “attractiveness” of this market
TrendsAnswer the key questions• Size?• Direction?• Growth?• News?• Regulatory?• Financial?• Needs (Pain)?
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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”]
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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!)
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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
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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”
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If the Market isn’t There yet
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
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If the Market isn’t There yet
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”
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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
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Market vs. Target Market
Market
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Market vs. Target Market
Market Target MarketFocusing on people
pre-disposed to buying
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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 [email protected]
2 Motorola 16% Janeice W.General Manager, Personal Networks Group
508-555-4000
3 Ericsson 11% Tom D. VP, Business Operations 919-555-7000 [email protected] Samsung 6% Muzibul K. Director of Product Management 972-555-7000 [email protected] Panasonic 6% Jim M. R&D Manager 770-555-6000 [email protected]
6 Siemens 5% Gerhard S.RF Development Manager, Mobile Phones
+49 89 555-4630 [email protected]
7 Alcatel 4% Richard S. Program Manager [email protected] Philips 3% Don G. Director of Strategic Development 510-555-0655
9 NEC 3% Russ M.Product Manager, Wireless Engineering
972-555-7441 [email protected]
10 Mitsubishi 3% Shuzo K. VP, Engineering 619.555.8800 [email protected]
11 Hyundai 1% Young Ki C. General Manager +82-555-639-7912 [email protected]
12 Kyocera 1% Darin H. Program Manager (858) 555-2283 [email protected]
13Audiovox (Toshiba)
NA Jim P. VP, Engineering 516-555-3300 [email protected]
14 NeoPoint NA Mark C. Program Manager 858-555-6675 [email protected] 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 [email protected] Acer NA Irwin C. V.P., Wireless Technology Center 858-555-9988 [email protected]
19 Globalstar NA Clemons K. Product Manager 858-555-1121
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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
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Market Segmentation
Dividing a market into
distinct and meaningful
groups of buyers…
who might merit
separate products and
(or) marketing mixes
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What to do With the Information
• Not just:– “Gather information”– “Report”– “Deliver a plan”
• Goal is to PERSUADE
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How do we Show What we Learned?
• Following are a few examples of“Assessing the Market”
• Likes? Dislikes?
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IC Market Make-up Today
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SiRiFIC’s Addressable Market
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Competitors by Segment
Real Property
Facilities
Maintenance
Fleet/Vehicles
Fixed Assets
IT Assets
PropertyManagement
Help Desk
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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
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Remember the Keys to Success
1. Know who your customers are
2. Listen to them
The rest is execution.
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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
n=33
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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”
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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
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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
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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)!!!
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Assessing the Competition
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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
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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?
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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)
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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?”]
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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
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Know Their Present and Future
Competitive Product roadmap (example)
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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?
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Competitive Summary
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Competitive Details
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XeroCoat vs Competitive Technologies
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Product Offerings by Company
Dräger offers the broadest range of monitors to care providers
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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
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Perceptual Map of Beer Market
Perceptual Map of the Attributes
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Perceptual Map of Beer Market
Perceptual Map of the Products
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Summary
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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
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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
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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
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Questions
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Andy [email protected] +1 714-377-6312
© 2013 REALWORLD Marketing, Inc.