Ideas to Income An Introduction to Marketing MaRS Entrepreneurship 101 January 14, 2009 Lecture 1 & Workbook Slides Peter Evans Advisor, MaRS Venture Group [email protected]
Jan 21, 2015
Ideas to Income An Introduction to Marketing
MaRS Entrepreneurship 101 January 14, 2009 Lecture 1 & Workbook Slides
Peter EvansAdvisor, MaRS Venture Group [email protected]
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 1
Peter Evans
Peter Evans advises entrepreneurs and high growth companies in a range of technology markets, specializing in strategic planning, research, product management and channel development. He brings to MaRS over 15 years experience working in early-stage venture-backed technology start-ups and publicly traded companies in the software, Internet services, online media and telecommunications sectors.
Previously, Peter worked in major accounts sales, product management, research and senior marketing roles with organizations such as Sympatico, FloNetwork (acquired by DoubleClick in 2001) and PlateSpin Inc. In his role as a consultant since 2003 he has worked with over 100 clients throughout North America from early stage ventures to large corporate clients such as TELUS, CNW Group and DoubleClick in the US (just prior to its acquisition by Google). An angel investor in a number of early-stage startups he is has served on a number of boards including Sitebrand (Ottawa), XPLANE Corporation (St. Louis) and the Toronto Venture Group. His community contributions include fundraising and educational work with organizations such as the National Ballet School, Junior Achievement and seven years serving as a Big Brother with Big Brothers of Metropolitan Toronto.
A noted speaker on strategy and marketing he has spoken at major conferences throughout North America and Europe in addition to being a guest lecturer on marketing at UofT and Queen’s. He was educated in cognitive psychology and telecommunications management at the University of Toronto and Ryerson University and holds an MBA from Queen’s University. He is currently completing the Certificate Program in Strategic Planning & Innovation at the M.I.T. Sloan School of Management.
Advisor, MaRS Venture Group [email protected]
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 2
What’s on for Tonight
What is Innovation?
What is Marketing?
Why Marketing Matters?
The Problem with Ideas: “The Innovation Paradox”
Step by Step overview of how a marketing as a system of STRATEGIC activities can transform Ideas to Income
Our Approach: – Key Marketing Principles/Frameworks – Best Practices (Examples) – Workbook Sections for Reference) – Take home exercise (fun for the whole family)
Session Learning Objectives
Goals Learn some key marketing
and strategy concepts Be able to apply them
to an invention or idea Have a deeper respect
for marketing as a discipline Have Fun
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 3
What is Innovation?
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 4
Innovation is Good Wikipedia Says So
INNOVATION [in-uh-vey-shuhn n]
a new way of doing something. It may refer to incremental, radical, and revolutionary changes in
- Thinking - Products - Processes - Organization
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 5
10 Types of Innovation
1. Finance/Business Model - How you make money 2. Networks and alliances - How you join forces with other companies for mutual
benefit 3. Enabling process - How you support the company's core processes and
workers 4. Core processes - How you create and add value to your offerings 5. Offerings - Product performance How you design your core offerings 6. Product System - How you link and/or provide a platform for multiple
products. 7. Service - How you provide value to customers and consumers beyond and
around your products 8. Delivery Channel - How you get your offerings to market 9. Brand - How you communicate your offerings 10. Customer Experience - How your customers feel when they interact with your
company and its offerings
It goes way beyond science & technology
1. Finance/Business Model - How you make money 2. Networks and Alliances - How you join forces with other companies for
mutual benefit 3. Enabling process - How you support the company's core processes and
workers 4. Core processes - How you create and add value to your offerings 5. Offerings - Product performance How you design your core offerings 6. Product System - How you link and/or provide a platform for multiple
products. 7. Service - How you provide value to customers and consumers beyond and
around your products 8. Delivery Channel - How you get your offerings to market 9. Brand - How you communicate your offerings 10. Customer Experience - How your customers feel when they interact with your
company and its offerings Source: Doblin – Division of Monitor
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 6
Innovation is…
creativity fused with process that transforms.
income +
positive social
change
ideas
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 7
Innovation is…
creativity fused with process that transforms.
income ideas
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 8
What is Marketing?
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 9
Marketing Definitions
“Marketing is the activity, set of institutions and processes for creating, communicating, delivering and exchanging offerings that have value for customers, clients, partners and society at large.”
AMA (American Marketing Association)
“The management process responsible for identifying, anticipating and satisfying customer requirements profitability”
Philip Kotler –Author & Professor of International Marketing
Kellog School Of Management, Northwestern University
How the professionals describe marketing
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 10
STRATEGY PRODUCT MANAGEMENT
SALES R&D SERVICE FINANCE Legal
Where Marketing Fits Within the Business Functions of a Company
SALESFORCE INTEGRATION
MARKET MANAGEMENT
MARKET RESEARCH
PARTNERSHIPS
HR MARKETING
IDEA INCOME
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PROMOTION Sales promotion strategy,
advertising, publicity
The 4P’s as a Framework
PRICE Pricing strategy, cost accounting,
price setting research
PLACE Distribution channel strategy,
distribution merchandising
PRODUCT Product strategy, “needs”
research, development pllan
A simple linear view of the marketing process
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 12
Benefits of Marketing
Customers Establishes your relevance/credibility with the right first customers
Product Clearly identifies problems and critical transition points and guides the
development of the right prototype and product
Markets Creates a more predictable and scalable go-to-market process and alignment
with the right segments
Investors
Provide a common framework for understanding key areas of the business that affect success. Shows how a company can grow and make money on a sustainable basis
What’s in it for start-ups?
✔
✔
✔
✔
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 13
Why Marketing Matters Its in the numbers…
Average Slides 15 in an Investor Pitch Deck
50% More than
are marketing related
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 14
1. Company Overview & Vision 2. Management & Advisors 3. Customer Problem 4. Market Opportunity/Size 5. Solution 6. Benefits/Value Proposition 7. Success to Date (Customers/
Partners/Patents)
8. Competitive Advantage/ Intellectual Property
9. Category Map - Where our Solution Fits
10. Competitive Advantage (Value Matrix/Value Curve)
11. Business Model
12. Marketing & Sales (Customer Acquisition/Sales Cycle)
13. Financial Projections (3-5 Yr.)
14. Financing Requirements
How an Investor Sees Marketing Investor Presentation: Table of Contents
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 15
1. Company Overview & Vision 2. Management & Advisors 3. Customer Problem 4. Market Opportunity/Size 5. Solution 6. Benefits/Value Proposition 7. Success to Date
(Customers/Partners/Patents)
8. Competitive Advantage/ Intellectual Property
9. Category Map Where our Solution Fits
10. Competitive Advantage (Value Matrix/Value Curve)
11. Business Model
12. Marketing & Sales (Customer Acquisition/Sales Cycle)
13. Financial Projections (3-5 Yr.)
14. Financing Requirements
How an Investor Sees Marketing Marketing is threaded across the venture
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 16
So What Happens when Marketing
Gets it Wrong?
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 18
Reasons for Market Failures
Failure to clearly identify and focus on: 1. Market Category – Addressable Market
2. Target Customers – Problem you solve
3. Competitors (Current and Future) – Who Else is Working on this Problem?
4. Product Strategy/Positioning – Your Unique Approach
5. Pricing structure – What End Customers and Channels will Pay for the Product
6. Distribution Model - Direct or through Partnerships?
7. Revenue Model – How you Make Money (Partnerships/Licensing)
The 7 Deadly Sins
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 19
And it’s getting even tougher to
compete these days…
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 20
Nobody is Safe Anymore Even some of the most established companies are under seige
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But does Marketing REALLY Matter?
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 26
YES
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Because
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Because…
Marketing helps get you to FCS
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And…
Nothing really happens until somebody gets to FCS
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WT* is FCS ?
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=
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First Customer Sale
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Yay !
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But here’s the bad news
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 35
:-(
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Most Sales Don’t Close
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 37
Why Most Sales Don’t Close
No Pain No Goal = No prospect
Critical points of pain or key business issues are necessary to initiate a search for a solution
No Value Goals should be related back to $$$
Tangible value propositions provide a means of reducing price pressure i.e. Reduced cost, increased revenues, higher customer satisfaction/lower churn etc.
No Power Power buys from power
While end-users and influencers are fun to sell to they have not have the authority to buy
Ultimate decision-makers may have different goals (points of pain)
No Solution Feature/Function discussions are
useless unless put in context of the customer’s pain
Solutions must be created in the prospects mind through careful, methodical diagnosis
Here’s where the process breaks down
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 38
Back to the Drawing Board
problem the
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 40
Ideas Don’t Have Market Context
idea (n.) i·de·a*
a form, look or appearance of a thing as opposed to its reality.
a conception existing in the mind
a thought, a mental image, a notion
an opinion, view, or belief
a groundless supposition; a fantasy
a hazy perception
a vague impression, fanciful notion, inkling
Source: Random House Webster's Unabridged Dictionary
Even Webster is pessimistic
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 41
We have an Innovation Paradox
Product Company Business Science Technology
Source: Neoset Ventures
Not all technologies can spark the creation of a business
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 42
Market Problem Buyer Budget
The Market is Not your Customer
Source: Neoset Ventures
People or organizations with needs and budgets are…
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 43
Transforming Ideas to Income
Market Opportunity Value
Proposition Financial
Model
Science Technology Company Business Product
Market Problem Buyer Budget
1 2
3
4
Source: Neoset Ventures
4 Key Areas of Focus
Distribution Strategy
Can we about marketing as
as a of activities?
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 45
Transforming Ideas to Income Another way to think about marketing in a strategic context
SCAN 1
2
4
5
(Markets)
CONFIGURE (Internal Capabilities)
3
1. Markets
2. Customers
3. Suppliers, Partners Networks
4. Competitors
5. Financial Engine
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 46
Looking at Convergent Themes
1. Create
2. Capture
3. Sustain
Markets
Search Technology
A free search engine + a paid (Cost-per-Click) ad model
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 47
Eliminating Unrecoverable Cost
1. Create
2. Capture
3. Sustain
Customers
MP3 Standard
Apple focused on what buyers really hated about buying music
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 48
Leveraging the Ecosystem
1. Create
2. Capture
3. Sustain
Partners & Suppliers
CRM Platform
Salesforce.com went beyond SAAS to Software Syndication
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 49
Delivering Unexpected Value
1. Create
2. Capture
3. Sustain
Competitors
Virgin is opportunistic & aspirational in building its brand
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 50
Tuning the Financial Engine
1. Create
2. Capture
3. Sustain
Financial
From simplified logistics to fuel hedging Southwest stays on top
Too many to mention !
Too many to mention !
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 51
SCAN 1
3
2
4
5
(Markets)
CONFIGURE (Internal Capabilities)
1. Scan Category: Market
Goal: Look for Convergent Themes to Discover new Markets
Key Questions:
What market category are you pursuing?
Are you creating a new category? How big is it? Do buyers have industry context to
make a decision?
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 52
2. Filter Category: Customer
Goal: Eliminate Unrecoverable Costs
Key Questions: Who is your customer? What problem do you solve? How do you know it’s a problem? How much will customers pay to solve the problem? How did you decide on pricing?
SCAN 1
3
2
4
5
(Markets)
CONFIGURE (Internal Capabilities)
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 53
3. Synchronize Category: Suppliers, Partners & Networks
Goal: Leverage the Ecosystem to help deliver a better, faster, cheaper solution
Key Questions: Who has the power to get you to your target customer segments? What degree of influence do key suppliers have on your ability to produce your solution? How can you best approach the market opportunity (Direct vs. Channel) Are there syndicated networks you can use to sell your product?
SCAN 1
3
2
4
5
(Markets)
CONFIGURE (Internal Capabilities)
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 54
4. Amplify
Goal: Deliver Unexpected Value that Competitors Can’t Match
Some Focus Areas: Who is your competition? What are their strengths and weaknesses? Apply the concepts in Step 2&3 to strip out unrecoverable costs that customers do not value. Can you delight customers on elements of the product/service where quality can be raised or new elements can be created to develop a sustainable advantage? Can you demonstrate thought leadership in the category and use it to evangelize through industry opinion leaders?
SCAN 1
3
2
4
5
(Markets) Category: Competitors
CONFIGURE (Internal Capabilities)
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 55
5. Tune Category: Financial
Goal: Optimize revenue and costs
Key Questions: What is your method for capturing revenues (product sales, royalties, licensing advertising supported) What are the total costs? - professional services, sales engineers etc. Any upfront payments or recurring revenues? (maintenance, upgrade revenue sources) Do partners need to be paid? - Sales Channel – Direct, Distributors, VARS
SCAN 1
3
2
4
5
(Markets)
CONFIGURE (Internal Capabilities)
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 56
Market
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Social
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$0.01 $0.10 $1.00
$10.00 $100
$1,000 $10,000
$100,000 $1,000,000
$10,000,000 $100,000,000
$1,000,000,000
1959 1969 1979 1989 1999 2009 Source: Hans P. Moravec 1998-2003]
Dol
lars
per
MIP 10x reduction every
4.25 years
10x reduction every 7.5 years
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 61
Enviornmental
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SOURCE: NVCA / Thompson Reuters Exit Poll SOURCE: NVCA / Thompson Reuters VC Fundraising Q3
Total economic value created by VCs.
Total amount of money raised
by VCs.
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 63
Revenue Growth
Competing against time
Revolutionary Technology
Horizontal Market Expansion (for Breadth)
Transaction-Oriented Sales (Buy what I have)
Tin-Men (Horizontal Orientation)
Volume Oriented: Telesales/Cold-Calling
Poorly Defined – Non-Integrated Island
Features Development
Info. Overload
Cashflow
Competing against inefficiency
Evolutionary Technology
Vertical Expertise (for Depth)
Consultative Selling Approach
Sales Strategists (Vertical Expertise)
Exec. Referrals (3-Degrees of Separation)
Accountable & Aligned with Sales
Focus on Relevance…not just Differentiation
Less is More (Contextual/Diagnostic SalesTools), Thought Leadership through Research
Corporate Goals
Technology Buyer Focus
Technology Positioning
Market Segmentation Focus
Sales Approach
Salespeople
Lead Generation Strategy
Marketing Dept. Role
Product Management Focus
MarCom Focus
Then Today B2B Tech.
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 64
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Visual Recognition Systems
What We Can Learn from the Movies The power of convergent metaphors
Digital Signage
GPS Location-Based Services Technologies
Pay as You Drive Insurance
Social media (blogger) performance monitoring) Reputation Management
for UGC
Public Opinion Measurement Software
Brand Reputation Management
Gesture Based User Interfaces “Edutainment Software”
Who Cares? Emerging Category Emerging Technology
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 66
Category Mapping (CleanTech)
Source: Greentech Media (2007)
Understanding how the sector forms into “microclusters”
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 67
Market Sizing
Market Total Revenues Expected Market Share
Projected Company Revenues
Automotive $60 billion X 0.1% $60 million
Aerospace $40 billion X 0.1% $40 million
Healthcare $30 billion X 0.1% $30 million
Food Service $30 billion X 0.1% $30 million
Total $160 million
This is NOT a Believable Revenue Forecast
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 68
Customer
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Technology Creates Market Disruption
Technology keeps getting better. In every market, technology advances and improves and is driven by a set of behavioural, economic, regulatory and institutional factors. Companies take advantage of this by offering better products at higher prices, and by listening to and targeting mainstream and high-end users.
Customers will use a technology, up to a point. Technological progress inevitably reaches a point where it's far above what customers actually need and can use.
Overshooting customer needs enables disruption. When the level of technological progress is far above what customers actually need and can use, the phenomena of overshooting creates the opportunity for an upstart to come in with something that's cheaper, simpler and good enough for a set of customers who don't need the advanced technology.
It's not really about technology—it's about the business model. Small, nimble, disruptive firms can succeed with business models that are unattractive to incumbents.
Clayton Christensen sets out 4 rules that govern disruptive innovations:
Some of the Golden Rules
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 70
Critically Assessing your IdeaTo drive customer relevance
What are you best at that no one else is? How does that “translate” to proposed customer benefit? – Underlying Innovation – product – solution
Why should a customer care? – How much better than current technology/product/solutions
Which markets desperately need you? – Urgency over “nice-to-haves”
What buyers must have your solution? – This is a realistic forecast number
What problems do you solve? – How do customers talk about the problem? What is their point of view?
What is the real (loaded) customer cost to buy the solution? – Time & resources to deliver and implement etc.
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 71
Developing a Value Driven Strategy
The Most Important Equation You Should Remember
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 72 KW-025
Average Value for
Quality Buyers
Average Value - “Stuck in the
Middle”
Superior Value via
Higher Quality
Average Value for
Price Buyers
Superior Value via
Lower Prices
Maximum Buyer Value
Inferior Customer Value (Over-priced or Over-specified)
Higher
Parity
Lower
Lower Parity Higher
Relative Quality
Relative Price
Minding your P’s & Q’s What’s YOUR Strategy for Adding Value for Customers?
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 73
Segmentation Model (AMD)How Microprocessors Cluster on Key Consumer Dimensions
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Customer SegmentationThe Most Important Research You Can Undertake
A Segment is a Sub-Set of Buyers: – Within a market who share similar needs – Demonstrate similar buyer behaviour
Emphasis is on identifying clusters of buyers who are: – Attractive – Unattractive – Non-addressable
Good Segmentation Reveals Clusters that satisfy the following criteria: – Identifiable - The differentiating attributes of the segments must be measurable so that
they can be identified – Accessible - The segments must be reachable through communication and distribution channels. – Substantial - The segments should be sufficiently large in order to justify the resources required to
target them – Unique Needs - To justify separate offerings, the segments must respond differently to
the different elements of the marketing mix – Durable - The segments should be relatively stable to minimize the cost of frequent product changes
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 75
Where are you in the Buying Cycle? There are rules to how markets adopt technology
Source: Moore (2002), Crossing the Chasm: Wiefels (2002), The Chasm Companion
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 76
Getting Caught in the Chasm
Adventurous
Early buy-in attitude
Think “big”
Independent of the “herd”
Spend first
First use capability
Think Pragmatists arepedestrian
Prudent
Wait-and-see
Manage expectations
Part of the “herd”
Spend next
Staying power
Think Visionaries are reckless
Visionaries vs. Pragmatists
Pragmatists don’t trust visionaries as references
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 77
Marketing to Buyers in Organizations
Features Seymours
IT Manager
Marketing Manager
Director
VITO’s
CEO/President
Executive Director (Assoc.)
Executive VP (Industry)
COO/CFO/CMO
Functions Users
Salesperson
Clerical Staff
Database Admin.
Call Center Sales/Support
What to ask:
What are you using for a system now?
How are you using it?
Any serious problems?
Who’s who in the org.?
What to ask:
What are the technical criteria?
How much? How long?
How big?
How would you design the perfect solution to this problem?
What to ask:
What are the specific goals for your organization over the next (quarter, year?)
What new markets is your organization looking to grow in?
What are the criteria for establishing a business relationship?
Benefits
Parinelli’s Influence & Authority Network
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Analyzing Customers
Key Questions to Ask… 1. What Experience do they have? 2. Who do they Report to?
3. What are their Responsibilites? 4. What Motivates them?
C-Level
VP-Level
Director
Manager
Vertical
User
Finance HR Ops. . Marketing
Horizontal
X
Photonics
Robotics Pharma
.
Spatial
Government
Medical Devices Academic
Use this guide to better understanding buyer orientation
X
X
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Case Study
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Where are all the Flying Cars?
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They Have been Working on Other Stuff More features … Less Function…and a bailout package
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Is this a Reasonable Request? The Innovators are working on it…sort of
Taylor Aerocar: 1949
Moller Skycar: 2008
General Motors: Early Prototype?
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Ouch !
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Assignment for Next Week’s
Lecture
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Q1. Why are the
flying cars not taking off ?
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Bonus Round Q2.
If we were to ask the right questions to PROFITABLY REDEFINE the category of
“personal aviation” what would they be?
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 88
Hint. Go back to the slides
and think about MARKET TRENDS + what
CUSTOMERS (really) want!
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 89
Send your responses to
[email protected] by 9am Jan 24th, 2008
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 90
Worksheets
Work
shee
ts
Establishing Target Markets
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Identifying/Sizing your Target MarketTarget Market Criteria
Size
The estimated size of the market to determine whether or not it is worth going after. Beware of “top-down” sizing
Expected Growth
The size of the market may be small, but if it is an emerging market that is growing significantly it may be worth going after
Competitive position
The less competition the more attractive the market
Cost of reaching the market
Is the market accessible to you?
Compatibility
Is it aligned with your objectives competencies & resources
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 93
Creating a Category MapHow do you stack up on key factors that drive value
High
Low
Low High Ease-of-Use
Performance
Competitor 1
Competitor 2
Competitor 3
You?
Competitor 4
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Seg
men
t A
Seg
men
t B
Seg
men
t C
Seg
men
t D
Seg
men
t E
Seg
men
t F
Seg
men
t G
Market Size [$] $.6 B $1.2B $5.0 B $.16 B $1.5B $0.3B $0.2B
Value Chain Ownership 1 5 8 6 3 2 1
Market Potential $ $0.2B $75M $10M $35M $80M $15M $10M
Time to Market [years] 4 2 1 3 2 4 7
Barriers to entry [#] 6 2 2 5 4 3 9
Differentiation [#] 7 4 5 4 3 5 9
Competitive Threats [#] 2 2 2 4 7 4 2
Investment required [#] 6 5 3 7 9 5 9
Segment Scoring Try to rank various market segments using this scoring model
Work
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Market Research Methods
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 96
Secondary Research
Information provided by third-party sources (may be syndicated “shared” content)
Information has been gathered from previous market research
Advantages – Ease of access – Lower Cost – Less time consuming
Disadvantages – Information may not be exactly what is
required to assess new markets – Results may be out-of-date – Research design may be poorly constructed
Secondary Marketing Research A Starting Point
Sources Consulting firm research
Reports
Government reports and statistics
Newspaper articles
Web-based articles, reports, etc.
Census reports
Trade magazines
Scientific and trade journals
Libraries and resource centers
Books on the industry
Published reports and studies
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 97
Primary Marketing Research4 Types of Research Design
Qualitative (Focus groups, In-Depth interviews) Used for explorative purposes
Small number of respondents
Not generalizable to the whole population - statistical significance and confidence not calculated
Quantitative (Surveys and Questionnaires) Generally used to draw more conclusions and tests a specific hypothesis
Uses random sampling techniques
Infers from the sample to the population - involves a large number of respondents
Observational (Product in-use Analysis, Empathic Design) Observational research that employs a process of watching—without interfering
Concentrates on viewing the customer doing everyday activities in their own environment
Experimental (Purchase Labs, Test Markets) Researcher creates an artificial environment to try to control spurious factors, then manipulates
at least one of the variables
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Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 98
Customers
Telephone Surveys
Online Surveys
Focus Groups
Demos.
Custom Panels
Clinical Trials
SME Interviews
Market
Trade Shows
Trade Assoc. Statistics
Government Reports
Media Monitoring Economic
Reports
Syndicated Research
Competitors
Patents
SME Interviews
News Scanning Services
Advertising & Speaking Employee
Blogs
Websites
Getting Customer/Market Data A Qualitative & Quantitative Research Checklist
Work
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Evaluating Customer Requirements
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 100
Where are you in the Buying Cycle? Can you identify what group of buyers you are addressing?
Source: Moore (2002), Crossing the Chasm: Wiefels (2002), The Chasm Companion
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 101
Segmentation VariablesHow does your market cluster on these key segment breaks
Consumer Characteristics (Partial List):
Geographic: Region, city size, metropolitan area, density
Demographic: Gender, age, race, life stage, birth era, residence tenure, marital status
Socioeconomic: Income, education, homeowner,
Psychographic: Personality, values, lifestyle, status
Buying Situations (Partial List):
Outlet type: In-store, catalogue
Benefits sought: Product features, primary motivation
Product Usage: Usage rate, awareness and product knowledge
Behaviour: Involvement in purchase decision
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 102
Qualifying your Sales Prospects
Customer’s Pain Qualified No Goal = No prospect
Critical points of pain or key business issues are necessary to initiate a search for a solution
Value has been quantified Goals should be related back to $$$
Tangible value propositions provide a means of reducing price pressure i.e. Reduced cost, increased revenues, higher customer satisfaction/lower churn etc.
Buyer Has Authority to Proceed Power buys from power
While end-users and influencers are fun to sell to they have not have the authority to buy
Ultimate decision-makers may have different goals (points of pain)
Solution is Understood Feature/Function discussions are
useless unless put in context of the customer’s pain
Solutions must be created in the prospects mind through careful, methodical diagnosis
Have you addressed these key areas in the sales process?
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 103
Pricing ResearchWork through these areas before you set your price
What’s your fundamental strategic model? – Premium Price (Product Leadership) – Lowest Price (Operational Excellence) – Blended Model (Customer Intimacy)
What is the Method for Capturing Revenues – Product sales – Royalties – Licensing – Advertising supported
Some other Factors Need to be Considered – What are the total costs? - professional services, sales engineers etc. – Upfront payments or recurring revenues? (maintenance, upgrade revenue sources) – Do partners need to be paid? - Sales Channel – Direct, Distributors, VARS
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 104
Some General Pointers Beware of OVERESTIMATING your market forecast - Especially if you are not
in an established market category Ironically, it can be much harder to compete in a market where there are no existing competitors - Why? You
are competing against “non-consumption” - Customers lack points of reference that can serve to validate their need for your technology
When assessing market opportunity don’t overlook the benefits of market research Good market research mitigates risk. Besides interviews with current and prospective customers,
make sure to review reports or interview key technology analysts and other Key Opinion Leaders covering your space.
Remember…Differentiated Technology is NOT Enough Market relevance is more important than ever in identifying a target market. Look for
“necessary“ product/service requirements that have not been satisfied by competitors.
Look for Areas where you can deliver UNEXPECTED value Design your product and service on key attributes of value that amplify the impact you make
with reference customers. The trick to building market share is to over-deliver in areas that matter most ….and leaving the things that don’t matter to competitors.
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 105
Here’s More…
Understand your VALUE DISCIPLINE: How you can best create value in a market vs. your competitors Clearly understand how your competitors create value - Is their product best in class? Do they lead with low-
price? Or are they customer intimate with a highly specialized product for niche segments? What room have they left you to exploit the market through a different approach?
Draw a category MAP to better articulates how you fit vs. competitors and other product/service substitutes A category map that defines your product/service and competitors across key criteria is critical to providing much
needed context to potential buyers
Identify how you add to the “Customer’s UNDERSTANDING of the Problem at Hand” Do you have a diagnostic process that guides prospects through a method of determining and quantifying the
impacts on their organization? Does this also translate tangibly into financial measures?
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 106
And More
Remember Points of Pain for Customers VARY greatly within the Same Company – Understanding the prospect’s Vertical (C- Level, Director, Manager, User) and Horizontal (Functional - Finance,
Operations, IT, HR) Orientation is critical to mapping out points of pain correctly.
Identify the optimum point of entry - It’s often NOT the VITO on the first call – While it’s important to get to the VITO (Very Important Top Officer) don’t overlook the need to research their
agenda with subject-matter-experts who are lower in the organization (often a best point-of-entry is the sales dept.)
TRIANGULATE with your Competitors to Float the category ! – Gaining an understanding of the marketplace by just checking out competitors’ websites is an inexpensive but
myopic approach to benchmarking who you are up against. Supplement your research with regular competitor meetings where your share a little about what you know about other competitors - and get a lot in return.
Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 107
Getting Started GuideIf you want to get going keep these steps in mind
Market Dynamics
Why is this a good opportunity now?
Market Sizing
Market Prioritization and Rationale
Review your total market and industry dynamics
Customer Insights
Select segmentation criteria
Divide relevant market into customer segments
Target Market
Describe each customer target group
Competitors
Evaluate competitors for partnering options or exit possibilities
Conduct customer interviews, focus groups, discussions with experts, etc…
Look at customer trends, regulations, technological advances
Look at analyst reports and do “bottom-up” analysis…not top down
Run some estimates of potential market share, sales volumes, revenues, and profit (under various funding /resource /partner scenarios)
Develop a meaningful category map that spatially compares competitors on key factors for creating value.