Jaine Lucas Executive Director, IEI
Jan 11, 2016
Jaine LucasExecutive Director, IEI
MARKET vs. INDUSTRY
• MARKET The organized exchange of goods, services, or resources between buyers and sellers within a specific geographic area and during a given period of time. • A buyer gives up money and gets a good, while a
seller gives up a good and gets money
• INDUSTRY One or more business firms that produce similar products
MARKET vs. INDUSTRY
• Examples of industries– Automotive– Cosmetics– Appliances– Baking
• Examples of markets– 2014 Philadelphia hospitality market– May 2013 global smart phone market– 2013 Canadian soft drinks market
MATCHING PRODUCTS & SERVICES WITH CUSTOMERS
REMEMBER WHO PAYS!
• The key to success is falling in love with your customers
You must know them, study them, honor them, serve them…
• The single most crucial step towards starting a successful business is discovering and articulating what you can provide that your customers want enough to pay for
KNOW YOUR CUSTOMERS!
1. Why do your customers want your product or service?• What do you provide?• What are your customers really buying?• How much will they pay?
2. Who, exactly, are your customers?3. How do your customers buy?
• When do they buy?• Where do they buy?• What rules or expectations govern their buying?
REMEMBERING THAT…
• There can be many that influence purchasing decisions
• The people who use or consume the product may not be the one who actually makes the purchase
• Especially true in business and in families
EXERCISE
WHY PEOPLE AND BUSINESSes BUY…
• DESIGNER HANDBAGS
• PUBLIC RELATIONS SERVICES
WHY CUSTOMERS BUY
• People and businesses have different requirements
• Both people and businesses buy benefits
• They buy solutions to their problems and satisfaction of their needs and wants
• People and businesses do not buy features
• Like torque or braking power or acceleration
• Products or services are a means to an end
• People or businesses may not buy what you think you sell
WHY CONSUMERS BUY
• Meet biological needs• Increase security• Gain status or recognition – to belong• Live out fantasies• Reduce anxiety or other strong emotions• Save time or money• Solve problems• Can be irrational, more emotional
WHY BUSINESSES BUY
• Provide their own goods or services more cost effectively
• Save money
• Cement relationships
• Position themselves strategically
• Improve public relations
• Solve problems
• More rational, logical
WHAT DO BUSINESSES CARE ABOUT?
• Quality • Dependability• Cost • Customization• Market exclusivity• Delivery schedules• Guarantees• Strategic relationships
FORCES THAT AFFECT BUYING BEHAVIOR
BUYERS BUY BENEFITS
• A benefit is the value a customer places on a function and/or feeling the product produces through its features
• Identify - through testing - the few, crucial benefits that will affect customers’ buying decisions...• Use these to drive marketing strategy,
packaging, pricing, branding, and sales plans
FEATURES SUPPORT BENEFITS
• Features are what make up the product’s or service’s ability to perform functions for customers
• Some features are more equal than others:• Of the dozens of features an iPad
may have, perhaps only two or three – such as a high res camera or downloadable apps – might be important to customers
• Which differentiate you from the competition?• Are they protected or protectable by
copyrights, patents or trademarks?
EXERCISE
BENEFIT
1.2.3.
FEATURES THATSUPPORT BENEFIT1.2.3.
METHOD TO COMMUNICATE BENEFIT1.2.3.
COMMUNICATE BENEFITS
KNOW YOUR CUSTOMERS!
1. Why do your customers want your product or service?• What do you provide?• What are your customers really buying?• How much will they pay?
2. Who, exactly, are your customers?3. How do your customers buy?
• When do they buy?• Where do they buy?• What rules or expectations govern their buying?
WHO WANTS YOUR PRODUCT OR SERVICE?
• Develop an intimate knowledge of who buys• Customers’ behavior• Personal and institutional motivations• The key words, concepts, associations
that trigger behavior• Segment who buys
• Identifiable, organized, or organize-able & reachable subgroups of customers
• Marked by demographics, behaviors, location, interests
CONSUMER CUSTUMER PROFILE
Describe your ideal customer or client by answering the questions below. The questions take you from specific characteristics to a definition of a market or market segment:• How will they use your product or service?• Why might they buy it?• What will they pay for it?• Are they men, women, or both?• What is their age group?• What is their approximate average income?• What is their employment type (blue-collar, white-collar, managerial,
professional, homemaker, etc.)?• What is their lifestyle (personality, self-image, etc.)?
CONSUMER CUSTUMER PROFILE
• Where are they (local, state, national and globally)?• How many of them are there?• How many do you expect to get as customers?• What percentage of the market do you expect to get?• What’s the growth trend of your target market?• What are their buying habits?• What magazines do they read?• What organizations do they belong to?• What conventions or events do they attend?• Is there a directory that lists them?• Are there mailing lists of them available?• What is the best way to reach them?
BUSINESS CUSTOMER PROFILE
Describe your ideal customer or client by answering the questions below. The questions take you from specific characteristics to a definition of a market or market segment:• How will the firm benefit from buying your product or service?• How much are the benefits worth to them – in savings, increased
market share, profile, etc.• Who buys? Who influences? Who facilitates? Who decides? What
buying procedures are in place? What controls?• What level of service to they expect?• How are they used to buying? Salesperson? Directly? Other?
BUSINESS CUSTOMER PROFILE• How is the transaction started, facilitated, completed?• What industry norms govern the transaction? Discounts, payment
terms, warranties, types of contracts.• Where are they located ?• What piece of the market are you aiming for? • How many of target firms are there?• How many do you expect to get as customers?• What’s the growth trend of your target market?• What are their buying habits?• What organizations do they belong to?• What conventions or events do they attend?• Is there a directory that lists them?• Are there mailing lists of them available?• What is the best way to reach them?
WHAT IS MARKET SEGMENTATION?
Process of dividing a market into subsets of consumers with common needs or characteristics
SEGMENT ANALYSIS
• Talk to customers!• Interviews & surveys
• Observe customers using/buying similar items• Read what they read, go where
they go• Talk to others who serve the same customers• How do they segment,
communicate, etc?• Examine how competitors segment• Define segments and estimate size
TARGET SEGMENTS[ CONSUMERS ]
TARGET SEGMENTS[ CONSUMERS ]
TARGET SEGMENTS[ CONSUMERS ]
MORE MARKET SEGMENTATION
• Use-Situation• Time, objective, location & person
• Benefit Segmentation• Convenience, social acceptance,
value, economy
• Hybrid Segmentation• Demographic/psychographic• Geodemographics www. claritas.com, PRIZM• SRI VALS – Innovators, thinkers, believer,
achievers, strivers, experiencers, makers survivors
TARGET SEGMENTS[ BUSINESSES ]
EXERCISE
CUSTOMER PROFILE• Define your customer• Define his/her segment• What channels would you
use to reach your customer?
KNOW YOUR CUSTOMERS!
1. Why do your customers want your product or service?• What do you provide?• What are your customers really buying?• How much will they pay?
2. Who, exactly, are your customers?3. How do your customers buy?
• When do they buy?• Where do they buy?• What rules or expectations govern their buying?
EXCHANGE ANALYSIS
• What changes hands?• Why? What is the value proposition to the buyer?
What dimensions of value matter?• Who sells? Who buys? Who influences? Who
facilitates? Who holds the most power?• When does the exchange happen? How long is the
sales cycle?• How are transactions started, facilitated, completed?• What rules, regulations, norms shape the exchange?• What norms govern the exchanges?
• Discounts & payment terms, warranties, types of contracts, style & culture
PERCEPTUAL SPACE
• How does your product or service stack up against competitors?
• What mind space do you occupy?• What unique value can you offer?• What will be your unique selling proposition?
PRODUCT COMPARISON CHART
• List competitive products/services – the from customers’ point of view
• Note crucial dimensions of value
Price Quality Segment ChannelProduct1 $$$ H A SalesProduct2 $ L B WebProduct3 $$ M C DirectSubstitute1 $ L D Sales
Substitute2 $ M E Shows
Notes
PRODUCT COMPETITIVE ANALYSIS: COMPETITIVE OFFERINGS MATRIX
Differentiation
Att
racti
ven
ess
L
HH
Product Y
Product X
Product Z
Product B
Product A
Product C
L
PRODUCT COMPETITIVE ANALYSIS: PERCEPTUAL MAP
Quality
Cost
Map key products or services along dimensions most important to buyers & influencers
WHAT IS A VALUE PROPOSITION?
• Or “unique selling proposition”• One of two essential elements for effective
positioning (communicating benefits is the other)• Distinct benefit or point of difference for the
product or service• Consequences of poor/ineffective value
proposition?• Little or no market uptake = failure• Perception of product or service as “me too”
“WHAT’S IN IT FOR ME?”- CUSTOMER
SEGMENTATION
TARGET SEGMENT
MARKET
POSITION
PSYCHOLOGICAL
VALUEPROPOSITION
VALUE PROPOSITION
• Define what you provide/will provide• As simply and concretely as possible, emphasizing
function, not form• Describe your customer
• As precisely as possible, emphasizing why they care, i.e., the type and magnitude of the problem they have that you solve
• Define precisely the value you provide to your customer in terms of benefits they will receive• Quantifying you claim when possible, especially for
businesses, and supporting it with testimony
VALUE PROPOSITION[ EXAMPLES ]
• iPod: “best digital jukebox”• Lexus: “quality, zero defects”• Dell: “customized PCs made quickly and
sold economically”• Southwest: “friendly, fun customer
service at economical prices”• Gap: “wearable, affordable, hip American
style”
WHAT’S THE VALUE PROPOSITION?
• Dove Soap
• V-8 Juice
• McDonald’s Happy Meal
EXERCISE
WRITE YOUR VALUE PROPOSITION“Our company provides x that does y
(solves y problem) for z in a way that. . . .”
“Automsoft’s RapidPharma provides 100% accurate and reproducible data at the finest level to help pharmaceutical firms bring new production
processes to scale, while providing batch assurance and full compliance with CFR Chapter 21 Part 11.”
SOURCES OF CONSUMER DATA
• www.fedstats.gov – economy, business and all demographics of US population
• www.census.gov – data on age, education, income and occupation of US residents by state and region
• World Fact Book – key stats on any country worldwide www.cia.gov.publications.factbook
• Claritas – demographic and lifestyle profiles• Yankelovich – consumer lifestyles and consumption
patterns• Mediamark Research – segmentation studies of consumers’
leisure activities and buying cycles
BIBLIOGRAPHY
Matching Products & Services with Markets• Tony diBennedetto lectures• Jaine Lucas lectures • Jeffrey Dobkin, How to Market a Product for under $500!, (Danielle
Adeams Publishing Company, 1995).• Craig Fleisher & Babette Bensoussan, Strategic and Competitive
Analysis (Prentice-Hall, 2003).• TL Hill lectures• Jill Kapron, BizPlan Express, (South-Western College Publishing
Company, 1998).• Philip Kotler, Marketing Management, 9th Edition, (Prentice-Hall,
1997).• Small Business Development Center business planning program –
2000.• Barbara Wright presentations