Transcript No Slide Title

Entrepreneurial Development
(E102)
Marketing
January 26, 2010
Ken Pickar
Special thanks to Chris Halliwell, Instructor,
Thursday’s guest lecturer
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Today’s agenda
• Feedback session
• Speakers Class
• Homework Scheduling and Presentations
• Lecture on Market Research- Ken Pickar
• HW on Marketing for 2/2/10
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What are some of the intrinsic
problems in introducing a new
product into a new market from a
new company with a new team?
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Marketing triangle for an
established company
Market
Technology
Company
Risk is minimized by changing only one of the vertices
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Fundamental Problem of Initial Introduction
of a New Product from a New Company
• How do you know what
the “market needs”?
• Your Low Bandwidth
requires High Focus- lots
of targets, little resource
• Optimization- biggest bang
for the buck
• Achieving “Customer
intimacy”- understanding
the customer
High Wire Act
Big decisions based
on insufficient data
• Credibility- Why should
anyone give you the time
• Counter to culture of
attacking a big target-
contrary to why you are doing
this in the first place
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But not no data!
Where do you start?
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“Because different customers have different
needs, a marketer cannot effectively satisfy a
wide range of them equally. The most
important strategic decision is to choose the
important customers. [To align priorities in a
timely manner] Customer selection must
involve all operating functions.”
Ben Shapiro
Harvard Business School
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Market segmentation
•
Market “strategy”
–
This product would be attractive in China. There are 1.7B Chinese.
Even if we got only 1% of the market. . .
What’s wrong with this?
people are different
wrong 1%
competition and substitutes
No room for growth
–
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Segmentation
• Consumer Markets can be characterized by
Segment :
Example:
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Segmentation
• Consumer Markets can be characterized by
segment including
– Demographic
•Age
•Sex
•Ethnicity
•Income
•Occupation
•Education
•Household status
•Geographic location
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Segmentation- continued
• Psychographic variables
– Life-style
– Activities
– Interests
– Opinions
– Product use patterns
– and product benefits.
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See Also
• http://www.businessplans.org/Segment.html
• http://en.wikipedia.org/wiki/Market_research
• http://www.telesian.com/techlibrary/archive/pos
itioning.cfm
• Need to think through: What is the demographic
for your product (if consumer)? What are the key
companies in the market (if B toB)?
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Advantages of knowing segment
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The Technology Adoption Model
as the Basis for Segment Focus
Rate of Adoption
Early Majority
Late Majority
Early Adopters
Innovators
Laggards
Time
A measure of the rate of adoption of a cluster of new
technologies by a community over time
Where are you on this curve?
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Consider adaptation of a new technology
• Age
• Income ?
• Geography
• Education
• Sex
?
?
?
?
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Why should a customer adopt a
new technology?
Early adopter?
Late majority?
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Can corporate customers be characterized
in a similar way?
• Are there companies who are leaders
• Are there companies who are followers?
• What determines whether a company will
be aggressive in adopting a new technology?
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Who are the leaders?
–
–
–
–
–
–
Aviation
Computers Hardware
Computers software
Biotech
Energy
Medical devices
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Example: A new medical imaging methodology
(MRI+)
Mass of US Hospitals
Top 100
Teaching Institutions
Top 15 Luminary
Medical Centers
“I love writing
papers and
Peer approval
“Can I recover my
I build my
practice by doing Fees from insurer
better surgery?” and keep my patients?
“Can
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Thus for medical imaging equipment
(MRI, PET, Ultrasound, X-Ray etc.)
• GE Strategy
– Target segment: a few luminary institutions
– Presentation at large professional meetings and
Publication of results in peer-reviewed journals;
– Sell to larger hospitals
– Eventually reduce price, de-feature and sell to smaller
institutions
– Globalize to Europe and Asia (typically lower cost)
– Move to service model of installed base
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Use www/Library Data Base
Sources to Determine:
•Major trends in technology, standards, regulations (Barriers and
enablers)
•Drivers and barriers to growth- consider rate of market adoption
•Business model options and key players (competitors/ partners) at
each layer of the food chain
•Size of segment, major sub-segments/rough distribution of market
revenues/units
•Forecasts or prognostications of rate of segment growth
•Value chain, ecosystem and customer players
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What about dealing with large industrial
companies (e.g., OEMs)?
Are all customers the same?
• Look for the “Teacher customer”
–
–
–
–
–
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Not always easy to find!
Opinion Leader
Early adopter of New Technologies
In pain
Respected
Influencer
•Inside company
•Within industry
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The Teacher customer is necessary
• To teach you your value and your position in the
market
• To provide credibility to investors, employees, partners
• To strongly influence other early adopters
• To co-create your product strategy, priorities and plans
• To generate early revenue from volume deployments
• To be patient with your failures
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Finding the Teacher Customer
1. Talk to friends and friends of friends (Mentor(s),
academics, experts) Network!!
2. Do your (secondary literature research) homework.
Use Library and Internet. Consultant studies?
Kristin can help get you started here.
1. Industry Groups, Publications can very helpful
2. Develop hypotheses and assumptions you MUST
validate
3. Review literature to identify community influencers
and potential Innovators
• Each segment has Innovator companies
• Every company has Innovator individuals
(the “go-to” person)
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Finding the Teacher customer
5. Talk to the wrong people to get to the right
people
6. Assemble your interview tools:
60 second “elevator” pitch
2-pager on what “it” is
Open ended questions
Interviewee should do 90% of the talking
7. Say “thank-you”, follow-up and nurture
the relationship as appropriate
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Breakout
• What is the market segment of your Prime
customer?
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Generate Hypotheses & Identify Underlying Assumptions
EVALUATION
QUESTIONS:
For Which
Customers Do I
Solve Important
Problems?
Does The Value
vs. Competitive
Alternatives
Justify Change?
How Many
Customers &
What Will
They Pay?
Requirements to
Attract, Sell &
Support These
Customers?
State your
assumptions
regarding what
your product is,
what it does,
and the
implications for
related
technologies
Quantify the
problem you solve
vs. alternatives in
each target
segment
By Industry
By Application
(Use the product
to…)
By other segment
variable
Quantify total
cost of adoption/
switching vs.
current methods
or alternatives for
each target
segment
Is it worth it to a
customer?
Why will solving
this problem be
important to
more customers
over time?
What will
customers be
willing to pay &
what are the
implications for
your business
model?
What will it take
to generate wordof-mouth and
brand awareness?
What kind of
distribution model
does the business
model require?
What support will
customers need to
evaluate and use
the product?
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Recruit Interview Targets
• How do I get them to talk to me?
– Use phone and e-mail follow up
– Tap your network for contacts, Mentors! Professors! Alums!
– Go to friends, friends of friends, etc. Much better than blind
call!!
– From company names get HQ city, find phone number
– Email addresses and numbers often on the web
– Calling early in morning sometimes gets people in before
their assistants can intercept phone
– You are researching applications in products and services for
key segments and customers of a new Caltech technology
(use the name!)
– Be prepared for disappointment- this is hard. Don’t take it
personally! It’s not about you!
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Interview
• How do I approach them?
– Use a 30-second pitch
– E-mail with follow-up phone calls or reverse can
both work well
– Send them a 1-pager.
– Provide agenda and general topics in advance -gives the target a chance to think, and clarifies that
this is not a sales call!
– They choose the time. Accommodate them!
– Let them know that this will be brief
~ 20 minutes
– Be persistent
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Open-Ended Interview Questions
•Write a script
•Flow from general to increasingly specific,
but always open-ended
•Question “DOs”
– Why?
– How do you measure that?
– How do you define that term?
– What’s working, what isn’t?
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Open-Ended Interview Questions
– Can you draw a diagram so I can see where
it fits into your overall system?
– How did you determine the value of that?
– How would you make tradeoffs among
features?
– How will you remove barriers to your
success?
– What would the ideal situation look like?
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Question “DON’Ts”- Questions
which pre-judge or “sell answer”
– Don’t you think that…?
– Wouldn’t you like it if…?
– Black or white, yes or no…?
– We think this, what do you think?
– If we do this, will you do that?
– What do you want?
– What should we do?
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6-Step Interview
Planning Process
1. Select targets to interview
2. Set objective for each interview
3. Recruit and schedule interviews (Can be long lead
item!!)
4. Develop the discussion guide (script)
5. Conduct the interviews
6. Meet shortly after the interview (like
immediately!) to
Agree on what you heard
Summarize what you learned
Focus on testing hypotheses
Change path if necessary
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Formal Interview Roles
• Moderator
– Asks most of the questions (from discussion guide)
– Clarifies extensively
– Controls flow and timing
• Note Taker
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–
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Primary stenographer
Leads post visit debriefing -- The Three Main Points
Devises format and “buckets” for notes
Compiles, distributes notes
• Observer
– Notes body language and “emotional” quotes
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Telephone interviews
• Speakerphone for interviewers
• International can use Skype (use
microphones)
• Have info sent in advance
• Identify everyone on the call
• Thanks and follow up e-mail
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Trade Organizations
•Tens of thousands of them
•Deeply knowledgeable
•Library can help to identify
• Best one stop shopping for interview
subjects, market studies, innovation
leaders
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Trade Shows
• There are tens of thousands
• Many are in LA region
• People are in talk/marketing mode
• One stop shopping for info, performing market
studies
• Is there a meeting held during this quarter?
• Student discounts or funds available as E102
expense
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Consultant Studies
•Consider large and small
consultancies
•Library can help
•Interview subjects can help
•Can negotiate cost- zero is good
•Alternative- interview consultants
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On-line Market surveys you create
Zoomerang.com and others
• Excellent for getting data “easily” and analyzing
• Only as good as the questions and the
respondent list
• Direct people to the site (trade group
assistance?)
• Keep short
• Consider Colorado Avenue passers-by
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Summary of HW 1
All Teams do this!!
–
–
–
1.
2.
All E-mail HW prior to noon on Tuesday to Andy and Ken
Volunteer two teams to present HW for Tuesday and two for
Thursday
All send PDFs of PPT for presentation teams or PDFs of Word for
non-presenting teams
Prepare a signed Team Rules Statement
Show roles and names of people initially assuming these
roles
3. Present Market Hypotheses
4. Present Vision Statement
5. Prepare elevator speech for mentors (doesn’t have to be
sent)
HW 2
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Begin Market Research!
• Write script
• Call at least 5 people
• Interview at least 2
• After each interview
– Review what went wrong
– Review what went right
• Revise
• Continue to define the market using secondary
research
HW 3
Homework for next Tuesday
1. Potential customers: What are the top three
segments (consumer) or top three companies (B
to B)
2. Write script for interview
3. Show a plan for Market Research. . .
1. Secondary
1. Internet, Publications ,e.g., Trade
Journals
2. Marketing reports (free if possible)
2. Primary
1. Identify Experts
2. Show Schedule and continue Interviews
1. Of experts
2. Of potential customers
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Secondary Research
• Kristin Buton Caltech libraries
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Marketing 101
The 4 Ps
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What is Marketing?
4 Ps of Marketing
• Product
• Promotion
• Pricing
• Place (or distribution system)
What follows is necessary for Business Plan
but not for Tuesday Homework
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Product
• What is your product? Describe in terms of
benefit to the customer
• Product packaging (is this relevant?)
– Discuss form-factor, pricing, look, strategy
– Summarize Cost of Goods and high-level Bill of
Materials
– Shipping issues
– Customs issues
Promotion
• Direct marketing
– Overview of strategy, vehicles & timing
– Overview of response targets, goals & budget
• Third-party marketing
– Co-marketing arrangements with other companies
• Marketing programs
– Other promotional programs
Pricing
• Pricing
– Summarize specific pricing or pricing strategies
– Compare to similar products or compare to
doing nothing
• Strategy
– Summarize strategy relevant to understanding
key pricing issues
Placement (Distribution)
• Distribution strategy
• Channels of distribution
– Summarize channels of distribution
• Distribution by channel
– Show plan of what percent share of distribution
will be contributed by each channel -- a pie
chart might be helpful
• Discuss fulfillment issues
Vertical Markets/Segments
• Vertical market opportunities
– Discuss specific market segment opportunities
– Address distribution strategies for those
markets or segments
– Address use of third-party partner role in
distribution to vertical markets
Placement (International)
• International distribution
– Address distribution strategies
– Discuss issues specific to international distribution
• International pricing strategy
• Localization issues
– Highlight requirements for local product variations