Transcript Slide 1

Lecture 4
Marketing
Jan 17, 2012
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
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
High Wire Act
• Achieving “Customer intimacy”-
Big decisions based
on insufficient data
buck
understanding the customer
• 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
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Market strategy
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This product would be attractive to Teenagers. There are
25 M teenagers. All we need is 1% of the market to be
successful
Comment?
What’s wrong with this?
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Market segmentation
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Market “strategy”
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This product would be attractive to Teenagers. There are 25 M
teenagers. All we need is 1% of the market to be successful
Comment?
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
Own the product already
Profession
Geographic
Rural etc
Rich
Age
Supply chain
Culture and religion
Gender
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Segmentation
• Consumer Markets can be characterized by
segment including
– Demographic
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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/po
sitioning.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
Laggards
Innovators
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
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Age
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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 build my
practice by doing
better surgery?”
“Can I recover my
Fees from insurer
and keep my patients?
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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”
– 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
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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.
3. Industry Groups, Publications can very helpful
4. Develop hypotheses and assumptions you MUST validate
5. Review literature to identify community influencers and
potential Innovators
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Each segment has Innovator companies
Every company has Innovator individuals (the “go-to” person)
6. Look for Scientific or Journal publications/ Contact
author
4444
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Finding the Teacher customer
7. Talk to the wrong people to get to the right
people
8. Assemble your interview tools:
60 second “elevator” pitch
2-pager on what “it” is
Open ended questions
Interviewee should do 90% of the talking
9. Say “thank-you”, follow-up and nurture the
relationship as appropriate
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Breakout
• Who is your Prime Customer?
• 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?
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Start now to identify and schedule conversations
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 prejudge 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
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Select targets to interview
Set objective for each interview
Recruit and schedule interviews (Can be long lead item!!)
Develop the discussion guide (script)
Conduct the interviews
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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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
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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
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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
• Plus and minus of Caltech students
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The hell with all this. . .
• Why not just make a prototype and see who
wants it – particularly if the prototype is easy
to make (like a website)
• Why not have the customer help you design
the product?
• Why not “pivot” and then “pivot” again. . .
HW for Tuesday Jan 23
Begin Market Research!
• Get in Contact with your mentor
• Share all data
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Write script
Call at least 5 people
Interview at least 2
After each interview
– Review what went wrong
– Review what went right
• Revise Hypotheses if necessary
• Continue to define the market using secondary research
• Write up and submit your conclusions