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Transcript of 1 Entrepreneurial Development (E102) Marketing January 26, 2010 Ken Pickar Special thanks to Chris...
1
Entrepreneurial Development (E102)
MarketingJanuary 26, 2010
Ken PickarSpecial 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
Company
Market
Technology
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
• 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
High Wire ActBig decisions based on insufficient data
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But not no data!
Where do you start?
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Ben Shapiro Harvard Business School
“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.”
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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 differentwrong 1%competition and substitutesNo 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/positioning.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
A measure of the rate of adoption of a cluster of new technologies by a community over time
Early Majority
Innovators
Rate
of A
dopt
ion
Laggards
Late Majority
Early Adopters
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?
Who are the leaders?
– Aviation– Computers Hardware– Computers software– Biotech– Energy– Medical devices
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Example: A new medical imaging methodology
(MRI+)
“I love writing papers and Peer approval
“Can I build mypractice by doingbetter surgery?”
“Can I recover my Fees from insurer and keep my patients?
Top 100Teaching Institutions
Top 15 Luminary Medical Centers
Mass of US Hospitals
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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
• 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” pitch2-pager on what “it” isOpen ended questionsInterviewee should do 90% of the talking
7. Say “thank-you”, follow-up and nurture the relationship as appropriate
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 segmentBy IndustryBy Application(Use the product to…)By other segmentvariable
Quantify total cost of adoption/ switching vs. current methods or alternatives for each target segmentIs 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 word-of-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 interview2. Set objective for each interview3. Recruit and schedule interviews (Can be
long lead item!!)4. Develop the discussion guide (script) 5. Conduct the interviews6. Meet shortly after the interview (like
immediately!) to Agree on what you heardSummarize what you learned Focus on testing hypothesesChange 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– 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
Summary of HW 1
All Teams do this!! – 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
1. Prepare a signed Team Rules Statement2. Show roles and names of people initially
assuming these roles3. Present Market Hypotheses4. Present Vision Statement5. 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
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HW 3 Homework for next Tuesday1. Potential customers: What are the top three
segments (consumer) or top three companies (B to B)
2. Write script for interview3. Show a plan for Market Research. . .
1. Secondary1. Internet, Publications ,e.g., Trade Journals2. Marketing reports (free if possible)
2. Primary1. Identify Experts2. Show Schedule and continue Interviews
1. Of experts2. 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
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