Who is Your Customer Workshop One – The Market Your Product? – February 21 ... Theme One – Who...
Transcript of Who is Your Customer Workshop One – The Market Your Product? – February 21 ... Theme One – Who...
Workshop One – The Market Who is Your Customer
Our Text and Reference
Disciplined Entrepreneurship 24 Steps to a Successful StartupBill Aulet - ©2013
Six Themes within the 24 Steps• Who is Your Customer? –
January 24• What Can You Do for Your
Customer? – February 7• How Does Your Customer
Acquire Your Product? – February 21
• How Do You Make Money? – March 7
• How Do You Design & Build? – March 21
• How do You Scale Your Business? – April 11
Concluding Event – April 25
• Saturday afternoon, April 25• Five minute presentations including
a unique and team specific deliverable
• Produce something tangible that will enhance your resume/portfolio
• Other assessments include a participation rubric and work shop self assessments
• Celebrate your success with a party
Theme One – Who is Your Customer Five Initial Steps
1. Market Segmentation2. Select a Beachhead Market3. Build an End User Profile4. Calculate the Total Addressable Market Size
(TAM) for the Beachhead Market5. Profile the Persona for the Beachhead
Market
What Should We Be?
Market-Driven
Target Customer-Driven
Customer-Driven
What is the Single Necessary and Sufficient Condition for a
Business?
A Paying Customer!
Breakthrough Scenario*Technology - After a year of challenging lab work, Koshi and Roberta finally cracked it. They were now sure they could manufacture artificial down feathers cost effectively!
Dream – To transform the quality of people’s sleep through the invention of a better pillow
Technical Advantage – Their artificial down had heightened levels of insulation, a better resilience / resistance quotient and was kinder to both animals and the environment
But, do they have a business?
Step #1 – Market Segmentation
An idea or technology can serve a variety of potential end users. Start your primary market research and complete a market segment matrix.
WHY? It is crucial to start the process with the
customer in mind and work back from there.
The Market Segmentation Matrix
How to Do a Market SegmentationStep 1A – Brainstorm • There are probably a large number of
industries that could benefit from your product
• Focus on end users not customers• Be broad and expansive
Group Exercise - Brainstorm
• Break up into groups and brainstorm three possible market segments for the new pillows
• Fill in what rows of the matrix you can, but leave blank any areas where no data exists yet
• Start by going online and “buy” a pillow• We’ll get back together in about 20 minutes to
collate ideas on target markets
Normally the matrix is filled in from Primary Market Research – not by you sitting in the
Commons or library debating or doing internet searches and reading reports
Let’s Pick the Best Target Markets
How to Do a Market SegmentationStep 1B – Narrow • Is the target customer well funded?• Is the target customer readily accessible to your sales
force?• Does the target customer have a compelling reason to buy?• Can you today, with the help of partners, deliver a whole
product?• Is there entrenched competition that could block you?
If you win this segment, can you leverage it to additional segments?
• Is the market consistent with the values, passions and goals of the founding team?
Avoid Common Market PitfallsSelling to Everyone• You can make a product that fits the
needs of anyone you run intoThe China Syndrome• Rather than create a new market; choose
a huge existing market
Apply your limited resources to a narrow and carefully defined market
How to Do a Market SegmentationStep 1C – Do primary market research • Talk directly to customers and observe customer behaviors
Actions speak louder than words• Don’t rely on Google searches
If you find a market report it’s too late for your venture• Don’t sell – you are asking questions to learn• Be open minded and unbiased, never presuppose a
solution (inquiry, not advocacy)• Take the time and be patient
Understanding Your Market
•How does your customer buy?
•When do they buy?•Why do they buy?•Where do they buy?
Attacking the ProblemThree Tactics
1. Walk in your customers shoes – go out and buy a pillow
2. Observe people in the process of buying a pillow
3. Talk directly to people buying pillows
Taken together you will learn a ton
Koshi and Roberta’s Market Assumptions
1. People care about sleep quality when making a pillow purchase decision.
2. We believe we can sell online directly to customers.3. We believe that our customers will be young urban professionals.4. We believe that our very first customers will be new graduates who
need to outfit their apartments.5. We believe we can sell our pillows at a high enough price to cover
costs.6. We believe we can raise enough capital to cover investments in
manufacturing.
Primary Research QuestionsHello, I’m a student at ____ and I’m researching sleep quality. I’m asking people about the last time they bought a pillow. Do you mind if I ask you a few questions?
• When was the last time you bought a pillow?• Why were you looking for a pillow?• How did you start shopping for a pillow?• Why did you choose the one you bought?• After you bought, how did you feel about the purchase?• Will you be in the market for another pillow anytime soon?
How to Do a Market SegmentationOrganize your research• End User – who specifically will be using the product? • Application – What will be dramatically improved by
your new product?• Benefits – What value will the end user derive from
your product? Time or cost savings?• Market characteristics – what about the market will
help or hinder the adoption of your new product• Lead customers – influential customers; “lighthouse” or
early adopters
How to Do a Market SegmentationOrganize your research• Partners/Players – What companies will you need to
work with to provide a solution that integrates into their workflow
• Size of the market – roughly, how many potential customers if you achieve 100% share
• Competition – who is making a similar product• Complementary assets required – what else does your
customer need to get the full solution. Will you need to bundle with products from other manufacturers?
The Market Segmentation Matrix
Collect Primary Research from Your Team Members
Koshi and Roberta’s Market Assumptions*
1. People care about sleep quality when making a pillow purchase decision.
2. We believe we can sell online directly to customers.3. We believe that our customers will be young urban professionals.4. We believe that our very first customers will be new graduates who
need to outfit their apartments.5. We believe we can sell our pillows at a high enough price to cover
costs.6. We believe we can raise enough capital to cover investments in
manufacturing.*Excerpted from: Talking to Humans, Gabe Constable - © 2014
Analyzing the Data Collected*• 24% of shoppers knew what they wanted when they
walked in• 52% looked up information on their phone in the
store• 45% purchased a mid or high priced pillow• 68% of shoppers interviewed indicated that better
sleep was a major driver of their choice• 37% of interviewees were reacting to a life change• 37% of interviewees were in replacement mode
Key Takeaways• Customer discovery is about gaining much deeper
insight into your customer, or market• Being told your ideal is cool is not useful; seeing
behavior that validates a customer’s willingness to buy is very useful
• Prepare an interview guide before you get out of the building
• To ask the right questions you need to understand your risks and assumptions
Key Takeaways• Get creative when trying to recruit people• Sometimes observation is as powerful as interviews• Take good notes, especially on key risks, so you can
calculate metrics later• Bring learning back and analyze the patterns as a
team• Never stop asking hard questions about your business
Step #2: Select One Beach Head Market
Select One Beach Head Market
Step #3 – Build an End User Profile
Step #3: Target Customer Profile
Step #3: Target Customer Profile
Step #4: TAM Sizing for 1st MarketMake a first pass TAM (Total Addressable Market) calculation for your beachhead market. This is how much annual revenue there is available to you for your product if you achieved 100% market share. This is only for your first market which you should be able to do with some clarity. The strong preference is for a bottoms up type of analysis where you can show from your primary market research how many of the potential customer you have identified and then extrapolate this to the broader market. Complementary to this but much less compelling on its own, is a tops down analysis where you are working with market analysis reports and extrapolating without direct interaction and validation. Often, very important subtleties are missed in tops down analysis.
Step #4: TAM for BHM
Women in the US
157 M
Pregnant Annually
6 M
First Time Moms
2 M
Photo: visualphotos.com
Share via social media
Technology Savvy
Want convenience
Connect with family and friends
Extend her excitement
Share monthly pregnancy photos
IntuitiveComfortable to wear
Update her care network
Capture pregnancy experienceUse mobile “apps” to track health
Indications
Low maintenance
Real-time feedback
Easy to use
TAM Sizing Example: inTouch
In the US, there are 2 Million women like Michelle
Connecting mommies with their babies
inTouch
BUT NOT ENOUGH…NEED TO GET TO $’S PER YEAR!
Step #5: Persona
Step #5: Persona
15.390 NEWENTERPRISES
DISCIPLINEDENTREPRENEURSHIP
18-40 years old
Urban (Europe, Russia)
Middle manager
Single
Brand conscious
OutgoingWeekend traveler
Open minded
University degree
Adventurous
Persona Example: Good enough?
Budget Boutique Accommodation
anotel ANSWER: WAY TOO GENERAL
15.390 NEWENTERPRISES
DISCIPLINEDENTREPRENEURSHIP
33 years oldMale
Lives on Kutuzovskiy Prospect in Moscow
Recently moved into his new flat with his girlfriend
Works at VTBInvestment Banking
Current salary is USD 10.000/ month
Loves Strelka and Ginza Projects
In winter he loves skiing in Austria or France
In summer he travels around the whole world
Loves esquire,Forbes, afisha, pop, GQ
“I am Vlad”
Vlad needs some paintings for his new apartment.
Little time
He likes to try out new things and talk about it
He wants to be unique
Persona Example: eGallary – Better?
Timeless art. Less time, more art.
ANSWER: BETTER BUT NOT GOOD ENOUGH
Persona Example - Best
15.390 NEWENTERPRISES
DISCIPLINEDENTREPRENEURSHIP
Meet Carolina37 Year Old, Cuban American
Has two children: Maria and Esteban
Moved to the U.S. 10 years ago
Lives in Milwaukee, WI with her family
Works part-time in a coffee shop
15.390 NEWENTERPRISES
DISCIPLINEDENTREPRENEURSHIP
Carolina’s PrioritiesMy family is the most important
thing for me I want a better future for my
children
How can I help my children to get into college, when I
never went?
Key to Persona Development
Questions?