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42629 lecture 12 pt2

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Market Prototyping

Market Prototyping

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  • 1. Protovation – Market testingThomas J. Howardhttps://sites.google.com/site/thomasjameshowardhomepage/thow@mek.dtu.dk Unless otherwise stated, this material is under a Creative Commons 3.0 Attribution–Share-Alike licence and can be freely modified, used and redistributed but only under the same licence and if including the following statement:“Original material by Thomas J. Howard for course 42629 – Innovation and Product DevelopmentDepartment of Mechanical Engineering, The Technical University of Denmark”
  • 2. 9 Guesses GuessGuess Guess Guess Guess Guess Guess Guess Guess2 Original material by Thomas J. Howard for course 42629 – Innovation and Product Development 2012 Department of Mechanical Engineering, The Technical University of Denmark
  • 3. 3 2012Blank 2012, Crossing the Rubicon: Entrepreneurial education at the crossroads Original material by Thomas J. Howard for course 42629 – Innovation and Product Development Department of Mechanical Engineering, The Technical University of Denmark
  • 4. 4 2012Blank 2012, Crossing the Rubicon: Entrepreneurial education at the crossroads Original material by Thomas J. Howard for course 42629 – Innovation and Product Development Department of Mechanical Engineering, The Technical University of Denmark
  • 5. 5 2012 Blank 2012, of Mechanical Engineering, for course 42629 – Innovation and Product Development at the crossroads Crossing the Rubicon: Entrepreneurial education Original material by Thomas J. Howard Department The Technical University of Denmark
  • 6. Hypotheses Testing and Insight6 2012 Blank 2012, of Mechanical Engineering, for course 42629 – Innovation and Product Development at the crossroads Crossing the Rubicon: Entrepreneurial education Original material by Thomas J. Howard Department The Technical University of Denmark
  • 7. Determine Your Market• Should be divided into seven key parts 1. Consumption 2. Markets 3. Distribution system 4. Market entry 5. Buyers 6. Selling Arrangements 7. Prices Material from: Khaled Ayesh 2009, “How to Prepare Innovative Feasibility Study in transitional economy”, Consulting Group for Development, CGD
  • 8. 1. Consumption• What is the current consumption of the product or service?• What are the current trends in consumption? Is consumption increasing or decreasing?• How is the product or service being consumed? (Packaging, volumes)
  • 9. 1. Consumption… cont.• What is the quality of the product that is being consumed?• Who consumes the product? What are their demographics? (Age, income, educational levels, marital status, family size)• Are these demographic segments growing or shrinking?
  • 10. 2. Markets• What is the current structure of the marketplace?• Who is currently supplying these products to customers?• What will be the reaction of these firms if a new firm enters the market?• Can a firm compete with existing firms or other potential entrants?
  • 11. 2. Markets ……cont.• What are the implications for a firm who wants to expand its market? – What are the costs? – What revenues can be expected?• Where are the markets (customers) located? Are they local, regional, national, or international? What will it cost to serve them?
  • 12. 3. Distribution System• Will it be necessary to provide delivery services?• What delivery schedules will be required?• What common carrier options are available?• Should the firm provide delivery itself?• Should delivery equipment be purchased or leased?
  • 13. 4. Market Entry• How will the product or service be introduced to the market?• Will the product be marketed under the company’s name or under some other name?• What will attract buyers? (Low prices, advertising, promotion, customer service, or some other method)
  • 14. 5. Buyers• Will you sell directly to consumers or go through a “middleman” buyer?• What types of buyers will purchase the product?• Where are they located?• What product specifications will they require?
  • 15. 5. Buyers ……cont.• Have potential buyers expressed an interest in the product?• What type of purchasing commitments are buyers willing to make?• How reliable are the buyers?• What type of payment schedules will be encountered? How severely will this affect the firm’s cash position?
  • 16. 6. Selling Arrangements• What type of selling services will you need to provide?• Will you need to employ a sales force or go through a buyer?• If you employ a sales force, how many people will this require? What is their compensation plan?
  • 17. 6. Selling Arrangements ….cont.• How will they be selling the product?• What are the costs of these activities?• Should you have sales offices located throughout your geographic market area?• Why have you chosen one method of selling activities over another?
  • 18. 7. Prices• Setting a price is a critical activity in the market portion of the study.• The price must be high enough to cover all costs and provide you a profit, but low enough that customers will purchase the product or service.
  • 19. 7. Prices ………cont• To help determine the price, look at: – Past prices of the industry – Current price trends – Expectations of buyers (brokers) – Expectations of consumers – Quality levels of substitutes or competitors• These factors only help you set a price. They can’t set the price for you
  • 20. Sun cream on demand What are the burning question related to the market feasibility of this product?20 Original material by Thomas J. Howard for course 42629 – Innovation and Product Development 2012 Department of Mechanical Engineering, The Technical University of Denmark
  • 21. The burning questions about marketfeasibility of sun cream1. How much variety is required in SPF ?2. What are the primary location for sales/need?3. Will customers change their mindsets/habits?4. How many (% & Vol.) people forget to bring SC?5. What are customers willing to do to receive the product?6. What is the required dosing sizes?21 Original material by Thomas J. Howard for course 42629 – Innovation and Product Development 2012 Department of Mechanical Engineering, The Technical University of Denmark
  • 22. Choose a couple of the questions and discuss how you could test the feasibility using a prototype 10mins22 Original material by Thomas J. Howard for course 42629 – Innovation and Product Development 2012 Department of Mechanical Engineering, The Technical University of Denmark
  • 23. Protovate your market Taking your own project and your list of burning questions, design 2 market feasibility tests. 10mins23 Original material by Thomas J. Howard for course 42629 – Innovation and Product Development 2012 Department of Mechanical Engineering, The Technical University of Denmark
  • 24. Questions ?24 Original material by Thomas J. Howard for course 42629 – Innovation and Product Development 2012 Department of Mechanical Engineering, The Technical University of Denmark

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