42629 lecture 5 pt 3

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42629 lecture 5 pt 3

  1. 1. Integrated Product DevelopmentForecastingJakob A. Bejbro Andersenjaban@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 Jakob A. Bejbro Andersen for course 42629 – Innovation and ProductDevelopment Department of Mechanical Engineering, The Technical University of Denmark”
  2. 2. ForecastingRealizing the potential
  3. 3. Introducing the hockeystick- A market potential has no value to investors in itself.- There has to be a credible plan for realizing this potential.- The following questions need to be answered: - When will you start selling? - When will ”break even” be reached? - When can the investor achieve an ”exit”? - How much can the shares be sold for? Financial Balance Time3 Original material by Jakob A. Bejbro Andersen for course 42629 – Innovation and Product 2012 Development Department of Mechanical Engineering, The Technical University of Denmark
  4. 4. Requisites for the hockeystick (exponential growth)• A solid execution strategy. – Segment 1, then 2, then 3 ... (remember the bowling pins)• A good knowledge of the customer / market.• A credible sales approach.4 Original material by Jakob A. Bejbro Andersen for course 42629 – Innovation and Product 2012 Development Department of Mechanical Engineering, The Technical University of Denmark
  5. 5. The lifecycle of a market (segment)• Unexploited markets tend to have the following characteristics: – Early stage sales; driven by enthusiasts, lack of track record. – Breakthrough; track record established, sales increasing drastically. – Business as usual; Market saturated, few new customers. Sales rate Market saturation Early stage sales Breakthrough Business as usual Time5 Original material by Jakob A. Bejbro Andersen for course 42629 – Innovation and Product 2012 Development Department of Mechanical Engineering, The Technical University of Denmark
  6. 6. Planning for continued growth• As capital (liquidity) and track record is established…• … the basis is formed for going into new segments.• The specific strategy for entering into new Seg 5 segments is a key parameter for investors. Seg 4 Seg 3 Seg 2 Seg 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 186 Original material by Jakob A. Bejbro Andersen for course 42629 – Innovation and Product 2012 Development Department of Mechanical Engineering, The Technical University of Denmark
  7. 7. Projecting sales• Sales are key as they validate the market for the offering.• Investors rate sales over any other dimension.• As with market estimates, there is a top down and a bottom up approach. – Again, it is beneficial to use both approaches. SALES7 Original material by Jakob A. Bejbro Andersen for course 42629 – Innovation and Product 2012 Development Department of Mechanical Engineering, The Technical University of Denmark
  8. 8. Choosing a sales approach• Business to Business sales (B2B) – The same product can be sold to different levels of an organisation. – As a general rule: • Higher in organisation you find more purchase power, but longer sales cycles. • Lower in the organisation you find smaller budgets, but shorter time from introduction to actual purchase. – Exceptions are however many: • Strategic level can be used to push through sales • The operational level can be to hung up on formal requirements.• Business to Customer (B2C) – Through distributor/partner. – Direct sales. – Web portal.• Composite models (B2B/B2C) – Facebook, adwords etc.8 Original material by Jakob A. Bejbro Andersen for course 42629 – Innovation and Product 2012 Development Department of Mechanical Engineering, The Technical University of Denmark
  9. 9. Exercise 5a:(You are still with the brewery)For one of the identified segments:Identify two or more sales approaches:1. _________________________2. _________________________3. _________________________4. _________________________• How will you sell your own idea?9 Original material by Jakob A. Bejbro Andersen for course 42629 – Innovation and Product 2012 Development Department of Mechanical Engineering, The Technical University of Denmark
  10. 10. Projecting sales (bottom up)• Describe sales going from day to day• What steps need to be taken for each sale to be made? • Which resources does it require? • How can the resources required be minimised? Establish contact Create materials Specify solution Formulate quotation Negotiate terms Sale! Wk 1 Wk 2 Wk 3 Wk 4 Wk 5 Wk 610 Original material by Jakob A. Bejbro Andersen for course 42629 – Innovation and Product 2012 Development Department of Mechanical Engineering, The Technical University of Denmark
  11. 11. To be reducedThe sales funnel (bottom up II) Number of Time usage candidates T1 hours First meeting per meeting First meetings N Qualification T2 hours per lead T3 hours Purchase per lead order N/10 (?)11 Original material by Jakob A. Bejbro Andersen for course 42629 – Innovation and Product 2012 Development Department of Mechanical Engineering, The Technical University of Denmark
  12. 12. Exercise 5b:For one of the identified sales approaches,list important tasks:Task 1: _________________________Task 2: _________________________Task 3: _________________________Task 4: _________________________Task 5: _________________________•What tasks will be important for your own product?12 Original material by Jakob A. Bejbro Andersen for course 42629 – Innovation and Product 2012 Development Department of Mechanical Engineering, The Technical University of Denmark
  13. 13. Projecting sales (top down)• To get a reality check on sales figures, a number of approaches can be used: – Check media for sales intel (companies like to boast). – Look adoption rates in for similar products/services.• As a venture company, you should be ambitious: – ”We expect to match or even beat on the sales figures of Company X” – If you are no better than your competitor – why enter the market?13 Original material by Jakob A. Bejbro Andersen for course 42629 – Innovation and Product 2012 Development Department of Mechanical Engineering, The Technical University of Denmark
  14. 14. EDGEFLOWEDGEFLOWSales forecasting (slides courtesy of EdgeFlow Aps)
  15. 15. EDGEFLOWSales forecast - bottom upBased on sales to strategic level in large companies.Motivation for sales approach (to strategic level):• Selling to as high a level as possible• Enables us to add CSR arguments to sales pitch• Requires limited sales force (favourable at an early stage)Procedure-Proces validated with sales experts.- Milestones and target sales # validatedwith customers (where possible)- Projected hit rate (8-12%) Sales forecast excel sheet
  16. 16. EDGEFLOW Sales forecast – top down Based on sales to strategic level in large companies. Procedure - Identify competitors Comp 1, Comp 2 and Comp 3 (wind turbine manufacturers) - Look for mentioning of sales figures in media (Comp 1 shown as example). - Build sales history and projection from data obtained. ”…ramps up ”…Large order production to 30 with local utility units per month” – 10 turbines”…40 units sold” ”Comp 1 enterssold in first 8 DE market – 15months of units alreadyoperation…” sold” ”Comp 1 lands Year in framework agreement w…” market Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6
  17. 17. Q?17 Original material by Jakob A. Bejbro Andersen for course 42629 – Innovation and Product 2012 Development Department of Mechanical Engineering, The Technical University of Denmark
  18. 18. Focus for Fridays Group Work (double diamond)• Work on specifying and rating segments.• Knowledge of customer needs required– how will you obtain it?• Start formulating your value proposition.18 Original material by Jakob A. Bejbro Andersen for course 42629 – Innovation and Product 2012 Development Department of Mechanical Engineering, The Technical University of Denmark

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