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Path To Market M4 Presentation Transcript

  • 1.
    • Module 4
    • Go to Market &
    • What’s the Business Model
    • Graham Royce 2009
  • 2.
    • Your Plan of Attack
    • Relationships
    • Routes Channels Distribution
    • Map Your Channels
    Go to Market
  • 3.
    • Pharmaceutical - pre clinical development cycles, clinical trials, governments approval, regulations
    • Telecommunications - carriers resell voice and data services to whole sale intermediaries
    What’s Your Path to Market Map this out and it will reveal players in the value chain All industry sectors have a rhythm
  • 4. Routes Relationships for Commercialisation
    • The Route
        • The path your product will take from manufacturer to customer
    • The Relationship
        • Will create value between organisations along that path
    • Create Value
        • Added value can be done in several way’s – This session
    Articulating this path to market gives investors a look at potential opportunities of your idea
  • 5.
    • Chapter 4 recap Categories, Segments, Lead customers
        • Starting point
    • Who’s the customer
        • You should have identified targets (segments) & (ranked)
    • Map out the game plan
        • Go after each segment at the right time
    Your Plan of Attack
  • 6. PORTABILITY PROCESSING CAPABILITY Workstations Desktops Notebooks Handhelds PDA’s Smartphone's Predicted Growth Of the Smartphone Category Circa 2005 Recap on Category & Segments Example possible growth area Wendy Kennedy “So What Who Cares Why You”
  • 7. Definers Context Compatibility Descriptors Segment Definers Commuter trains Commute time QTY travellers Demography % business travellers Context How will the customer Use the product/service E ticketing Train status monitoring Passenger internet access Descriptors Government funded Reduce operational costs Revenue generating services to Passengers on board Buying group Rail commissioners Rail engineers Procurement specialist Compatibility With existing platforms Propriety rail legacy systems Rail certification safety in all Area’s
  • 8. Definitions
    • Industry (Diagram 1A)
          • Raw materials (Mining & Farming)
          • Refining – Manufacturing (Crude Oil - Chips)
          • Services (Law & Medicine)
          • Technological research, design and development. (Uni Colleges – Corporate R&D - Legal)
    • Market
          • A broad landscape of buyers looking to solve different problems
            • (Medical Market)
    • Customer Segments
          • Are groups of customers who reference each other
          • (Teaching Hospitals – Medical diagnosis – Cardiac Care – Private Clinics)
            • Auto groups
            • Travel industry
            • Accountants
    • Lead Customers
          • Often called early adopters – Innovators in a segment
          • Often lead the way Specific
          • (Teaching hospitals – Private clinics)
            • Ford Car set up the first production line – wasn’t their idea RR
            • However all followed suit
            • New companies set up supplying production line
            • Materials.
  • 9. Diagram 1A
  • 10. Raw Materials Transport Processing Forming Assembly Distribution Sales Service What’s your value chain? What are the margins in each link? Where are your competitive strengths? Where is your strategic intent? Value Chain G.Royce 2007
  • 11. Adapted from Michael Porter, Competitive Advantage , Free Press, New York, 1985, p. 46 Another Example of a Generic Value Chain This could be looked at as and Ecosystem Inbound Logistics Operations Outbound Logistics Marketing & Sales Service FIRM INFRASTRUCTURE TECHNOLOGY DEVELOPMENT HUMAN RESOURCE MANAGEMENT PROCUREMENT Margin
  • 12.
    • This is about timing to go after segments
    • A phased approach
    • Investors seek mitigated risk
    • They like to see a disciplined plan to tackle the market
    • Investors like growth plans beyond one customer segment
    Investors & Your Plan of Attack Adoption Curve with your phases of your path to market Worksheet 5(A) Everett M Rogers 1962
  • 13.
    • The next stage
    • Route and Channels
  • 14.
    • Definition of Channels of Distributions
    The Route A Channel is A route taken by a product as it moves from manufacturer to end user A Channel Map Helps you see who is involved
  • 15.
    • Channel Map for a Software Vendor
    A Channel Map Hosted Software Provider Enterprise Customers Small/Medium Sized Businesses Small/Medium Sized Businesses Enterprise Integrators Large Account Resellers Value Added Resellers Resellers Distribution Direct Sales Wendy Kennedy “So What Who Cares Why You”
  • 16. Phases of Your Path to Market #2 #3 #1 Category Leadership Segment Attack Plan Lead Customer (Early Adopters) Name Each Target Segment Wendy Kennedy “So What Who Cares Why You”
  • 17. Your Plan of Attack Lead Customer (Early Adopters) Segment Attack Plan Category Leadership Timing Timing Timing 5. 4. Measure of Success Measure of Success Measure of Success 3. 2. 1. Major Initiatives Major Initiatives Major Initiatives Top Five Customer Targets
  • 18.
    • Choices
      • Market validation
      • Prove the business model
      • Early access partners
      • Visibility / Awareness
      • Signed customers
      • Whole product readiness
      • Building a channel
      • Major account focus
      • Channel expansion
      • Strategic partnership
      • Licensing
    Key Thrusts
  • 19.
    • Mapping the Relationships unlocks
        • Suppliers
        • Resellers
        • Competitors
      • Both
        • Upstream &
        • Downstream
    • of your
    • Value Chain
    Relationships
  • 20.
    • The Most Common Types
    • Technology
    • Sales
    • Business Development
    • Marketing
    • Product
    Relationships Map Out Relationships
  • 21.
    • Example Mobile Wireless Market
    Worksheet 5(B) Access Point Cisco Cellular Wireless Satellite Bell Antenna Raysat Component Devices PDA - Centrino Mobile Equipment Cisco Equipment Integrators IBM Carriers Vodafone O2 – BT - Orange Mobile WISP O2 Vodaphone WISP O2 - BT Eircom Service Provider Workplace Operator UPS, Police Local Government Mobile Operator ? Facility Operator Starbucks Hilton Operator Mobile Workplace Emergency - Fleet Coach Mobile Hotspots Rail - Bus Car Public Hotspots Coffee Shops - Hotels Airports – Railway Etc Location Provider Specific Type of Business and Company Name Value Chain
  • 22.
    • How does the customer prefer to buy?
          • It may not be from you (Books – Newspapers – prepared goods – central suppliers)
    • How complex is you product?
          • Out of the box or
          • Does it require more – service – training – development
    • How scalable is your channel strategy?
          • Will it allow you to reach your revenue projections
    • How much services and support is required?
          • Can a third party do it
    • Do you enable or add value to other products in the market?
          • What channels are used to sell those products
    • What do you require from your channel members?
          • Consider storage, service, value added, bundling etc
    • How much margin can you afford to pay fore these benefits
          • Value chain
    A Channel Map Checklist Worksheet 5(C)
  • 23. Some Lessons on Channel Building Lesson1
    • You Can’t Push on a Rope
    • Like markets, channels evolve over time
    • New ideas in early markets have fewer channel options than established ideas in mature markets
    • Most channel partners will see you as a risk, but …
    • There are always a few early-access partners seeking out innovative products
  • 24.
    • It’s All About Traction
    • Getting traction is the #1 goal for new ideas
    • Remember, you’re an unknown: Who’s willing to bet on you?
    • Partners can give you access to the market and visibility to customers
    • This won’t often mean lots of money at first – but it means credibility and traction
          • Witness: Intel and IBM both have histories of partnering with early-stage companies in emerging markets .
    Lesson 2
  • 25.
    • You Get What You Give
    • It takes time and energy to ignite a channel
    • Start with a few relationships and get them rolling:
    • Training, support, hand-holding, marketing tools
    • Showcase your visibility:
        • Press coverage, case studies, customer wins, etc.
        • Create a relationship you can replicate – scalability is key when channel building
    Lesson 3
  • 26.
    • Out of Sight = Out of Mind
    • Gaining channel mindshare matters
    • Strike a chord with your channel
    • Start with a specific project you both care about and show early wins
    • Find ways to work together; don’t create islands
    • Respect the insight into the market and customer that your channel has; then respond!
    Lesson 4
  • 27.
    • Leave Nothing to Chance
    • Be clear about your expectations
    • What is it you both want?
    • Do you agree on:
    • Customer/sales priorities
    • Business model
        • Investment of time, money, people
        • Timelines/expectations/milestones
        • Write it down and sign it off
    Lesson 5
  • 28.
    • Investors
    • The real burning question is
    • Can your idea make money?
    • Business Model & Financial Forecast
    Where’s the Money Profit?
  • 29.
    • Defining Your Business Model
        • First step to getting investor money
        • Mapping the direction your business will take
    • Give Your Business Model a Backbone
        • Financials NOT LOGO’S
    • A sample Model for Licensing
    • Test Drive Your Model
    • Back Pocket Metrics
    Where’s the Money
  • 30.
    • You need to show a clear mechanism by which you will generate revenue and profits
    • which includes
    • Financial forecast of the investment that will be required
    Business Model
  • 31.
    • It will be influenced by
        • Your choice of commercialisation path
    • It must show the value proposition
        • Diagram 1B
    • It must show
        • External factors – Market/Customer readiness
        • Internal factors – can you support your idea
    Business Model continued The business plan must show the financial opportunity and payback scenario
  • 32. Value Proposition A Value Proposition Diagram 1B AMCS Ltd The Offering Key Value Features Values What is offered Market Description Competitors Domain Customers To who Selling Points Business Model Pricing How it makes money
  • 33.
    • It’s a tool used to determine if and when value can be extracted from your idea
    Business Model continued Types of model Bait to hook model VOIP Free but selling premium services Flea market model for online community multiple small charges Content Portal Information in one spot – advertising fees
  • 34.
    • How will you make money ?
        • Skype & eBay show payback very simply September 2005
        • Skype & eBay show two separate methods but have joined forces to create further added value.
        • Yahoo & eBay strategic alliance May 2006
    • Investors will put in significant time into evaluating the business model
    • Will the business model deliver return on investment (ROI)
    • Research and explore differing models to find the right one for you
    Defining your business model
  • 35.
    • Some types of business model for consideration
    How will you make money Auction Fee from bringing buyers and sellers together Bait & Hook Something for free build customer base sell other products Bricks and Clicks Off & On value added services airlines car hire Content Portal Advertising fees - bring information together charge a fee for use Licensing Charge per user etc software Loyalty Rewards programme commitment to vendor products Subscription Rent out period of time
  • 36. General business models
    • The multi-level marketing business model ( Referral system )
    • The network effects business model ( The band wagon effect )
    • The monopolistic business model ( Microsoft )
    • The cutting out the middleman model
    • The collective business models ( Cooperatives )
    • The industrialization of services business model ( McDonalds )
    • The low-cost carrier business model ( Ryanair )
    • The premium business model ( BMZ Rolls Royce )
    • The direct sales model ( Insurance )
    • The professional open-source model ( Linux )
    • Various distribution business models ( Supply chain )
  • 37.
    • What is the time to revenue
        • What’s yours and their commitment to time
        • How soon will you meet your financial targets
        • When will you be profitable
    • What is the growth curve
        • Investors will want to understand your growth plans
        • Do you have new markets – products – support services
        • You must show growth plans if you are seeking investment
    Building your business model
  • 38.
    • Detailed financial forecasts is the backbone of the BP
    • Does the Business Plan / model translate into:-
          • Revenue
          • Cashflow
          • Profits
    • Build the above on solid data gathered from credible industry sources
    • Make any assumptions realistic and logical
    Give your business model backbone
  • 39. Data points for building your financial forecast
    • Your sales assumptions
    • Customer interviews and competitive research
    • Bottom sales forecasting
    • Number of customers you plan to acquire and by when
    • Revenue per customer
    • Revenue forecast – by month quarter and 5 year projection
    Your Customer
    • Industry research reports
    • Industry associations
    • Size – The number of potential target customers
    • Adjacent Segments
    The segment
    • Sector/industry research reports
    • Customer associations
    • Government web sites with industry stats
    • Total available market, your addressable market and annual growth rate
    The Market Tips & data Sources Data Points Topic
  • 40.
    • Logical assumptions based on factors above
    • Check online portals for headcount costs and staffing benchmarks
    • A plan for how the management team will evolve
    • Headcount growth, including costs and timing
    People
    • Industry standard ratios – find these on web sites and other sources provided by banks, consulting, management and accounting firms.
    • Anticipate operational expenses
    • Anticipate sales, general and administrative expenses
    Operations, Sales, General & Administrative (SG&A) Expenses
    • Use assumptions to build out a year by year forecast
    • Number of sales reps & when they will be hired
    • Number of channel partners recruited and at what margins
    Channels
    • Express these assumptions
    • Populate your spread sheet so you can manipulate the numbers “What if” scenarios
    • Unit pricing
    • Cost of goods sold
    • Channel margins
    • Gross Margin
    Price & Cost
    • Express this in units and in euro
    • Show month, quarter, and year views
    • Break it down by each product
    • Number of new products introduced
    • Number of installations
    • Revenue steams
    Product Tips & data Sources Data Points for building financial forecasts Topic
  • 41.
    • What is the anticipated time to market?
          • How long will it take to commercialise your idea
          • What is the date and stick to it.
    • What should the scope of the license include?
          • Should it be and exclusive license or non exclusive
          • Should there be limits on the field of use
    • Should there be geographic limits on the license?
    • What costs need to be recouped?
          • What development and other costs must be considered
    • What is the ideal way to structure financial payment of the license? Should the financial payment included
          • An upfront payment for ongoing royalty stream
          • A minimum annual royalty which must be paid regardless of the amount of sales; or
          • Depending upon the amount of additional R&D required, the license may provided a royalty holiday for the first few years
    • What are the terms, conditions, and timelines for the agreement
    Questions a model for licensing should answer
  • 42.
    • You and your team will be required to provide knowledge transfer and support. So, you need to scope out:
      • The costs (people and other) required to support the idea.
      • The time you and your team will need to spend on knowledge transfer
    Support Resources
    • What access does the licensee expect to have to any improvements made to the IP
    • What about the newly developed but related IP and know how?
    R&D investment
    • Costs (development and other) incurred to date
    • Money already invested in the idea
    • Additional investments required prior to licensing
    Costs
    • An estimate of the currency potential based on the opportunities
    Revenue potential
    • What is the Licensee’s current market coverage
    • Will the licensee’s distribute the idea globally
    • Does the licensee plan to enter new markets
    Path to market
    • What product(s) will the idea become part of
    • The forecasted sales volume
    • List prices of the final products
    • Can you bundle your IP with other IP to improve or increase the value?
    • Be sensitive to the licensee’s motivation. Ensure it is not defensive licensing
    Product line fit
    • Who will maintain the patents? Costs?
    • Is the IP in good standing in the event the licensee wants to perform due diligence?
    IP
    • The different fields of use for the idea
    • The different customer segments where the idea would be used
    • The incremental value of the product the end customer attributes to the new idea
    Customer Segment Licensing Data Points Topic
  • 43.
    • Main Test
      • Is for the business model to be consistent with the rest of the business plan
    • Present the business model to trusted advisors
      • Face to face
      • Let the trusted advisors read it check it with out you present to make sure all is crystal clear
    Test drive your business model
  • 44.
    • What’s your addressable market size?
    • What percentage of this market do you plan to own and when?
    • How much money do you plan to get from each customer each year?
    • What is the 3 to 5 year financial forecast?
    • What is the
      • Time to market?
        • To revenue?
          • To be cash flow positive?
            • To be profitable?
    Some Back Pocket Metrics
  • 45.
    • Questions to me
    • [email_address]
    Your turn