Lecture 8: Market Research Techniques - Part 2


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In this lecture, Poornima digs into lifestyle marketing and certain market forces to consider when launching a new product.

You can watch the lecture here: http://youtu.be/uYEdAvJchT4

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Lecture 8: Market Research Techniques - Part 2

  1. 1. Duke ECE 490L: How to Start New Ventures in Electrical and Computer Engineering Poornima Vijayashanker poornima@femgineer.com Jeff Glass jeff.glass@duke.edu Akshay Raut ar118@duke.edu 1
  2. 2. Review Duke ECE 490L • Risk • Positioning • Competitive Analysis • Differentiation Techniques • Goal: Identify and Attract Early Adopters 2
  3. 3. Announcements • Lab 2 is up! • http://femgineer.com/duke-ece-490l-labs • Get started early! • There are 3 assignments that need to be completed by lab period on week 7. • Durham Startup Scene Duke ECE 490L 3
  4. 4. Idea Summary 4
  5. 5. Agenda • More on positioning! • Digging into the Competitor • Horizontal vs. Vertical Market • Substitutes • Secondary Markets • Point Tool vs. Integrated Solutions • Customer Discovery Duke ECE 490L 5
  6. 6. Duke ECE 490L Still no building... 6
  7. 7. Duke ECE 490L Know thy enemy. 7
  8. 8. Duke ECE 490L To thy own self be true. 8
  9. 9. Dig Deeper into Competitor • Product Line • What are the various product lines and which customers does it appeal to? • Do they have the entire spectrum? Loss leader, mid-range, and high-end • All-in-One product that isn’t well suited to a particular segment? • Do they have a process in place for upselling? • Anticipate areas of growth • If they are strong, where do they appear to be heading? • If they are weak, where do they appear to be heading? Duke ECE 490L 9
  10. 10. Case Study: Mint v. Quicken • Who they chose to neglect? • Mac Users • What didn’t they get? • Packaging • Market is moving away from shrink-wrapped software • Ease-of-Use Duke ECE 490L 10
  11. 11. Case Study: Mint v. MS Money • Who they chose to neglect? • Mac Users • What didn’t they get? • Packaging • Market is moving away from shrink-wrapped software • Ease-of-Use • Sunset in June 2009 Duke ECE 490L 11
  12. 12. Takeaways • Understand market trends • Packaging • Ease-of Use • Adoption based on other factors e.g. web, mobile • Understand neglected or up-and-coming user base and their needs Duke ECE 490L 12
  13. 13. Duke ECE 490L Create an image or identity in the minds of the target market. Occupy a position in a prospective customer’s mind - one that reflects company’s strengths and weaknesses as well as those of the competitor. 13
  14. 14. Duke ECE 490L Re-positioning: changing identity of a product, relative to competitor. e.g. luxury line. 14
  15. 15. Duke ECE 490L vs 15
  16. 16. Duke ECE 490L 16
  17. 17. Lifestyle marketing. Duke ECE 490L 17
  18. 18. Duke ECE 490L Lifestyle marketing: a brand attempts to embody the values and aspirations of a group or culture for the purposes of marketing. 18
  19. 19. Duke ECE 490L 19
  20. 20. Early adopters embrace change. Duke ECE 490L 20
  21. 21. Open to a new way of life. Duke ECE 490L 21
  22. 22. Horizontal vs. Vertical Markets Duke ECE 490L 22
  23. 23. Horizontal Market • Solves a BIG problem • Large base of customers whose needs are the same • Usually a strategy for a larger company that can spend a lot of money marketing • Create a single product or have upselling opportunities • May neglect nuanced needs of subgroups Duke ECE 490L 23
  24. 24. Vertical Market • Niche market • Product that appeals to a particular group, and has a specialized use case • Avoids product from becoming commoditized Duke ECE 490L 24
  25. 25. Benefits of Vertical Market • Clear value proposition • Build a loyal following • Product maybe specialized but hard to replicate • Product can be subsystem for a larger product • Product can be later “re-skinned” for other verticals Duke ECE 490L 25
  26. 26. Case Study: AeroVironment • Two technologies: unmanned aircraft and charging systems for electric vehicles • Seems like a niche market • Products used in subsystems for larger mainstream and horizontal market products • Mainstream is also starting to adopt technologies Duke ECE 490L 26
  27. 27. Substitutes. Duke ECE 490L 27
  28. 28. Substitutes • Are they part of the target market? And by how much? • Do they reflect a particular behavior? • Can you transition people from using substitutes into using your product? Duke ECE 490L 28
  29. 29. Secondary markets. Duke ECE 490L 29
  30. 30. Competitors Own Reselling Market • e.g. “Apple authorized reseller” • Does this capture another position? e.g. lower end or higher end Duke ECE 490L 30
  31. 31. Competitors Integrating into Larger Systems • Do they supply other vendors? • Are the vendors happy with them? • Are the vendors open to trying out a new product? • Are the vendors locked into a contract or have exclusive limitations? Duke ECE 490L 31
  32. 32. Competitors Pricing and Distribution Schemes • One-time use vs. contracts vs. upgrades • Is there lock-in? • Competition in product placement • Your product is too similar? • Your product is unknown and there is risk involved with selling it. Duke ECE 490L 32
  33. 33. Point Tool v. Integrated Solution Duke ECE 490L 33
  34. 34. Point Tool v. Integrated Solution • Can you begin by partnering with a competitor? • What are the limitations for building on their platform? • e.g. Facebook Apps • What will it take to then displace their product? • What will it take to transition to your own platform? Duke ECE 490L 34
  35. 35. Case Study: Mint.com • Initially integrated with third party solution: Yodlee for data • Quality of data limited potential • Eventually began build in-house data solution Duke ECE 490L 35
  36. 36. Market research is one part in leading to customer discovery. Duke ECE 490L 36
  37. 37. What if you’re in a new market? Duke ECE 490L 37
  38. 38. Duke ECE 490L Customers Market Product Features Competitors Risk Existing Market Known Known Critical Many Cost of entry; Product Development; distribution New Market Unknown Unknown, definition critical Irrelevant at first None at first (other startups) Long evangelism and education cycle Resegment Existing Market Possibly known Unknown, definition critical Critical; tied to existing market Critical, tied to existing market Market redefinition; product definition *Table 5.4 from The Four Steps to the Epiphany - Steve Blank 38
  39. 39. Other market forces to consider? Duke ECE 490L 39
  40. 40. Market Forces Duke ECE 490L • Policies: these can be non-governmental • e.g. franchise have to buy from a certain vendor • Regulations: this is government based • high barrier to entry, but once you’re in you have more protection • permits, licenses • Infrastructure: need to build additional support 40
  41. 41. Duke ECE 490L Customer Discovery Validation Customer Creation Business/Company Formation Early Adopter Pricing Product Distribution Mainstream Adopters Money for Marketing Market Research 41
  42. 42. Duke ECE 490L Customer Discovery Validation Customer Creation Business/Company Formation Early Adopter Pricing Product Distribution 42
  43. 43. Customer Discovery Duke ECE 490L • Not stage of tell me what you want • Not stage of here’s what I’ve built, will you buy it for $X • Interview to understand pain points • Focus on needs 43
  44. 44. Goals of Customer Discovery Duke ECE 490L • Goal is to valid user segments from market research to identify viable early adopters • Identify neglected segments • Verify demand 44
  45. 45. Early Adopter Characteristics to Look For Duke ECE 490L • Has or can acquire a budget. • Has put together a solution out of piece parts (substitutes) • Has been actively looking for a solution • Is aware of having a problem • Has a problem 45
  46. 46. Other “Customers” Duke ECE 490L • Decision Maker • Economic Buyer • Recommender • Influencers • Customers 46
  47. 47. Put a price on pain. Duke ECE 490L 47
  48. 48. Level of need is an indicator for adoption. Duke ECE 490L 48
  49. 49. Characteristics of Needs Duke ECE 490L • Latent Need: have a problem and know they have a problem • Active Need: they are actively searching for a solution • Vision: have an idea for a solution, might have cobbled together a solution but are prepared for a better one 49
  50. 50. Level of loyalty to an existing solution is an indicator you cannot convert immediately. Duke ECE 490L 50
  51. 51. Characteristics of Loyalty Duke ECE 490L • Need more features. • Verifying credibility. • Risk averse. • Long decision time frame. 51
  52. 52. Test across various user segments. Duke ECE 490L 52
  53. 53. Review Duke ECE 490L • More on positioning! • Digging into the Competitor • Horizontal vs. Vertical Market • Substitutes • Secondary Markets • Point Tool vs. Integrated Solutions 53