3.3 market resarch & competitive positioning.pptx


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Part of the Steve Blank methodology of classifying markets as Existing, Resegmented and New.

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3.3 market resarch & competitive positioning.pptx

  1. 1. This presentation is made possible by the support of the American People through the United States Agency for International Development (USAID). The contents of this presentation are the sole responsibility of Rasmussen International and do not necessarily reflect the views of USAID or the United States Government. Market Research and Competitive Positioning
  2. 2. Power of Information • Strong market research • Allows you to make plans with real data • Attack big markets • Minimize competitive threats
  3. 3. Why does market size matter? • Quantify and validate the business opportunity • Paint a compelling picture of opportunity for: – Investors – Company personnel – Customers – Partners – Market analysts/press
  4. 4. Market Research Sources • Primary, direct: – Conducting qualitative interviews • Customers, • Prospects, • Suppliers & vendors • Secondary, indirect: – Published sources – General information about target market, industry, and competition
  5. 5. Primary Sources Traditionally: focus groups & interviews Now: email, online, website, panels, observation, field trials, informal beta-user groups, customer panels, interviews, survey monkey, LinkedIn, Google searches, Craigslist, …
  6. 6. Secondary Sources • Traditionally: expensive industry reports (Gartner, Forrester, IDG) • Now: publicly accessible records – Local/Regional markets & industry sectors: • Business Associations & Chambers of Commerce • Trade Associations & Industry groups • Business journals & Academic institutions – International markets, add to the above: • Chambers of Commerce of your target country • Embassies and Consulates
  7. 7. Market Opportunity • Investors want to participate in large, growing markets • Every investor asks the question: “How big is the market?” • Small market opportunity: – a family business, fundable by a bank • Big market opportunity: – upside, potentially fundable by risk capital
  8. 8. The language of “market size” • TAM - Total Addressable Market – Total number of customers or the amount of business being conducted in the market in which you participate – Everyone that could ever be to reached with your product • SAM - Served Addressable Market – The potential slice of that market that your specific product addresses – The portion of TAM you can target • SOM – Share of Market – The actual slice of the market that you expect to achieve – The subset of the SAM that you will realistically reach – Measured in either % or absolute $
  9. 9. TAM: total possible market for your product category SAM: Based on your current business model SOM: based on practical limits of your business model
  10. 10. 2M Units 1.6M Units 0.4M Units
  11. 11. Types of market intelligence • Quantitative: – Size of market – market demographics & cohorts – business characteristics, trends • Qualitative: – Understanding customer behavior, – Perceptions and buying patterns – Market opportunities & threats • Product/service features • Are expectations met/going to be met? • Perceptions on competitive advantage? • Follow up – any action items to tweak product/service?
  12. 12. Market Sizing Process Define business strategy assumptions Set timeframe and growth metrics Identify relevant analogs Model market from 3 perspectives Highlight market trends, discuss key implications  Positioning strategy - Market and customer segmentation - Critical need - Competitive differentiation  Business and pricing models  Partnership and channel strategy  3-5 years  1 year of actual market segment numbers  Annual growth rates  3-5 year CAGRs  Market penetration rates  Financial analysts  Market analysts  Trade associations  Public Co. information  Trade journals  Channel partners  Total Available Market (TAM)  Served Available Market (SAM)  Share of Market (SOM)  Marketing  Sales  Finance  Engineering  Operations Select best information sources  Products  Markets  Industries
  13. 13. Major Corporate Assumptions and Future Goals • Assumptions: – What do they believe about their reputation and capabilities? – Who are their key decision makers? Functional backgrounds? – What is their attitude toward change and risk? • Future Goals: – Financial goals (ROI, share price, sales volume?) – Incentive systems for management? – Who is on their board of directors? – What are their governmental constraints? Where can you obtain these answers? Public and private…
  14. 14. Product Positioning Positioning Methods: • By attribute – BMW known for engineering, Volvo for safety & durability • By price & quality – Walmart vs. Neiman Marcus • By application – Morning blend coffee • By user type – Johnson & Johnson baby shampoo repositioned for adult use as mild shampoo • Vis-à-vis competitor – Avis – “We’re #2 so we try harder”) • As solution provider for a specific problem
  15. 15. Positioning Measurement • Perceptual Mapping Spatial mapping of brand perception by various individuals • Positioning to a Segment includes all the options a target market has to fulfill need for a product/service, including substitute products • Positioning Map chart different products & services to enable comparison and contrast easily axes of map – price vs. quality, comfort vs. price, expertise vs. price any gaps on the map can point to areas of new product development
  16. 16. Positioning Statement Positioning statement breaks down into 4 parts: 1. Target Market 2. Your Product/Service 3. Frame of Reference/Category includes all the options a target market has to fulfill need for a product/service, including substitute products 4. Point of Difference or Uniqueness the benefit that buyers get from your product uniquely
  17. 17. Construct a “Day in the life” • This is the story telling part of what you do… • What your customers need and what they care about • How they will use your type of product/service • How they gain value • How they will be happy to pay you
  18. 18. You Typical two-axis diagram • You define the axes to show your strengths • You’re always in the top right corner
  19. 19. SWOT Diagram • Strengths • Weaknesses • Opportunities • Threats • Useful for internal and external analysis • Helps shape thoughts on competitive environment
  20. 20. Current Industry Structure (rivalry amongst competitors) Potential Entrants Customers Substitutes Suppliers Competitive Analysis: The Porter Model Who is your Competition?
  21. 21. Thinking through the Porter Model • Minimizing Substitution Effects: – How easy is it for a customer to substitute your product/service? • Minimizing Supplier issues: – How easy is it for Suppliers to drive up prices? • Reducing bargaining power of customers Current Industry Structure (rivalry amongst competitors) Potential Entrants Customers Substitutes Suppliers Current Industry Structure (rivalry amongst competitors) Potential Entrants Customers Substitutes Suppliers Current Industry Structure (rivalry amongst competitors) Potential Entrants Customers Substitutes Suppliers
  22. 22. Building Barriers to Entry • High capital investment • Specialized service delivery processes • Special distribution channels • Unique image or brand awareness • Patented or difficult to copy features • Geographical location advantages • Specialized sources of supply (supplies and labor) • Special purpose machinery or software • Special financing techniques • Experience curve knowledge Results in higher profitability and less risk
  23. 23. Research Methods QUANTITATIVE: CONJOINT ANALYSIS Helps analyze thought process behind preferences. Identify & describe levels of product attributes or characteristics. Measure relative utility and relative importance of the attributes. The relative value of product/service attributes can be analyzed statistically.
  24. 24. Research Methods QUANTITATIVE: KEY DRIVER ANALYSIS Survey method that uses statistical linear regression to measure strength of multiple attributes (variables) relative to a strategic characteristic (dependent variable). Useful in answering: • What is driving the brand it its market segment? • What would make its market share rise? • What makes a competitor’s market share rise?
  25. 25. Competitive Analysis and Frameworks • Investors ask: Who is the competition? • Capabilities: – Products and Services offered – Marketing and selling – Dealers and distributors – Facilities and locations – Operations – Technology – Overall cost position – Financial strength – Organizational culture – Managerial capacity • Strategy – Corporate portfolio and SBUs – Political ties and other special advantages – Strategic direction? Growth, harvest…?
  26. 26. Conclusion • Understand – Target market and segment, – Your industry – Your customers – Your competitors • Know how to position yourself and your products and services to pinpoint your messaging • Reduce business risk and increase revenue & profitability