Targeting Customers Launching New Ventures University of Oregon

Agenda Housekeeping announcements Loose ends: Passion, business models, disruptive technologies, industry analysis Mini-lecture: Targeting Customers Break Video & discussion

Housekeeping announcements

Loose ends: Passion, business models, disruptive technologies, industry analysis

Mini-lecture: Targeting Customers

Break

Video & discussion

Follow your passions

Industry Analysis

Morphing Your Business Model Two of today’s online readings focused on business model flexibility: “ Technology: It’s All About Your Customer” How serving lobstermen in Maine led to the evolution of Seafax “ Keeping Your Business Model Flexible” Recommends continuous morphing “ Flexibility Test” provides some very useful tips

Two of today’s online readings focused on business model flexibility:

“ Technology: It’s All About Your Customer”

How serving lobstermen in Maine led to the evolution of Seafax

“ Keeping Your Business Model Flexible”

Recommends continuous morphing

“ Flexibility Test” provides some very useful tips

Web 2.0 impacts business models “ The Perfect Storm” (excerpt from Wikinomics ) Story about how public awareness of how Sony’s DRM software was invading PCs went viral on Cory Doctorow’s blog. “ Business models that depend on bits not being copied are just dumb … lawmakers who try to prop them up are like governments that sink fortunes into protecting people who insist on living on the slopes of active volcanoes .” Evolution of the Internet: Web 1.0 – digital newspaper & library Web 2.0 – a massive computing platform w/ open-source code, evolving communities, and user-produced content.

“ The Perfect Storm” (excerpt from Wikinomics )

Story about how public awareness of how Sony’s DRM software was invading PCs went viral on Cory Doctorow’s blog.

“ Business models that depend on bits not being copied are just dumb … lawmakers who try to prop them up are like governments that sink fortunes into protecting people who insist on living on the slopes of active volcanoes .”

Evolution of the Internet:

Web 1.0 – digital newspaper & library

Web 2.0 – a massive computing platform w/ open-source code, evolving communities, and user-produced content.

Analyzing Customers

Market / Customer Analysis Most important piece of your plan Build on industry analysis – define your niche Identify your customers Demonstrate how you will solve problems for customers Describe how you will reach customers – advertising, sales Convince reader that there is an eager market for your product or service

Most important piece of your plan

Build on industry analysis – define your niche

Identify your customers

Demonstrate how you will solve problems for customers

Describe how you will reach customers – advertising, sales

Convince reader that there is an eager market for your product or service

Target Market Strategy Identify the market niche you will serve Be as specific as possible Better to be too specific Benefits to target market What problems do you solve? What needs do you fulfill?

Identify the market niche you will serve

Be as specific as possible

Better to be too specific

Benefits to target market

What problems do you solve?

What needs do you fulfill?

Nectar of the Geeks

Vice Fund url

Three Types of Benefits Emotional Hope, fear, love, guilt, greed, convenience Financial Increased profit, value pricing, save money, payback period Utility Convenience, speed, comfort, etc.

Emotional

Hope, fear, love, guilt, greed, convenience

Financial

Increased profit, value pricing, save money, payback period

Utility

Convenience, speed, comfort, etc.

Talk to Your Customers Imperative that you talk with customers! Casual conversations Interviews Surveys Focus groups Identify needs Listen!

Imperative that you talk with customers!

Casual conversations

Interviews

Surveys

Focus groups

Identify needs

Listen!

Target Market Questions What buy now? / How get service? Would you be interested in …? Would you buy? Where would you expect us to advertise? Who do you consider our competition? Other comments? Levinson, “Guerrilla Marketing” 3rd edition

What buy now? / How get service?

Would you be interested in …?

Would you buy?

Where would you expect us to advertise?

Who do you consider our competition?

Other comments?

ED: Chapters 6 & 18: Building a customer focus Are you careful to treat all of your customers the same? If you do, you’re wasting time and money! Instead, spend most of your marketing dollars on the 24 percent of your customers who provide 95 percent of your revenue.

Are you careful to treat all of your customers the same?

If you do, you’re wasting time and money! Instead, spend most of your marketing dollars on the 24 percent of your customers who provide 95 percent of your revenue.

Retaining customers Do you focus on keeping your customers? You should! Most companies lose about 25 percent of their customers per year. Acquiring a new customer usually costs about 5 times as much as keeping an existing one -- so there’s a lot of money going down the drain!

Do you focus on keeping your customers?

You should! Most companies lose about 25 percent of their customers per year. Acquiring a new customer usually costs about 5 times as much as keeping an existing one -- so there’s a lot of money going down the drain!

Who is this guy? The Pitchman …

The Pitchman …

Discussion Questions People often poke fun at Ronco products, but they sell like hotcakes. What makes these products such good business opportunities? What is Ron’s “secret sauce” -- i.e., what are the factor(s) that have made him such a remarkable success?

People often poke fun at Ronco products, but they sell like hotcakes. What makes these products such good business opportunities?

What is Ron’s “secret sauce” -- i.e., what are the factor(s) that have made him such a remarkable success?

Discussion Questions What is the Ronco organization like? How does this organization structure fit with the firm’s strategy? How do opportunities like those Ron dreams up compare with the “dot-com” startups we saw during the internet bubble? What’s different?

What is the Ronco organization like? How does this organization structure fit with the firm’s strategy?

How do opportunities like those Ron dreams up compare with the “dot-com” startups we saw during the internet bubble? What’s different?

My favorite Popiel quote: “ We got Veg-O-Matics for $3.42 wholesale. They retailed for $9.95, and we sold them to the stores for $7.45, which means we had four dollars to play with.” “ If I spent a hundred dollars on TV, I had to sell 25 Veg-O-Matics to break even.” If you understand this analysis, you understand the essence of new venture finance!

“ We got Veg-O-Matics for $3.42 wholesale. They retailed for $9.95, and we sold them to the stores for $7.45, which means we had four dollars to play with.”

“ If I spent a hundred dollars on TV, I had to sell 25 Veg-O-Matics to break even.”

If you understand this analysis, you understand the essence of new venture finance!