Market SegmentationRobin PurohitVP of Product ManagementVERITAS Software
Who am I• 13 years experience as developer, architect,  strategic planner, PM• Telecommunication, Enterprise Computing,  N...
Product Management at VERITAS• 4 year transition from   –   Evangelism to business leaders   –   No process to formal Prod...
Market Segmentation &Business Planning• Brings focus to complex, data-rich problem   – Ensures a customer-centric view of ...
Market SegmentationCommon Pitfalls• Inwards Looking:  Segmenting by Product Offering• Relying on 3rd Parties:  Using Indus...
Market SegmentationBest Practices – Robin’s View• Assess the Market Stage• Develop a strawman with secondary research• Dis...
Assesssing the Market Stage  Using a Market Life Cycle ModelMarket Creation   Mkt Development Mkt Exploitation   Market Su...
Assesssing the Market Stage   Fibre Channel Storage & 3COM circa 1997 Market Creation    Mkt Development Mkt Exploitation ...
Strawman SegmentationFC Propositions• Sources to develop strawman  –   Industry groups  –   Peer discussions  –   Technica...
What the Research Revealed• Process:  – Mediated blind focus groups to develop impartial view  – Not extensive : 8 cities ...
Self-AssessmentNew Market, No Credibility• Internal soul-searching and executive interviews   –   Where is the company’s s...
Refined SegmentationOEM Channel• Through direct discussions with OEM prospects  –   PC Server  –   UNIX Server  –   Enterp...
Market Attack   Pricing Dynamic & Strategy Refinement Market Creation      Mkt Development Mkt Exploitation         Market...
How did the market play out?     3COM imploded, but….  Market Creation     Mkt Development Mkt Exploitation        Market ...
How to use Segmentation across    Market Life Cycle ModelMarket Creation      Mkt Development Mkt Exploitation        Mark...
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How to Segment a Market and Determine Price Points

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How to Segment a Market and Determine Price Points by Robin Purohit at SVPMA Monthly Event October 2002

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How to Segment a Market and Determine Price Points

  1. 1. Market SegmentationRobin PurohitVP of Product ManagementVERITAS Software
  2. 2. Who am I• 13 years experience as developer, architect, strategic planner, PM• Telecommunication, Enterprise Computing, Networking, Storage HW and SW• 4 years @ VERITAS as PM• Currently manage 75 person PM org – Planning – Cross-functional Program Management – Technical Marketing
  3. 3. Product Management at VERITAS• 4 year transition from – Evangelism to business leaders – No process to formal Product Life Cycle – Technology focus to market focus – Reporting to engineering to company function• Yes, we’re hiring
  4. 4. Market Segmentation &Business Planning• Brings focus to complex, data-rich problem – Ensures a customer-centric view of business opportunity and strategy• Clearly maps our targets by – Common customer characteristics – Channels – Competitive Landscape• Invaluable throughout the product lifecycle – Prioritize development – Choosing Partners – Marketing Messages – Pricing – Sales Training
  5. 5. Market SegmentationCommon Pitfalls• Inwards Looking: Segmenting by Product Offering• Relying on 3rd Parties: Using Industry Analyst Segmentation• Treating Segmentation as Static: Being unaware of changing market conditions• Public Communication: Telling the press, partners how clever you are
  6. 6. Market SegmentationBest Practices – Robin’s View• Assess the Market Stage• Develop a strawman with secondary research• Dispassionate primary research• Let a customer centric segmentation reveal itself• Determine most attractive attack points by knowing who you are• Validate with analysts,x-functional team….Ideally before significant R&D investment
  7. 7. Assesssing the Market Stage Using a Market Life Cycle ModelMarket Creation Mkt Development Mkt Exploitation Market Sustaining Market ExitEarly Adopter Early Mainstream Mainstream Mature Decline (Market Intro) (Growth) (Sustaining) (EOL) ? Where is the general market ? Where is the general market ? What market dynamics create new ? What market dynamics create new opportunities opportunities
  8. 8. Assesssing the Market Stage Fibre Channel Storage & 3COM circa 1997 Market Creation Mkt Development Mkt Exploitation Market Sustaining Market Exit Early Adopter Early Mainstream Mainstream Mature Decline (Market Intro) (Growth) (Sustaining) (EOL) Internal SCSI • Storage Densities Storage • Media Rich Applications • Data Explosion External Storage Serial InternalNetworked Storage Extended SCSI StorageStorage
  9. 9. Strawman SegmentationFC Propositions• Sources to develop strawman – Industry groups – Peer discussions – Technical press – Early Adopters within Video Production/Broadcast• Strawman Market Segments within Enterprise Universe of Customers – “Data Sharing” – “Shared Consolidation’ – “LAN-Free Backup”
  10. 10. What the Research Revealed• Process: – Mediated blind focus groups to develop impartial view – Not extensive : 8 cities provided enough to develop an intuitive view of the market• Results – Mainstream Market in infancy of education – LAN-Free Backup was only compelling reason to buy – Skepticism buying solution from a network vendor – Competitors highly fragmented and lacking credibility
  11. 11. Self-AssessmentNew Market, No Credibility• Internal soul-searching and executive interviews – Where is the company’s strengths? – Where is the company going? – What is the sense of urgency to develop a new market? – Is this a sufficient new economy to be worthwhile• Conclusions – Solutions delivery to create value • Develop new storage industry partnerships • Evangelize & educate to software vendors – Pre-mature for primary high volume channel • OEM best fit • Recruit a small highly set of new storage savvy VARS/OEMs – Aggressive M&A exploration to acquire credibility – Multi-100M$ product opportunity with first strike potential – Strong brand could accelerate customer interest
  12. 12. Refined SegmentationOEM Channel• Through direct discussions with OEM prospects – PC Server – UNIX Server – Enterprise Storage – Disk Drive• Challenge – Existing OEM channel served PC Servers, but UNIX and Enterprise storage were critical • Primary focus on PC Server • Identify VAR based solutions providers with UNIX/Storage
  13. 13. Market Attack Pricing Dynamic & Strategy Refinement Market Creation Mkt Development Mkt Exploitation Market Sustaining Market Exit Early Adopter Early Mainstream Mainstream Mature Decline (Market Intro) (Growth) (Sustaining) (EOL) License technology ASAP to build marketNetworked RecruitStorage Solution Partners for LAN Free Backup Price Insensitive Serial OEM Pursue significant M&A to acquire Storage best technology vendors Price Sensitive
  14. 14. How did the market play out? 3COM imploded, but…. Market Creation Mkt Development Mkt Exploitation Market Sustaining Market Exit Early Adopter Early Mainstream Mainstream Mature Decline (Market Intro) (Growth) (Sustaining) (EOL) Storage Network Infrastructure Enterprise RAID/UNIX Packaged solutions LAN Free BackupNew Threats in 2002 Internal Disk• IP-Storage• Hybrid devices
  15. 15. How to use Segmentation across Market Life Cycle ModelMarket Creation Mkt Development Mkt Exploitation Market Sustaining Market Exit Early Adopter Early Mainstream Mainstream Mature Decline (Market Intro) (Growth) (Sustaining) (EOL) Re-segment to : - exploit niches if you lost (compete on price) - identify untapped value and customers (premium price) “Tornado Phase” Identify compelling reason to buy one vertical at a time (price as part ofIdentify value solution costs) Throw out the segmentationone customer and chase the moneyat a time (price to win)(price high to cover costs)
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