Entrepreneurship 101 - Market Intelligence and Analysis

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In order to craft your value proposition, you need to make certain assumptions about your target market. It is important to validate these assumptions through market research techniques and analysis.

In this lecture, market research experts will introduce the principles of market research and analysis, including analytical frameworks such as the PEST analysis and Porter's Five Forces.

Part of Entrepreneurship 101

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Entrepreneurship 101 - Market Intelligence and Analysis

  1. 1. Where  –   How  –     Am  I  going  to   Am  I  going  to  sell  –   sell  ?  Geography,   Price  point  and   individuals  etc.   business  model   What  –     Who  –     Is  the  size  of  my   Am  I  compe4ng   market  ?  How  much   with  ?     money  am  I  going  to  Other  technologies/ make  ?  Is  it  worth  to   subs9tutes  etc.   solve  ?  
  2. 2. Compe9tors  –   Customers  –   local  &  global   local  &  global   EcoWater,  Cuno,     Their  needs  are   Brita,  GE/Zenon   different  &  water   Al9cor  (Amway)   quality  is  different   Culligan,  Woojin   Coway   Distribu9on   channel  is   Highly   extremely   compe99ve   complex  –     pricing  &     Online,  through   business  models  -­‐   distributors,  water   Rental  &  direct  sales   depots,  new   or  MLM  property  developers  
  3. 3. Where    am  I  going  to  sell   (geography)?   How   What     am  I  going  to  sell   is  the  size  of  my   (business  and   market?   pricing  models)?   Who   Which   am  I  compe9ng   industry  am  I  with  (technology/ selling  into?   company)?   Successful   Launch  
  4. 4. Secondary  research  sources   •  Websites     •  Books     •  Industry  Journals  and  Research  Publica9ons   •  NewsleZers   •  Third  Party  Analyst  Reports   •  Company  Brochures  Primary  research  sources   •  “Informa9on  specialists”  at  libraries   •  Surveys  (online  –  more  quan9ta9ve)   •  Focus  groups  (online  or  in  person  more  qualita9ve),   •  Trade  shows     •  Third  Party  Industry  Analysts   •  Through  Social  Media  (facebook,  twiZer,  Quora)  
  5. 5. Ques4ons  to  ask:  -­‐Is  my  technology  really  disrup9ve?  If  so  what  is  it  replacing  ?  -­‐Who  is  my  direct  compe9tor  at  my  price  point?  -­‐Does  my  compe9tor  have  a  diversified  por`olio?  How  to  find  the  answers:  1.  Consider  patent  or  prior  art  searches  –  Public   databases  like  USPTO  or  WIPO,  or  paid  databases  like   Delphion  or  Total  Patents  2.  Understand  your  posi9on  in  the  “value  chain”  3.  Compare  product/technology  capability/claims:  use   product  brochures  from  trade  shows  or  product   claims  from  websites  4.  Conduct  a  SWOT  analysis  and  Industry  analysis   (Porters  Five  Forces)  to  determine  your  compe99ve   edge  in  the  industry  
  6. 6. Favorable   Unfavorable   Strengths   Weaknesses  In  Capabili9es?  Compe99ve    Gaps  in  capabili9es?  Lack   advantage?  USP’s?  Price,   of  compe99ve  strengths?    t value,  quality?  Experience,  e knowledge,  data?   Financials?  Cashflow,  start-­‐r Resources,  assets  and   up  cash  drain?n people?  Loca9on  and   Accredita9ons?  a geographical?    Processes  and  systems  l   etc.?   Opportuni9es   Threats  Ex Compe9tors  vulnerabili9es?   Legisla9ve  effects?  t Industry  or  lifestyle  trends?   Environmental  effects?   Global  influences?     Compe9tor  inten9ons?  e Niche  target  markets?   Vital  contracts  and  r Partnerships,  agencies,   partners?  Loss  of  key  staff?  n Sustainable  financial  a distribu9on?  Tac9cs  –  major   contacts?   backing?    l  
  7. 7. -­‐What  is  my  poten9al  market  vs  addressable  market?    (i.e.  What  you  wish  it  to  be  vs.  what  is  realis9c  ?)  -­‐What  is  my  market  share  among  compe9tors?  -­‐What  is  my  market  share  in  Canada/Ontario?   1.  Consult  market  reports  from  mul9ple  vendors     2.  Be  clear  about  the  “defini9on”  used   3.  Sizing  the  market  in  publicly  traded  space  can  be  easier  than   with  privately  held  companies:     a.  BoZom  up  method  –  aggregate  revenues  of  all  players   –Tier  1,  2  or  3  –  You  are  likely  in  Tier  3   b.  Use  unit  price  and  volume  of  sale  as  a  means  to   determine  market  share  of  the  company  and  total   market  size   b.  Look  at  annual  reports,  tax  filings,  press  releases,  Tech   blogs,  product  brochures  etc.   4.  Market  sizing  at  regional  levels  is  more  logical    –  NA,  EU,  Asia,   Middle  East   5.  Ul9mately  make  realis9c  assump9ons!!  
  8. 8. -­‐Should  I  be  selling  my  products  outside  of  North  America?  -­‐What  are  the  cultural  &  gender  preferences  or  differences  in  that  market?  -­‐What  are  the  regula9ons?  Are  they  favorable  or  not  ?  -­‐What  partnerships  do  I  need?   1.  Consult    reports  on  customer  preference  and  behavioral   changes  –  Frost  &  Sullivan,  Datamonitor,  Forrester,  Industry   Associa9ons,  GLG  healthcare     2.  Use  social  media  to  your  advantage  –      E.g..  P&G’s  teenage  feedback  on  feminine  hygiene  products   through  social  media  sites;  Consider  focus  groups  or  expert   advisory  panel  discussions  before  developing  a  product   3.  Tap  into  Canadian  Trade  Commissioners  office  (DFAIT)  in  other   countries  –  as  simple  as  local  news  clippings   4.  Complete  a  P.E.S.T  analysis  for  that  par9cular  geography  to   understand  the  Poli9cal,  Environmental,  Social  and   Technological  market  forces  
  9. 9. Poli9cal   Economic   Government  Type   Business  Cycle  Stage   Government  Stability   Growth,  Infla9on  &  Interest  Rates  Freedom  of  Press,  Rule  of  Law,  Bureaucracy,   Unemployment,  Labor  Supply,  Labor  Costs   Corrup9on   Disposable  income/Distribu9on   Regula9on/De-­‐regula9on  trends   Globaliza9on   Social/Employment  Legisla9on   Likely  Economic  Change   Likely  Poli9cal  Change   PEST  Analysis   Framework   Socio-­‐Cultural   Technological   Popula9on  Growth/Age  Profile   Impact  of  Emerging  Technologies   Health.  Educa9on,  Social  Mobility   Impact  of  Internet  and  Reduced   Employment  PaZerns,  Aotudes  to  work   Communica9on  Costs  Press,  Public  Opinion,  Aotudes  and  Taboos   R&D  Ac9vity   Lifestyle  Choices   Impact  of  Technology  Transfer   Likely  Socio-­‐Cultural  Change   Likely  Technological  Change  
  10. 10. -­‐Who  has  the  most  innova9ve  business  model  out  there?  i.e.  Can  I  apply  those  best  prac9ces?  -­‐What  is  my  pricing  structure?  -­‐What  is  my  revenue  model?  -­‐Should  I  white  label  or  license?   1.  Use  focus  groups  to  determine  price  points  –  B2B  or   B2C   2.  Give  considera9on  to  geographic  loca9on  before   pricing  your  product   3.  Consider  manufacturing  yourself  and  sell  directly  or   “white  label”  to  tap  into  a  exis9ng  company/ manufacturers  with  name  recogni9on  in  your  market   place   4.  Don’t  want  to  manufacture  it  yourself  but  license  it   out  to  others  –  Need  a  provisional  patent  before   pitching  your  idea  
  11. 11. Should  I  be  selling  this  to  the  DOD  instead  of  healthcare?    Are  barriers  to  entry  low  in  certain  ver9cals?  Less  regula9ons,  price  agnos9c  ?    Could  one  industry  be  my  first  entry  point  before  I  tackle  another  ver9cal?  Should  I  target  government  or  the  private  sector?    1.  Understand  the  ver9cal  markets  of  your  compe9tors  and   target  least  compe99ve  ver9cals  2.  Are  there  any  investments  happening  in  a  par9cular  sector,   government  agency  or  country  that  could  be  an   advantage?    a.  Aper  9/11  and  other  global  incidences  –  increase  in   security  technologies    b.  Cleantech  -­‐  Ontario’s  Green  Energy  Act  and  FIT  program   in  bringing  in  investors  into  the  province;  China  inves9ng   $5  B  in  cleantech  in  next  3  years  
  12. 12. Is  there  really  a  market  need  here?  Whether  the  answer  is  a    “Go”  or  “No  go”  understanding  your  market  /  customer  /  industry  dynamics  will  be  key.  
  13. 13. Usha Srinivasan PhDDirector of Market IntelligenceMaRS Discovery DistrictT 416-673-8144E usrinivasan@marsdd.comW www.marsdd.com pg 24

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