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Session 3 qualitative market reserach for entrepreneurs market
1. 1
INDB – Session 3
ON QUALITATIVE MARKET RESEARCH FOR
ENTREPRENEURS
Dr. Rainer Harms
18-3-2022
2. Entrepreneurs on their way to create value
„An entrepreneurial opportunity, therefore, consists of a set of ideas,
beliefs and actions that enable the creation of future goods and services
in the absence of current markets for them’. (Sarasvathy, 2001, p.4)
BUT: How does an entrepreneur know if he found a “need worth
solving”?
We cover:
Opportuntiy assessment
Observation and survey methods with emphasis on
(*) Emphatic design and (*) Kano method
2
18-3-2022
3. What is „Value“ in the context of entrepreneurship?
A „need“ with buying power?
A „need“?
Pain and gain from Udacity
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4. 5 characteristics of an a attractive opportunity: external
fit
Timely (current need or problem)
Solvalbe (technical feasibilty)
Important (strong AND urgent)
Profitable (willingness to pay with some stakeholder)
Context (regulatory and industry context)
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B/D/N, p. 31
5. External and internal fit
Team
Resources
Opportunity itself
Context
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B/D/N, p. 37
6. So thats why you can make wrong decisions
Actual quality of opportunity
Poor Very good
Decision
Act False choice ->
loss
Excellent choice -> hit
Do
not
act
Correct rejection ->
save resouces
Missed opportunity -> lost
chance
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B/D/N, p. 37
http://www.1stdibs.com/furniture/tables/coffee-tables-cocktail-tables/
7. What was wrong with the previous slide?
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http://www.emeraldinsight.com/content_images/fig/2610400506004.png
8. How to learn about customer needs
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http://blog.biocision.com/5303/what-our-customers-have-to-say
10. Observation versus inquiry
Inquiry Observation
People can‘t ask for what t hey don‘t know is technically possiible Well-chosen observers have deep knowledge of corpoare capabilities,
including the extent of the comapanies‘ technical expertise
People are generally highly unreliable reporters of their own behavior Observers rely on real actions rather than reported behavior
People tend to give answers they think they are expected or desired People are not asked to respond to verbal stimuli – they give novverbal
cues of their feeling and responses through body language, in addition to
spontaneous, unsolicited comments
People are less likely to recall their feelings about intangible
characteristics of products and serices when they are not in the process of
using them
Using the actual product or a protype, or engaging in the actual activity for
which an innovation is being designed, stimulates comments about such
intangibles as smells or emotions associated with the product#s use
Peoples imagination – and hence their desires – are bounded by their
experience; they accept inadequacies and deficiencies in their
environment as normal
Trained, technically sophisticated observers can see solutions for
unarticulated needs
Questions are often biassed and reflect inquirer‘s unrecognized
assumptions
Observation is open-ended and varied; trained observers tend to cancel
out one another‘s observational biasses
Questionning interrups the usual flow of peoples‘ natural activity Observation, while almost never totally unobstrusive, interrupts normal
acttvities less than questionning does.
Questionning stifles opportunities for users to suggest innovations Observers in the field often identify user innovations that can be
duplicated and improved for the rest of the market
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11. Power of observation (inspired by Leonard / Rayport)
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http://www.autonationconnect.com/2010/05/junk-trunk/
http://blog.eoffice.net/2011/09/
https://theanimalrescuesite.greatergood.com/store/ars/item/50215/office-
12. Added value of Emphatic Design
Triggers of use
Interactions with local environment
User customization (lead users!)
Noting intangbile product characteristics
„When [you] explore the customers world with the eyes of a fresh
observer while simulataneously carrying the knowledge of what is
possible to do, you can redirect existing organizational capabilities to
new markets“
Leonard / Rayport
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http://cycle20ten.blogspot.nl/2010_06_01_archive.html
13. Emphatic design is powerful – but how to do it?
Step one: Observation
Step two: Capturing data
Step three: Reflect and analyze
Step four: Finding new solutions
Step five: Prototyes for new solutions
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Leonard / Rayport (1997) http://www.dailymail.co.uk/sciencetech/article-1378228/
14. There are many different ways to interact qualitatively in
New Product Development
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http://www.usability.gov/how-to-and-
tools/methods/index.html
https://www.wickedproblems.com/
table_of_contents.php
19. 18-3-2022 19
Satisfying basic
needs
Satisfying
performance
needs
Satisfying
excitement
needs
Allows a company
to get into the
market
Allows a company
to sustain and
remain
competitive
Allows a company
to excel and be
world class
HOW to use the Kano Model?
• Surveys
• Interviews
• Focus Groups
• Observations
• Customer
complaints &
feedback
Translate VOC
into Critical to
Quality (CTQ)
Characteristics
Rank the CTQs into three categories:
I. Dissatisfier: must be customer
requirements
II. Satisfier: more is better. Essential
to stay competitive
I. Deligher: differentatiator
Identify the
Voice of the
Customer
Evaluate
current
performance
Analyze &
Strategize
• Action Plan
• Project
Selection
• New product
or service
• Marketing
strategy
20. Kano logic
A product viewed as sum of components
„More“ is not always better“ -> non-linear utility function
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http://de.123rf.com/photo_9034391_touchscreen-
smartphone.html
21. Kano Terminology
„Must be“ – no + if implmemented, - if missing
„one-dimensioanl“ + if implemented, - if missing
Attractive: + if implemented, No – if missing
Indifferent: neiter + or – if missing
Reverse:- if implemented; 0 or + if missing
Questionnable: inconclusive results
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22. Doing a Kano analysis 1: The questionnaire
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http://faculty.kfupm.edu.sa/CEM/bushait/CEM_515-082/kano/kano-
model2.pdf
23. Doing a Kano analysis 2: The evaluation table
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http://faculty.kfupm.edu.sa/CEM/bushait/CEM_515-082/kano/kano-
model2.pdf
25. Integrating and interpreting (note: after segmenting)
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M: Must be / O: One-dimensional / A: Attractive
Interpretation based on: (*) Frequency (*) self-stated importance (*) CS-Index
http://faculty.kfupm.edu.sa/CEM/bushait/CEM_515-082/kano/kano-
model2.pdf
27. Practical implications
+ shows relative importance of product featuers
+ takes into account non-linearity in utility function
+ easy to handle
- Only delivers results on indicators that you asked for (horses)
- Does not take into account interdependencies of prodcut features
- Does not take into account the competitors perspective
- Does not take into account enigneering requirements
- Does not take into account costs of implementation
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28. To do (I)
You are interested in finding out how the waiting time for an answer at a
customer hotline impacts on customer satisfaction. How would the Kano
question(s) look like?
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29. To do (II)
Product attribute A O M I R Q Cat CS DS
Speed of answer 25 13 8 3 1 0
First call resolution 16 26 8 0 0 0
Clear language 6 13 26 5 0 0
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Your Kano analysis revealed the following results – what are the
implications that you suggest to managment?
And?
Example modified from http://de.slideshare.net/niteshv/kano-model-for-customer-needs
32. What did we cover?
Opportunity assessment: external and internal factors on
„attractiveness“
OA is based on assumptions -> observe and survey into markets
Observation has numerous advanatges in situations of high novelty
Survey has adavntag es in situation of low novely
Kano method is a sophisticated customer sastifaction survey.
Not without limits, it can be incorporate in the House of Quality
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33. References
Byers, T.H., R.C. Dorf and A.J. Nelson. Technology Ventures:
McGraw-Hill, 2010.
Leonard, Dorothy and Jeffery F. Rayport. "Spark Innovation through
Emphatic Design." Harvard Business Review, (1997): 102-113.
Sanders, Liz. "An Evolving Map of Design Practice and Research."
Interactions, (2008): 13-17.
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Editor's Notes
Source: Fauchard et al.
Eship as „for profit“ – here: thats what we learn in marketing: An „interesting“ market segment is one where there is a need togehter with the buying power. And this covers a whole lot of examples from „for profit“ entrepreneurship.
But there is more. People are increasling „getting entrepreneurial“ without thinking about profits for themselves. There are also „Communitarians“ and „Missionaries“:
Communitarians: Create value for a certain set of known recipients. Examples are social entrepreneurs who set up a ventrure to help local disadvantaged kids get an education. Or those who serve on „Bottom of the pyramid“ projects with hands-on contact to their recipients
Missionaries“: Create value for an unknown set of recipients: Church and Politics (even though the concept of „value“ appears to be a little vague at times
Timely: e.g. smart health care for the aging population. „Timely“ can be indicated by social and cultural trends. AND by digging deeper into the nature of need.
TREND ANALYSIS helps you to get to the bottom of it. Pay attention to trend breaks. Understand that trends are only an extraplolation of the past. To understand „Trends“ you have to understand the qualitative drivers of trends to be able to react. Check for example the upward trend in sales of small household appliances. What is the driver? Right, more single households; maybe even some „cocooning“. What can we learn if we understand the drivers? Not just to produce „more“ but to innovate around the lifestyle aspect of appliances.
What is NOT a timely problem: PLC … a need that has passed (is already served, like: mobile phone) or not yet exist (hen and egg problem: „supercharger“ for TESLA cars. How do you deal with this? Steve says: A market where you can find consumer data for is a market that is already served by others. It is likely that others have used first-mover advantages in terms of costs (learning curve), supplier relations, technology leadership (learning form old mistakes), cutomer acquisition (low-hanging fruits are picked early). Moreover: they are likely to be BIG and can afford to outprice you // and to have connections to end market (shelf space) – Think PORTER. Think: Dont overestimate the value of a solution that you think add noveltyl. Others may not share this idea.
TO DO: Customer inquiry
Solvable: metering of body functions with sensors
Technically solvable. The „Lean“ guys say: „Anything can be built“ – Well, this comes form the software market. It may be true that anything can be programmed, but not built physically yet so that this is realible for the mass market. Think the data store on a tesa film. Bit hit in the lab in 1994. Ideas of putting it to use on the private customer market. First first industry solutions out in 2012 http://www.tesa-scribos.com/eng/company/company_history at very different product/markets solutions (Fraud protetction)
NOT solvable 8at least not at effective costs): London swimming airport // BIG problems exist when the economic feasibility is assessed incorrectly as we see with large projects such BER airport, but also with all these startups that quitey disappear from the scene.
TO DO: Get in touch with engineers. Follow the technology life clyle to get a somewhat realistic idea on what may work and what not. What we have just learned about trends, however, also holds here.
Important: Stength and urgency
Strong and urgent: Need to have it and need to have it now: B2B: „Fashion hypes“: For kids: Iphone /// B2C: solutions that prevent a company from going bankrup.
Urgent, but not strong: Kids sweets at the checkout counter
Strong, but not urgent: You REALLY like to have that car, but it can wait a little
TO DO: customer inquiry. Find the „gleam“ in the eyes of customers. Assess if they are willing to pay already for a protoype or a MVP.
Profitalbe: is there WTP?
Like in the case of rare deseases, there is no POSSIBILITY to pay, even when the need is strong and urgent. In less intense form, the MAXMUM WTP needs to be elicited and the MOST EFECTIVE price needs to be assessed. Factors taht enter this decision are the sociodemographic charateristics of the buyers, particularly disposalble income, and the market structure that many „nibbel away“ at your profitability. Think Porters 5 forces and realize that it is not only the current market structure but future markett structures taht you need to investigate. Think trend analysis, and all the pitfalls that come with it.
TO DO: Assess WTP // Do industry analysis
Context: regulatory:
Positive: tire pressure sensors: regulations kickstarted the sensor industry
Now we see the „“TrillionSensor Roadmap initative with companies such as Fairchild semiconductors, Samsung, Hyunday and others taht link senor technology to the „internet of things“ and predit a market at 10% world GPD by 2050 for sensor technology. THIS IS HUGE!
NEGATIVE: Germanies current discussion on pricing and subsidies for renewable energies created huge uncertainty in the market. German solar panel firms have collapsed, and the „electic highway“ between north and south is hotly debated, limiting investment security for ventures active in this field.
TO DO: Get acquaitned with the regularoty environment of your venture. As it
Careful how you sell this slide: I am critical against self-ratings (rather: do „hypothesis-driven“ entrepreneurship)
There is more to opportunity assessment than assessing the nature of the opportuntiy itself and the external fit.
Think „interal fit“ with the entrepreneur and the team.
Linking to this is the social network view on the importance of securing resources.
This model here emphasizes „context“ and „opportunity“ even though I feel it stupid that it suggests that an opportunity can be evaluated outside of the context.
That said, sometimes you find these „self-rating“ guidelines in the literature.
On a positive note, they provide you with some features that you should think about when evaluating an opportunity. They can represent some „destilled knowledge“ of „experts“ on the issue hand can help you to overlook critical aspects.
On a negatie note there is (*) is it complete? (*) are the factors non-overlapping so taht you do not asssess the same thing twice? (*) there are some „psychological“ biasses namely that you use hidden assumptions in making the rating, and thereby people may be overoptimistic.
Thats why we suggest hypothesis-driven entrepreneurship!
There are 4 typical situations when you want to assess an opportunity [name]
Act on poor quality: Do you know this logo? Sure not: Webvan was rated the „largest .com flop in history with billions of losses
Poor understanding of customer demands: Wiki: their operations were laid out so that you got your stuff 30 mins after order. Most customers wanted shipments when they were home, taht is evenings
Do not act when O was poor: Difficult to assess later BUT: Our „petrified wook furniture story
Do not act when O was good: http://www.itbusiness.ca/news/10-of-techs-biggest-missed-opportunities/13860 for GREAT examples:
Xerox is a „classic“ in that it invented the PC, with graphical interface (like windows), a mouse (!) and ethernet conncetivity. But didnt market it.
Another recent thin is Yahoos failed attempt ot by Facebook for 1 Billion in 2006. They areay GOT the deal.
But what is wrong with this slide?
Two things: First, you dont usually have to fully commit and never be able to go back. In fact, you can structure your position so that you engage in little activity which „buys“ you the right and the possibility to scale up later. This is he logic or real options. This is the logic that venture capital deals are structured by when we talk about staged investments.
This is also the logic of hypothesis-driven entrepreneurship where you should invest some „reserach effort“ to learn as much as you can so that you can make the decsion to continue, change, or abandon the current project.
„Hypothesis-driven entrepreneurship adds to this story taht you base your decision on facts, not assumptions.
Most decision are based on assumptions – try to get some facts!
Oberservation & Inquiry
Up to now we have established that the decision to move a venture forward or to act on an entrepreneurial opportunity is based on an assessment of the opportunity.
While there are many aspects where an opportunity can „turn bad“´, we focus on the assessment of whether there are needs … or if an entrepreneur just thinks there are
But mind … sometimes faster horses are‘nt a ad thing
Triggers of use: Cereals not only for breakfast, but for takeaway: baby / office: Huge new market.
Triggers of use: Mobile phones and apps, for example: GPS-stuff-used creates the necessity to make rugged „outdoor-type“ phones
Trigger of use: spray fat and lawnmover so taht the grass does not stick
Internaction with local environment:
Quicken home bookkeeping software: Waht other software does it „crush“ with on „real“ persons computers that are often jammed with stuff
Smelly lab containers suggest a „smell proof“ lid: customers didnt mention this as something they needed as they already got used to it. Later, it became a NICE USP
Noting intagbile product characteristics:
Smell „smells clear“ // Tastes like Grandma‘s // Diapers as „clothing“ (so the need some outside design on top of inside functionality
Noting unarticulated needs
Such as storag e solutions in cars, a „clean“ cable solution such as we have seen.
Sounds familiar, doesnt it?!? The difference is in the amount of manpower that is put into these steps
Do this before: http://www.youtube.com/watch?v=vJG698U2Mvo
Or this, a little more difficult: http://www.youtube.com/watch?v=Ahg6qcgoay4
Observation:
Who:
in ED, groups of experts. ED literature suggests to take company representatives with you so that they can link their in-depth experitise of the job to the observations at hand. Like: Have a restaurant manager, a cook and a waiter with you when you observe customer behavior of „dining out“. In „Lean Startup“, its only the entrepreneur. But that person also has the expertise on the technology. Most important characteristic is open-mindedness, observational skills, and curiosity /// Observation is difficult: Monkey and basketball experiment
http://www.dailymail.co.uk/sciencetech/article-1378228/Didnt-spot-dancing-gorilla-famous-YouTube-video.html
What:
real-life customer behavior „playing, eating, relaxing“
Capturing data:
Foto, Video to capture fleeting emotions. The Car cupholder and smat stroag e stuff was a result from a photo safari
Reflect and Analzse:
Suggest to do this with another team that is unbiassed against influences for the actuatual observation – just facts! Lean Startup can deal with in in a way that you leave yourself some time between observation and analyzing
Finding new solutions: Crea: We have a different session for that
Protyping: this is the MVP. You are unlikely to move beyond a sketch or a drawing so we dont go in depth here
Expert mindset: „We do it (develop / test) FOR the customers
Participatory mindset: „We do it (develop / test) WITH the customers
Bubble 1: (pink) reserachers lead with expert mindset
Bubble 2: (blue) can be both reserachers and desingers, but users are seen as partners
Design+Emotion: focussion on the role of emotions in product desging
Cutltura probe: for idea generation. You get a bag of goodies form a foreing vuture of taget group, get „wild“ ideas around this
The usability gov website gives an outline of various techniques of capturing unsability tests
Contextual inquiry: let users perform stuff and interview them later
Critical desing: designers gone wild
http://www.coroflot.com/jacksonmcconnell
Focus groups are only slighty better in identifying a larger share of needs thatn individuals.
Take this aside for a little while … Lets explore the logic
What are the parts?
Storage
Weight
Resolution of screen
Resolution of camera
Brand name
Reception quality
ARE ALL THOSE IMPORTANT? OR: HAVE THE SAME IMPORTANCE?
C.R. : Ustomer rewuirement: Summing all responses up; take the max
Customer satisfaction index: Average impact of satisfation if „there“:
DS indext: neagative impact if not fulfilled
1: Determine Category:
Speed is „A“; First call res. is (O) und language is „M“: interpretation
2: CS und DS
A: 38 / 50 = 72 /100 = .72 21 / 50 = 41/100 = .41 *-1 = -.41
B: 41 / 50 = 81 / 100 = .81 8 / 50 = … -.16
C: 19 / 50 = 38 / 100 =. 38 39 /50 = 78/100 ….. -.78
AND Must trigger the idea that we need to recongize the shortcomings! Any advise on the (imlicitit) goal of maximizing profitability are PREMATURE!
HOQ is a overview that incorporates a large number of dimensions into on product features and thei impact on Custer satisfaction.
Left hand side: KANO
Right hand side: Comes form a survey where customers compare you to others.
So where would you act now and wyh you were to adivse ATOMIC (and 5 is Very good)?
Easy take: Edge grip. Or is it more complicated.
Check highes level of satisfiers/ dissatifsfiers and find that EG scores high. Thisis alos one of the areas where you are at a disadvantage. Reacting there helps to close the gap
The middle part comes from engineering: which product features impact how on the attainemnt of a utiililty characteristic
Upper also from engineering. How do engineering choices affec each other
