1. Š Rob Adams 2010 Market Validation - Slide 1
McCombs
Knowledge To Go
November 9, 2010
2. Š Rob Adams 2010 Market Validation - Slide 2
If You Build It Will They Come?
Three Steps to Test and Validate Any Market Opportunity
UT Alumni Network â Knowledge to Go
Tuesday, November 9, 2010
Electronic version of this presentation available
at www.drrobadams.com/events
3. Š Rob Adams 2010 Market Validation - Slide 3
If You Build It Will They Come?
ī§ What is this book about?
ī§ Ready, Aim, Fire
ī§ What do most companies do?
ī§ Ready, Fire, Fire, Fire, Aim
4. Š Rob Adams 2010 Market Validation - Slide 4
If You Build It Will They Come?
ī§ What are the facts behind this?
ī§ 90% of all start-up businesses fail
ī§ 65% of all new products fail
ī§ North America alone spends a whopping $260 billion
annually on failed products
ī§ âĻ and only $140 billion on successful products
5. Š Rob Adams 2010 Market Validation - Slide 5
Market Validation
ī§ Why do 90% of news businesses and 65% of new
products fail?
ī§ Companies focus on operational issues
ī§ Educated to manage, not create
ī§ Tendency to gravitate to data so it can be analyzed
ī§ Development is a process with an endpoint
ī§ Engineers work in the world of the tangible
ī§ None of the above issues are critical to product sales
ī§ Companies donât focus on markets
ī§ Products fail because they donât sell
ī§ 85% of product failure can be traced to market related issues
ī§ Marketing is not a process driven effort
ī§ Marketing and engineering are opposite functions
ī§ If you want to differentiate yourself have credibility in both
worlds
6. Š Rob Adams 2010 Market Validation - Slide 6
Market Validation
ī§ How can this be addressed?
ī§ Market Validation
ī§ Market Validation is a process applied to the unstructured, serendipitous
task of doing a complete evaluation of the market for a product before
the product is built.
ī§ Market Validation is a series of standard business practices applied
using an objective, market oriented and fact based data collection
process.
ī§ A complete Market Validation process takes 60 days and has a budget
of 10% of the expected cost of developing the product.
ī§ For those of you in start-ups the book covers how to use your own labor and save
on the costs
7. Š Rob Adams 2010 Market Validation - Slide 7
Market Validation
ī§ Market Validation
ī§ The philosophy behind Market Validation is that success is
achieved through a series of fast failures.
ī§ Market Validation lets you figure out in a matter of two
months, for 10% of your development budget, whether your
product or service will work in the market
ī§ The alternative is to spend 100% of your budget and 2-3
years coming to the same conclusion
8. Š Rob Adams 2010 Market Validation - Slide 8
Market Validation
ī§ Case Study: Motorolaâs Iridium
ī§ Case Study: Appleâs iPod
9. Š Rob Adams 2010 Market Validation - Slide 9
Market Validation
ī§ The three steps of Market Validation
ī§ Ready
ī§ A fast triage of your idea to understand if more time and effort
should be invested
ī§ Time investment of 2 days
ī§ Aim
ī§ A deep dive into the target market using primary research
techniques to develop a product with unique, differentiable
features that are compelling to your target audience
ī§ Time investment of 60 days
ī§ Fire
ī§ The art of converting market data into product features and
getting a product out the door quickly
ī§ Time investment is management diligence from the end of the
Aim process until the product ships
10. Š Rob Adams 2010 Market Validation - Slide 10
Market Validation
ī§ The Ready Step
ī§ Domain knowledge
ī§ Market size and growth rate
ī§ Lifecycles and trends
ī§ Competitive analysis
ī§ Outside data sources
11. Š Rob Adams 2010 Market Validation - Slide 11
Market Validation
ī§ The Ready Step
ī§ Domain knowledge
ī§ Where does your idea come from?
ī§ Is it part of your work experience?
ī§ Is it part of your consumer experience?
ī§ Areas to be careful around
ī§ Consumer: margins are tight, marketing is expensive
ī§ Medical: Large volumes of money do not mean
success
ī§ China: Big markets do not mean easy money
12. Š Rob Adams 2010 Market Validation - Slide 12
Market Validation
ī§ The Ready Step
ī§ Market size and growth rate
ī§ What is the size of the overall market?
ī§ What are the submarkets?
ī§ What are the sizes of the submarkets?
ī§ What are the growth rates?
ī§ What is the growth rate of the economy?
ī§ What is the growth of your market relative to the
economy?
ī§ Above
ī§ Same rate
ī§ Below
13. Š Rob Adams 2010 Market Validation - Slide 13
Market Validation
ī§ The Ready Step
ī§ Lifecycles and trends
ī§ What is the lifecycle of your market?
ī§ What are the trends affecting your market?
ī§ Population
ī§ Expanding and contracting industry sectors
ī§ Technology adoption
ī§ Competitive rivalry
ī§ What business model does your industry use?
ī§ Consumer
ī§ Manufacturing
ī§ Life Sciences
ī§ Technology
ī§ Services
14. Š Rob Adams 2010 Market Validation - Slide 14
Market Validation
ī§ The Ready Step
ī§ Competitive analysis
ī§ Who are your competitors?
ī§ Why are they successful?
ī§ What do their customers think of them?
ī§ What are substitutes for your product?
ī§ What are the economics of your product?
ī§ How much competition is the customer keeping their
money?
15. Š Rob Adams 2010 Market Validation - Slide 15
Market Validation
ī§ The Ready Step
ī§ Outside data sources
ī§ Is your market established enough to have analyst
firms?
ī§ What other sources of data can give your market data
credibility?
ī§ What analyst firms follow your market?
ī§ What are the names of the analysts?
ī§ How big do they say the market is?
ī§ What do they say the trends are?
ī§ How do you get your hand on their reports?
16. Š Rob Adams 2010 Market Validation - Slide 16
Market Validation
ī§ The Aim Step
ī§ Primary market research
ī§ Who to interview
ī§ Interviewing, interpreting the data and analyzing the results
ī§ Using outside firms
ī§ Getting the market ready for your product
17. Š Rob Adams 2010 Market Validation - Slide 17
Market Validation
ī§ The Aim Step
ī§ Primary market research
ī§ What kind of data weâre after
ī§ Types of surveys
ī§ Types of questions
ī§ Developing and conducting interviews
ī§ Initial interviews
ī§ Mid-stage interviews
ī§ Late-stage interviews
ī§ Who to interview
ī§ Sourcing names
18. Š Rob Adams 2010 Market Validation - Slide 18
Market Validation
ī§ The Aim Step
ī§ Who to interview
ī§ Sources
ī§ Doing the math on the available listings
ī§ Similarity to the sales process
19. Š Rob Adams 2010 Market Validation - Slide 19
Market Validation
ī§ The Aim Step
ī§ Interviewing, interpreting the data and analyzing
the results
ī§ Conducting the interviews
ī§ Analyzing the data
ī§ Interpreting the data
ī§ Using the data to target your market
ī§ Using the data to design your product
20. Š Rob Adams 2010 Market Validation - Slide 20
Market Validation
ī§ The Aim Step
ī§ Using outside firms
ī§ Multifaceted process
ī§ Assembling questionnaires
ī§ Conducting interviews
ī§ Crunching data
ī§ Analyzing data
ī§ Objectivity
ī§ You canât outsource the whole process
21. Š Rob Adams 2010 Market Validation - Slide 21
Market Validation
ī§ The Aim Step
ī§ Getting the market ready for your product
ī§ Similarity to the sales process
ī§ Target market
ī§ Suspects
ī§ Prospects
ī§ Closing
ī§ Customer use and success stories
ī§ Case studies
ī§ References
ī§ Credibility
ī§ Press, industry analysts and pundits included
ī§ Up to speed on your product
ī§ Know the approach youâve taken in evaluating the
market
22. Š Rob Adams 2010 Market Validation - Slide 22
Market Validation
ī§ The Fire Step
ī§ How to get a market oriented product out quickly
ī§ Written product specifications and schedules
ī§ Design Partner Programs, Advisory Board
Programs
ī§ Launch
ī§ Sustained sales and marketing efforts
23. Š Rob Adams 2010 Market Validation - Slide 23
Market Validation
ī§ The Fire Step
ī§ How to get a market oriented product out quickly
ī§ Tightly targeted, narrow markets
ī§ Minimally acceptable feature sets
ī§ Fast product iterations
ī§ Why quality doesnât always matter
24. Š Rob Adams 2010 Market Validation - Slide 24
Market Validation
ī§ The Fire Step
ī§ Written product specifications and schedules
ī§ Market Validation team of engineering and marketing
talent
ī§ Written product specs
ī§ Written schedules
ī§ Killing features early in the development process
ī§ The product manager
25. Š Rob Adams 2010 Market Validation - Slide 25
Market Validation
ī§ The Fire Step
ī§ Design Partner Programs
ī§ Drawn from target market
ī§ Product usage and design
ī§ 10-20% of your primary research base
ī§ Complete understanding of usability usage, and support issues
ī§ Early sales pipeline
ī§ Case studies for launch efforts
ī§ Advisory Board Programs
ī§ Drawn from target market and analysts
ī§ Executives in your buying chain
ī§ Economic buyer, user buyer, installer, supporter, budget
owner, âĻ
ī§ Sales pipeline
ī§ Case studies for launch efforts
26. Š Rob Adams 2010 Market Validation - Slide 26
Market Validation
ī§ The Fire Step
ī§ Launch
ī§ Been through it before with Ready and Aim steps of
Market Validation process
ī§ Large amount of supporting content
ī§ Ready step data
ī§ Aim step data
ī§ Early users, analysts and executive
ī§ Fact based approach to product development should be
emphasized
ī§ Budget is a critical universal benchmark for successâĻ
27. Š Rob Adams 2010 Market Validation - Slide 27
Market Validation
ī§ The Fire Step
ī§ Sustained sales and marketing efforts
ī§ Budget for first year sales and marketing needs to equal
the budget for development
ī§ No excuses; this is the only way to assure the market is
made aware of what youâre offering
28. Š Rob Adams 2010 Market Validation - Slide 28
For More Information
ī§ Book is currently available
at all major book sellers
ī§ 200 pages and very
readable
ī§ Speaking events around
the world
ī§ See www.drrobadams.com under
âeventsâ
ī§ Significant coverage in Inc. Magazine
and Inc.com
ī§ More information at
www.drrobadams.com
ī§ This presentation is posted under
âeventsâ
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