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Innovation, Marketing and Sales for Growth


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Support presentation to the SPIN-UP Training Programme on Entrepreneurial Skills for University Spin-Offs.

SPIN-UP is a cooperation project supported by the European Commission that aims to create an Entrepreneurship Training and Coaching Programme that contributes to the development of Key Entrepreneurial Skills, both technical and behavioural, essential to enable and leverage University Spin-Offs growth.

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Innovation, Marketing and Sales for Growth

  1. 1. templateversion1.0INNOVATION, MARKETING AND SALES FOR GROWTHModule Presentation[Place], [Date]
  2. 2. TRAINING OBJECTIVES AND CONTENTSThe SPIN-UP training inInnovation, Marketing and Salesfor Growth will help UniversitySpin-Off’s managers to improvetheir abilities to innovate andadequately manage themarketing effort to supportbusiness growth.Know the basicsaboutinnovation,marketing andsalesIdentify futureinnovation, marketing and salesneeds for thebusiness
  3. 3. TRAINING OBJECTIVES AND CONTENTSUnderstand the basic terms and principles related to successfulinnovation management over timeUnderstand some basic mechanisms of marketing planningRecognize the importance of having a specialized sales forceRecognize that sales goes through a number of phases before closingand in order to build long-term customer loyaltyInterpret the signs given, by consumers and business clients alike, thatbusiness services and products are on the right track for continueddemand by major customer segmentsKnow the basics about innovation, marketing and sales
  4. 4. TRAINING OBJECTIVES AND CONTENTS Discover the “chasm that separates the early adopters from the early majority… themost formidable and unforgiving transition…all the more dangerous because ittypically goes unrecognized” (Moore, 1999, p.18). Recognize the impact of management decisions concerning key areas, especially asregards growth, so that businesses may grow into multi-million Euro enterprisesthat contribute to the creation of jobs both locally as well as internationally Transform businesses into what Venture Capitalists want to see Having built a business plan with solid thinking in regard to all the key successfactors, the inhibitors to success, and the advantages of the proposed product orserviceIdentify future innovation, marketing and sales needs for the business
  5. 5. TRAINING OBJECTIVES AND CONTENTS Aiming for a potential market that is very large, so that even a small market sharewill produce a big sales volume Being able to gain a foothold in the market that will inhibit competitors Building a distinct competitive advantage over all the alternatives that customershave or might have in the future Possessing a compelling new technology (product or service) that is difficult forpotential competitors to copy, circumvent, or make obsolete Potentially growing to a valuation at least 10 times beyond the valuation at whichthe investors purchased their shares within a reasonable timeframe, typically threeto seven yearsIdentify future innovation, marketing and sales needs for the business
  6. 6. TRAINING OBJECTIVES AND CONTENTS This module is not intended to prepare trainees tobe experts in innovation, marketing and sales. Instead, it appeals to the trainee common sense andexperience to deliver the basics on these topics
  7. 7. Technology MappingA Technology Map defines the stream of newproducts/processes or concepts that the company iscommitted to develop over some future time periodAdvantages of using a Technology Map:• Helps your company anticipate technology trends• Defines a stream of new products (breakthrough orincremental) your company plans to develop over time• Forces decisions (commitment) about new projects amidtechnological and market uncertainty• Supports the allocation of resources (mainly finance)
  8. 8. Developing a Technology MapTechnology Identification1Decide on NeededTechnology Additions2Decide on‘What-to-Sell’ Strategy:License vs. Commercialization3Ongoing Product Management4 •Internal development(make)•External acquisition (buy)•Partner to co-create. Killing ‘wrong’ projects•Developing services•Intellectual property•etc.
  9. 9. Step 1: Technology IdentificationIncludes:• Monitor technology and market developments• Take inventory of your company‟s strongest know-how that may be a source of competitive advantage- Products, e.g. superior ones (e.g., hybrid cars)- Processes, e.g. superior manufacturing skills (e.g.just-in-time) and customer services; superior processes- Management practices, e.g. smart knowledge managementin exclusive collaboration (open innovation)
  10. 10. Step 2: Decide on Technology Additions• What emerging technology trends will affect your business?Which areas of weakness in your company‟s technologyportfolio?• Are additional technologies necessary to continue tocompete effectively?• „Make or buy‟ decision (dealing with development risk)- Internal development (within your company: make)- External acquisition (buy)- Partnering to co-develop
  11. 11. Step 3: Decide on ‘What-to-Sell Strategy’• The new technology itself is a product or it gives rise to a(new) product, e.g. a way to prepare a new medicine• Basic question: How to transform know-how into revenue?Critical issue: technology and market uncertainty• Options – the Continuum of selling options:- Sell or license know-how only- Sell „proof-of concept‟ (pilot plant or prototype)- Sell components to OEMs- Sell ready-to-use final products or entire systems- Sell a complete end-to-end solution (including services)
  12. 12. Product PortfolioProduct Portfolio: the range of products offered by thecompany (link with Product Life Cycle)
  13. 13. Which customers? Market segmentation• Step 1: Divide the market into groups, based oncriteria that meaningfully distinguish betweencustomers‟ needs, choices and habits.• Step 2: Describe customer‟s profiles in eachsegment.• Step 3: Evaluate the attractiveness of these segments,and select target segments.• Step 4: Position the product within selectedsegments.
  14. 14. Step 1a: Divide the consumer market into groupsSegmentation criteria for the consumer market (B2C):• Geographic (country, city/countryside, area)• Demographic (age/stage in family formation)• Psychographic (values and lifestyles)• Behavioral criteria related to the new product- Benefits desired in a product- Ease of use and usage occasion (home versus work)- Frequency of usage of a product (heavy versus light users)- Adoption speed- Buying behavior (moment of buying, place of buying)- Brand loyalty
  15. 15. Step 1b: Divide the business market into groupsSegmentation criteria for business market (B2B):• Industry sector referring to type of product/market• Firm size• Corporate culture• Use within one industry only, or cutting across differentindustries (e.g. banking software versus HRM softwareand accounting software)
  16. 16. Step 2: Describe the customer‟s profile in each segmentDescriptions are given in the next slides on:a) Attitude and behavior of user segments in theUS information and communication technologymarket.b) User segments according to „technographics‟,taking into account: pessimism/optimism,income (richness) and type of use (business,home, entertainment)
  17. 17. Example: Market segmentation for GIS (B2B)Industry/sectorForesty Oil and gasexplorationandexploitationFishery Telecommu-nicationsTransport Militarydefence
  18. 18. Step 3: Compare and evaluate market segments, and select–Size of segment in terms of sales volume–Growth rate of the segment and potential accessto other, adjacent market segments (crossingthe chasm?)–Competition within the segment–Capabilities of your firm to serve segment needs
  19. 19. Positioning ToolsHow to learn about positioning of the newproduct within the segment/which supportingtools in positioning?•Multi-Attribute Model: this reveals therelative importance of attributes of yourproduct
  20. 20. Multi-Attribute Model for Tom Tom
  21. 21. Exercise - 1• Groups of 2• Main goal is to develop a concept for a new product that combines thetechnology of both companies in the group• It will be based on the TCP methodology (see manual): Technology(capabilities) => Product (features) => Market (Needs)• Part 1 (T): Map the technologies of both companies (corestrengths, limitations, ownership, etc.)• Part 2 (P): Conceive a possible product with those technologies (use avalue curve or the multi-attribute model)• Part 3 (M): Link the product to the needs of specific market segments(see segmentation part)
  22. 22. 15© 2009 Hay Group. All Rights ReservedVALUEPROPOSITIONKEYRESOURCESDISTRIBUTION &COMMUNICATIONCHANNELSCUSTOMERSEGMENTSPARTNERNETWORKREVENUE STREAMS / PRICINGCOST STRUCTURECUSTOMERRELATIONSHIPKEYACTIVITIESwhich one of yourcustomer’s problemsare you solving andwhy will he work withyou rather than with acompetitor?through which meansdoes your customerwant to be reachedand addressed byyou?what type ofrelationship does yourcustomer expect youto establish andmaintain with him?what are yourcustomer’s needs,desires andambitions?what value are your customers really willingto pay for and how will they pay for it?what is the cost structure of your businessmodel and is it in harmony with the coreidea of your business model?what are your keyactivities and howdifficult are they toperform (by others)?what can partners dobetter than you or at alower cost (and thusleverage your businessmodel)?what are your keyresources and howdifficult are they to copy(by others)?Analysing / Designing a Business Model
  23. 23. 16© 2009 Hay Group. All Rights ReservedExample: the classical EMI
  24. 24. 17© 2009 Hay Group. All Rights ReservedVALUEPROPOSITIONKEYRESOURCESDISTRIBUTION &COMMUNICATIONCHANNELSCUSTOMERSEGMENTSPARTNERNETWORKREVENUE STREAMS / PRICINGCOST STRUCTURERELATIONSHIPMANAGEMENTKEYACTIVITIESSuperstar artists andhitson broadly availableLP/CDs•Retail outlets•Radio and TV•Music magazines•Mass Market•Global•RetailersHuge revenues from LP/CD salesof famous artists•‘Talent’ production•Recording music•Marketing•Distribution•Inventory•Finding talent•Recording Music•Marketing•Distribution cd’s•Distribution channel•Artists•Protected content•‘Talentspotters’•Studio’s•Brand name•Distribution channelBusiness model: the classical EMI•Relation with retailersvia contracts•organizing first fanclubs
  25. 25. 22© 2009 Hay Group. All Rights ReservedExample: Apple iTunes
  26. 26. 23© 2009 Hay Group. All Rights ReservedVALUEPROPOSITIONKEYRESOURCESDISTRIBUTION &COMMUNICATIONCHANNELSCUSTOMERSEGMENTSPARTNERNETWORKREVENUE STREAMS / PRICINGCOST STRUCTURERELATIONSHIPMANAGEMENTKEYACTIVITIES•Platform formusicians andfans/buyers•Matchmaking withtaste•Purchase musicdirectly, for low prices•Ease of use, instantdeliveryOnline•Communities•Simplified interface•Newsletter•Music lovers•Niche segments•Global reachSmall revenues from many artists(0.99 dollar for 1 track)Platform maintenanceManufacturing iPods/iPhones•Software development•Platform management•Design (iPod, iPhone)Content producers•Music database•Breadth of platform•Brand•iPod, iPhoneBusiness model Apple iTunes
  27. 27. 24EMI vs i-tunes: questions• Why did EMI not come up with the i- tunes business model?• What is the added value that i- tunes brings? To who?
  28. 28. 24EMI vs i-tunes: questions• Why did EMI not come up with the i- tunes business model?– Companies often think within the boundaries of their industry... double loop learningis critical. Re-assess the assumptions of your industry. The "these are the rules of thegame syndrome"– Success often blinds our ability to look at things differently... the "we have always beensuccessful syndrome"– New technologies can bring new variables into the system that open up newpossibilities.• What is the added value that i- tunes brings? To who?– To the music industry: fight music piracy– To the consumers: ease of use, buy only the songs you like, cheap– To the ipod platform: extensive technology adoption
  29. 29. Exercise - 2• Same Groups of 2• Develop a possible Business Model for your new product based on theBusiness Model Canvas of Osterwalder and Pigneur.• Starting point depends on your initial mindset: technology (resources),customer, a value concept, a partner you have, etc…
  30. 30. Exercise – 3 (optional)• Same Groups of 2• Have a discussion of what could be a pricing strategy for your newproduct
  31. 31. Exercise – 4 (optional)Discuss and give examples of how your company has implemented:a) Guerrilla Marketing;b) Buzz Marketing;c) Viral Marketing.Discuss moves by major competitors in your industry as concerns:a) Guerrilla Marketing;b) Buzz Marketing;c) Viral Marketing.
  32. 32. The Chasm• Pragmatists wantreliable andcomplete solutionsto their problems.They are weary ofrisk and rely on pastsuccess… verydifferent from earlyadopters.
  33. 33. Crossing The Chasm• To cross the chasm Moore suggests a “D-Day/EntryBeach” or “Big Fish, Small Pond” strategy• Identify a single pragmatist customer• Goal is to win a niche foothold in the mainstream asquickly as possible and then expand into adjacentsegments• Reference: Geoffrey Moore, Crossing the Chasm
  34. 34. Example of crossing the Cham - Documentum• Documentation management spin-off company from Xerox• In the chasm between 1990 and 1993 (flat sales of 2M$)• Target market between 1990 e 1993: “all personnel who touch complexdocuments in all large eterprises”• Strategy to leave the chasm (with a new CEO) :– Defined a beach-head = Pharma Regulatory affairs departments inFortune 500 companies (40)– Why: It is a small market (in number of customers), but the problemwas immense (250.000 to 500.000 pages per patent)– Result: In one year Documentum demonstrated that it could solve theproblem of one company. It captured 30 of the total 40 companiesand sales went to 8M$ and 25M$ in just two years.
  35. 35. Documentum’s Five Criteria1. Is the target customer well funded and are they readilyaccessible to our sales force?2. Do they have a compelling reason to buy?3. Can we today, with the help of partners, deliver a wholeproduct to fulfill that reason to buy?4. Is there no entrenched competition that could preventus from getting a fair shot at this business?5. If we win this segment, can we leverage it to enteradditional segments?
  36. 36. Exercise – 5 (optional)• Groups of 3• Main goal is to understand whether you are in the chasm and how youcould cross it• Discuss whether you are in the chasm or not• Develop a D-Day strategy for you to reach the early majority (crossingthe chasm) OR how you managed to cross the chasm