Lean Market Analysis

21.02.2015 Dr. Ute Hillmer www.better-reality.com
Market Research
Lecture
SIBE21.2.2015
Dr. UteHillmer

Dr. Ute Hillmer ist
Experte in der Vermarktung erklärungsbedürftiger
Produkte und Services, mit einem Schwerpunkt auf
neuen Dienstleistungen und Innovationen.
Was genau ist es, das Ihre Kunden suchen, wenn Sie Ihr Produkt
kaufen? Worauf kommt es Ihren Kunden besonders an?
Sie wissen es? Sind Sie sicher?
Begeisterte Fan-Kunden sind weder Geniestreiche noch Glücksache.
Sie basieren auf ganz, ganz viel detailliertem Kundenverständnis und
einer sehr konsequenten Umsetzung.

The New Market Research Manifesto
1. New media allows for new methods in market research
2. New management methods require new methods in market
research.
3. Learning first hand about the customer, the value he is willing
to pay for and to develop a product or service that delivers this
value is called CUSTOMER DISCOVERY.
4. Customer Discovery is NOT ABOUT statistically relevant
answers. It is about the questions: Where do we find hints and
patterns what our customers want and what they are willing to
pay for
5. Customer Discovery is all about fast, agile and lean.
6. Customer Discovery is a way to built market focused
innovations, that don‘t take forever and that don‘t eat an
endless research budget.

Thislectureisabout…
• Understanding why market research is changing
• Understanding customer discovery
• The 5 big Q‘s of market research
• What do you want to learn?
• Who do you want to learn from?
• How will you get to them?
• How can you ensure to be effective?
• How do you make sense of what you learn?

Agenda
1. Why does MR matter?
2. Why is MR changing?
3. The big 5 Q’s of Market
Research:
1. What do you want to learn?
- B-Model and Value Proposition Exercise
2. Who do you want to learn from?
- Your typical customer
- Your early adopter
3. How will you get to them?
- The Basics of Market Research
- Overview on Methods
- Google Tools for Market Research
(by Jens Tonnier, wolter eMktg.)
- Social Media Monitoring
4. How can you ensure to be effective?
- Changes in Market Research
- Interviews: Talking to People
- Afternoon Exercise
5. How do you make sense of what you
learn?
- Testing and re-testing our “product”

Why does
Market
Research
matter?

Q1:What doyouwant to learn?(Purpose)
• Size of the market
• Market trends
• Forecasting
• Planning
• Evaluation of
Strategies/promotions
• Assessing marketing mix
• Identifying market segments
• Identifying consumer needs
• Identifying competition
• Identifying opportunities/gaps
in the market
• Reduce riskCartoon copyright of Giff Constable, „Talking to Humans“

Anewproductintroduction, anewbusiness:
Howdoyouknowyour mostimportant questions?
• What are the assumptions you are making?
• From those assumptions, what are the most important and most
risky ones?
• E.g. the VALUE you provide to your customer:

Whatareyour mostimportant andmost risky
assumptions youaremaking?
• E.g. the VALUE you provide to your customer:

Whatareyour mostimportant andmost risky
assumptions youaremaking?
• How you reach your customers
Quelle: businessmodelgeneration.com
• How you make money

BusinessAssumptionExercise, 20 Minutes
1. Getting Ready
Groups of 3-5 people
Agree on your new product idea: you plan to develop (choose one)
• a Dating App,
• a Sports Appointment App,
• or a Car Sharing App
2. Go along with the Q’s given on the next slide and agree on a business
model how the app will stand out from the rest and how it will generate
customers + revenue
(be creative and wild, have fun with it! It’s just an exercise)
3. Write down the answers to the questions and find the key 5-7
assumptions you are making that are critical for success and
especially those that are highly speculative.
They are your research priority!

BusinessAssumption Exercise (cont.)
Findyourkeyassumptions
• My target customer will be? (How would you describe your primary customer? Archetypes?)
• The problem my customer wants to solve will be? (What are they struggling with and what need is unfulfilled?)
• My customers needs can be solved with? (be concise ; an elevator pitch of the solution)
• Why can‘t my customer solve this today? (What are the obstacles?)
• The measurable outcome my customer wants to achieve is? (What measurable change in your c‘s life makes
them love your product?)
• My primary customer acquisition tactic will be? (most likely you have multiple mktg. Channels, bit 1-2 will
dominate)
• My earliest adopter will be? (remember: no mainstream without early adopters)
• I will make money(revenue) by? (pick the primary ones)
• My primary competition will be? (direct and indirect competition)
• I will beat my competitors primarily because of? (what truly differentiates you?)
• My biggest risk to financial viability is? (what could prevent from breaking even? Can you de-risk something?)
• My biggest technical or engineering risk is (is there a major tech. challenge that might hinder building the
product?)
• What assumptions do we have that, if proven wrong, would cause this business/product to fail?
Then: Mark the assumptions that will have a large impact on your business
Mark the assumptions that you feel highly uncertain about
They are your research priority!

Schlüssel-
Partner
• Wer sind unsere
Schlüsselpartner?
• Wer sind unsere
Hauptlieferanten?
• Welche Ressourcen beziehen
wir vom Partner?
• Welche Aktivitäten führen
unsere Partner aus?
Wer / Wie / Was ?
Business Model Canvas
Wert-
Versprechen
• Welchen Mehrwert bieten wir
unseren Kunden?
• Welche Kundenprobleme lösen
wir?
• Welches Bündel an
Dienstleistungen/Produkten
bieten wir unseren Zielkunden?
• Welche Kundenbedürfnisse
befriedigen wir?
Kunden-
Segmente
• Für wen schaffen wir einen
überzeugenden Mehrwert?
• Welche sind unsere
wichtigsten Kundensegmente?
• Massenmärkte,
Nischenmärkte, segmentiert,
typisiert, multi-sided
Haupt-
Aktivitäten
• Welche Aktivitäten schulden
wir durch unser
Wertversprechen?
• …unsere Vertriebskanäle?
• …unsere Kundenbeziehung?
• …die Einkommensströme?
Vertriebskanäle
• Wie wollen Kundensegmente
erreicht werden?
• Wie erreichen wir sie heute?
• Wie sind Distributionskanäle
integriert?
• Welche sind am
Erfolgreichsten?
• Welche sind am
Kostengünstigsten?
• Wie integrieren wir Kanäle mit
Kaufprozess d. Kunden?
Haupt-
Ressourcen
• Welche Ressourcen benötigen
wir zur Erfüllung des
Wertversprechens?
• …unsere Vertriebskanäle?
• …unsere Kundenbeziehung?
• …die Einkommensströme?
Kunden-
Beziehungen
• Wie sollen die Beziehungen mit
Kundensegmenten angebahnt
und gepflegt werden?
• Welche sind bereits etabliert
• Wie sind sie i.d. Rest d.
Geschäftsmodells integriert?
• Wie Aufwendig sind Aufbau
und Unterhalt?
Kostenstruktur
• Was sind die Hauptkosten unseres Geschäftsmodells?
• Welche Hauptaktivitäten verursachen diese Kosten?
• Welche Hauptaktivitäten bewirken die höchsten Kosten?
Einkommensströme
• Für welchen Mehrwert sind unsere Kunden wirklich bereit zu bezahlen?
• Wofür bezahlen sie gegenwärtig?
• Wie zahlen sie zur Zeit?
• Wie würden sie bevorzugt bezahlen?
• Wie viel trägt jeder Einkommensstrom zum Gesamterlös bei?
Quelle: businessmodelgeneration.com
Find your most important
guesses + the most risky ones!

Q2:Whodo youwantto learnfrom?
1. The typical customer you
envision if you get traction
with your idea
2. Your early adopter = the
people who will take a
chance at your product
before anyone else does
3. Critical partners for
distribution, fulfillment, other
parts of the business
your job is to think through
the kinds of people who
have the problem you are
interested in solving!
Cartoon copyright of Giff Constable, „Talking to Humans“

Who doyouwant to learnfrom?
• The typical customer you
envision if you get
traction with your idea
• Your early adopter = the
people who will take a
chance at your product
before anyone else does
• Critical partners for
distribution, fulfillment,
other parts of the
business
MarketSize
Laggards
16%
Conservative
34%
Visionary
13,5%
Pragmatist
34%
Techy
2,5%
your job is to think through the
kind of people who have the
problem you are interested in
solving!
Chart based on Rogers 1995, p. 262 und Moore 1999, p.12

LaggardsLate
Majority
Early
Adopters
Early
Majority
Innovators Time
MarketSize
TheMainstreamMarket
The typical customer, once your product has successfully
entered the market

LaggardsLate
Majority
Early
Adopters
Early
Majority
Innovators Time
MarktSize
TheEarlyAdopters
The people who will take a chance at your product before
anyone else does.
If you can not get early adoptes, you can not move on.
Burning problem pic

Who doyouwant to learnfrominB2B?
• Strategic buyer who is
excited about the change
you can bring)
• Economic buyer who
controls the purse
• Technical buyer who
might have
approval/blocker rights
• User who ultimately uses
the product or service
Identify champions + saboteurs!

20MinuteBreak

Q3: Howwillyougettothem?
inother words:TheMethodology
• Internal vs. external sources
• Primary vs. secondary research
• Quantitative vs. qualitative sources
• Methods

InternalSources
• Customer Management System CMS
• Internal reports and analysis
• Sales data / Retail data - loyalty cards, etc.
• Stock Analysis
• Web site / eShop data
– Retrieve + analyze with Google Analytics
– Retrieve + analyze with commercial tools
• Social web data
– Retrieve + analyze with site-internal tools
– Retrieve + analyze with commercial tools

ExternalSources
• Open Data: available statistics + research documents
• Open Date: raw data from the internet
– Retrieve + analyse with Google tools
– Retrieve + analyse with commercial software tools
• Commercially available Data
• Other Data: magazine surveys, other firms’ research, …
• Own Surveys

PrimarySources
• First hand information
• Often expensive to collect, analyse and evaluate
• Can be highly focussed and relevant
• Care needs to be taken with the approach and methodology to
ensure accuracy
• Types of question – closed – limited information gained; open –
useful information but difficult to analyse

Secondary
OpenData
Sources

Secondary
Paid
Sources
http://bit.ly/1vvVZAX

QualitativeResearch QuantitativeResearch
Descriptive: tells you why, when and
how
Data can be observed but not measured.
Colors, textures, smells, tastes,
appearance, beauty, etc.
Overview
Based on numbers: 56% of 18 year olds drink
alcohol at least four times a week
Data which can be measured: length, height,
area, volume, weight, speed, time,
temperature, humidity, sound levels, cost,
members, ages, etc.
Example 1: Oil Painting
blue/green color, gold frame; smells old and musty;
texture shows brush strokes of oil paint; peaceful
scene of the country; masterful brush strokes
picture is 50cm by 70cm with frame 60 by 80; weighs 4kg;
cost €300
Example 2: Latte
robust aroma; frothy appearance
strong taste; burgundy cup
200ml of latte; serving temperature 65ºC
serving cup 7 inches in height; cost €3.95
Example 3: Freshman Class
friendly demeanors; civic minded; environmentalist
positive school spirit
672 students; 394 girls, 278 boys
150 students accelerate in math
Source: following http://regentsprep.org/ and

TraditionalQuantitativeResearch
Test your assumptions through quantitative research by using
• Secondary Research
• Do your own primary research
• Analyzing available Data

QuantitativeResearchToday
Test your assumptions through quantitative research by using
• Secondary Research
• Do your own primary research
• Analyzing available Data
Social Media Monitoring
(SMM)
Google Tools:
• Google Advanced Search
• Google Adwords / Keyword
Planner (Tool)
• Google Trends (Insight)
• Google Analytics

QualitativeResearchToday
Test your assumptions through qualitative research
• Asking people
• Watching people
• Go through the experience yourself
Questionnaire
Focus Groups
User Groups
Postal Survey
Telephone Survey
Social Media Monitoring
Customer Interviews
Test Markets
Internet feedback

Let‘sDigDeeper:Methodsfrom Google
Google tools for market research
• Google Advanced Search
• Google Adwords / Keyword Planner (Tool)
• Google Trends (Insight)
• Google Analytics
Welcome Jens
Tonnier from wolter
e-marketing GmbH!

Why Google?
Search Engines 2005

Why Google?
The Online Search Ecosystem 2013

SearchEngine useagein Germany

GoogleAdvancedSearch
Video: https://www.youtube.com/watch?v=yc6ssZnCyuA

GoogleKeywordPlanner
adwords.google.com/KeywordPlanner
Know how your customers are searching and talking, get wording
ideas and traffic forecasts
• Keywords are the phrases that customers use to research and
select a product or service
• You want to use the words that your target custonmers use +
look for
search for keyword and ad groups ideas based on terms that
are relevant to your product or service, your landing page, or
different product categories
Get historical statistics and traffic forecasts

Findinformationin KeywordPlanner
• Keywords, Search Volume, Competitiveness (based on AdWords
competition)
• Note: Only use EXACT match to explore keywords
– Exact match = tennis shoes
– Phrase match = tennis shoes for women –or-
blue tennis shoes size 9
– Broad match = shoes for tennis –or-
tennis rackets and shoes
• Keywords must be compared “apples to apples”
Video: http://youtu.be/bxREkVhzEkw

• useful for casting and short term forecasting of consumer trends
(where statistics is not available or not yet available)
• Free publicly available dataset; search per country, category,
period
• Google taxonomy of 256 categories (“jobs” including “job
listings” “career resources and planning”, “resumes &
portfolios”, “developing jobs)
• Overview of increases and decreases in the use of search
category in real time (normalized within search categories)
1 Exploring statistics from the internet
GoogleTrends http://www.google.com/trends

GoogleTrends

GoogleTrends
Video:
http://youtu.be/4uNrhACTv_c

GoogleAnalytics
• Does daily, monthly, yearly tracking of web visits
– Graphed over time
• Shows which pages they go to, how long they stay
– Bounce rate
– Entrance pages
• How they got there
– Search engines and Search terms used
• Location, operating system, monitor resolution
• Over 80 reports available

GoogleAnalytics
How it works
• Sign up for Google Analytics
– https://www.google.com/analytics/
• They return code to you
• You paste the code just below the </body> tag
• Put it on EVERY page
– Edit>Find and Replace is easiest option
• Put it in your template pages, so it will be automatically on every
page
• Go to the Analytics dashboard page to see daily metrics

GoogleAnalytics
Useful Reports
• Visitors:
– Map overlay, Browsers, Operating systems, Screen resolution,
Connection speed
• Traffic sources
– Direct links/Referring links/Search engines, Most frequent search
words used
• Content
– Top content, Site overlay
Video: http://youtu.be/WC3ONXJn9FQ

Let‘sDigDeeper:SocialMedia Monitoring

21.02.2015 Dr. Ute Hillmer www.better-reality.com © 2014 Brandwatch | www.brandwatch.de
Einführung/ Der Monitoring-Prozess
27
Daten-
erfassung
 Query
Analyse
Präsen-
tation
Bereini-
gung

1. Ziele/ Welche Abteilungen werden involviert?
Marketing Community/
CRM
PR
Markt-
forschung
Vertrieb
© 2014 Brandwatch | www.brandwatch.de

Abteilungen/ Marktforscher
Endlich verstehe
ich den Markt.

51
Marktforscher/Produktwünscheentdecken

52
Marktforscher/Produktwünscheentdecken

Q4:Howcanyou ensureto beeffective?
• Changes in Market Research!

Customer Development
• Customer Development
Customer Problem:
known
Product Features:
known
Illustration copyright of Steve Blank, „The Startup Owners Manual“

And why is MR
changing?

Whymust Market Research change?
9outof10product innovations arefailing
Corporate giant or small
star-up, low-tech or high
tech, online or offline, 9 out
of 10 new ideas fail
because…
our tools are
optimized for
execution
With innovations,
you need to be in
search mode!

ATaleof Fail

Webvan:a tailof fail
• A startup that promised delivery of groceries within 30 minutes
of ordering, from state-of-the-art order fulfillment centers
manned by advanced robots.
• Launched 1999;
• $10M, within 2 years $400M, raised;
• 8.5 billion market capitalization on day of IPO
• They had a compelling story, a great b-plan, a long list of
features for SW, warehouse handling,…
• Webvan executed as its board and investors asked
• from launch to fail in 2 years perfectly on plan

“NewProductIntroductionDiagram”
The model is a good fit for an exiting company where customers
are known, the product features can be spect‘ed upfront, the
market is well defined and competition is understood!

CustomerDiscovery

Customer Development
• Customer Development
Customer Problem:
known
Product Features:
known

Oneofthe largestfailureson record
• Founded in 1991 by Motorola and a global partnership of 18
companies
• Planned to built a mobile phone system that would work
anywhere on earth
• Purchased 15 rockets from Russia, U.S. and China, 72 private
satellites were launched into orbit
• 7 Years after launch, the infrastructure was in place; 9 Month
after first call was made, the company was bankrupt.

Anewareain productsand channels
Physical products through physical channels
Virtual products through physical channels

Talkingto People
3 Phases
• Pre-planning
• Interviews and other discoveries
• Analysis and Insight
Cartoon copyright of Giff Constable, „Talking to Humans“

Talkingto People2
Preparation: develop a question GUIDELINE
Q1: What do you want to learn?

Talkingto peopleandmake sure
• Do it yourself, don’t use an agency
• One person at a time
• Add a note taker if possible
• Start with a warm-up question and keep it human
• Avoid confirmation bias by hearing what you want to hear (you
can play a game with yourself)
• The story mode: “Imagine you are filming the documentary of
your life. At this moment, what were you doing, saying, what is
the emotion?”
• Are there solution hacks? Ways the customer tried to solve the
problem?

Moreto developa questionguideline
• Ask open questions
• Talk little and get the other person sharing openly
• Set goals for key questions and track results
We hope that 85% of all date app users are interested in getting
to know new people, unrelated to any romantic outcome.
• Observing uninfluenced behavior upfront, can lead to great
insight and will help you find the right questions.
• Parrot back or misrepresent to confirm
• Do a dry run

Developa questionguideline
Get Stories, not Speculation!
• Watch out for speculations (Would you buy this product? How much
would you be willing to pay? …) …humans are very bad in predicting
their future behavior!
• Instead, ask your interview partner to share a story about the past!
• How did you arrange + meet up for team sports in the past?
• How exactly did you do it?
• What worked well? Why do you think this worked? What was really good about it?
What was the most fun about it? …
• What would you like so see improved? What frustrated you most? If you could do it
all over again, what one thing would you change?
• What were the overall “cost” to you (time, money, nerves, …) – watch out for the
words used!
• What were the overall “gains” to you (fun, outcome, …) - …the words used!
• What was the most important reason you bought XX at the time?
• …

Evenmore to developa questionguideline
The MagicWand
• No Magic Wand Questions:
“If you had a magic wand that makes this product do whatever you
want, what would it do?”
• If anything, ask: “If this product were to solve one problem, what
would you want it to solve?”
It’s the customers job to explain their behavior, goals and
challenges. It is the product designer's job to come up with
the best solution.

Moreto developa questionguideline
Testing for price:
the hardest questions to get answered by qualitative questions are
– „Will people pay?“
– „How much will people pay?“
because answers to these Q‘s are extremely suspect.

Findyourinterviewsubjects
• Try to get one degree separation away
• Be creative and don’t expect people to come to you
– Where are they waiting and bored? (in line; moms on soccer
tournaments, …)
– Where are they in in their moments of pain?
– Referrals?
– Conferences, trade-shows, meet-ups?
– Social Media Groups?
– What do they enjoy? (pay a café, a manicure, ....)
If something does not work, try something new!

Moreaboutenterpriseinterviewsubjects
• Conferences, trade-shows
• Xing, LinkedIn, - know the title of your prospects
• Start in the middle – move up with more experience and
knowledge
• Ask for advice in a relevant chat
• Decide if you want to ask for advice or if you want to sell
• People are willing to grant time to friendly people, more so, if
they are students or researchers
If something does not work, try something new!

Exercise:Youhave 4minutes withyourCEO/your
Investor toconvincehim/her to fundthe newapp
• Research + test your most critical assumptions you are making for
the success of your app (morning exercise)
• You can use secondary research available online and parts from
statista at http://bit.ly/1vvVZAX
• Use your Google Research results for the right questions and the
right terminology
• You MUST go and do interviews (3 would be a good amount)
• Present in 4 Minutes, why your app must be funded. You can share
what you did, what you learned, what your conclusions are, what
your next steps will be. Convince for future funding!
• 2 Minute Feedback; I love….; I wish …; I share a thought….

Q5:How doyoumake senseof whatyoulearn?
• It’s not about scientific significance, its about pattern detection
• To find patterns, you need to track the data
• Good working method:
– everyone writes down as many patterns and observations as they saw on post-
its in 10 minutes.
– Put them all on a wall and sort them
– Discuss the patterns as a team and re-view your assumptions, your b-plan and
product plan.
• Don’t take one persons comment to literally: look for patterns and apply
judgment! In real life, talking to 50-100 people is a good amount.
• You are an intelligent filter, not an order taker
• People want to be helpful and nice; you want to hear nice things – keep that
in mind

LeanExperimentingyourwayup
• Only talking to people is not enough; building a live product is
expensive and time consuming. Built your way up, itterating to
the RIGHT product that meets a customer need and that sells.
Source: Chart by Gliff Contable, Talking to Humans

Q5:How doyoumake senseof whatyoulearn?
Verify your learnings by testing and re-testing our “product”:
Conversations
Mock-up
Prototype
Live Product
Put it in front of custemers and watch and listen to their reactions.
customers and get their feedback.

Makingmoresense ofwhatyoulearnbyputting
peoplethroughthe actal experience
• Built a Minimum Viable Product (MVP) that offers the value your
customers value most and get feedback
• Built a landing page test that offers the MVP or tests some
wording and run the analytics of who
- is interested to read more
- asks for material by entering an address
- clicks the “buy now” button

Readyformore?
• The Lean Star-up, Eric Ries
• The Startup owner Manual, Steve Blank
• Business Model Canvas, Osterwalder
• Giff Constable, Talking to Humans
• The Lean UX,

Dankeschön!

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