Ideas to Income: An introduction to marketing

Ideas to Income 
An Introduction to Marketing 
MaRS Entrepreneurship 101
January 14, 2009
Lecture 1 & Workbook Slides

Peter Evans 
Advisor, MaRS Venture Group
pevans@marsdd.com

Peter Evans
Advisor, MaRS Venture Group
pevans@marsdd.com

Peter Evans advises entrepreneurs and high growth companies in a range of technology markets,
specializing in strategic planning, research, product management and channel development. He
brings to MaRS over 15 years experience working in early-stage venture-backed technology
start-ups and publicly traded companies in the software, Internet services, online media and
telecommunications sectors.

Previously, Peter worked in major accounts sales, product management, research and senior
marketing roles with organizations such as Sympatico, FloNetwork (acquired by DoubleClick in
2001) and PlateSpin Inc. In his role as a consultant since 2003 he has worked with over 100
clients throughout North America from early stage ventures to large corporate clients such as
TELUS, CNW Group and DoubleClick in the US (just prior to its acquisition by Google). An angel
investor in a number of early-stage startups he is has served on a number of boards including
Sitebrand (Ottawa), XPLANE Corporation (St. Louis) and the Toronto Venture Group. His
community contributions include fundraising and educational work with organizations such as
the National Ballet School, Junior Achievement and seven years serving as a Big Brother with Big
Brothers of Metropolitan Toronto.  

A noted speaker on strategy and marketing he has spoken at major conferences throughout
North America and Europe in addition to being a guest lecturer on marketing at UofT and
Queen’s. He was educated in cognitive psychology and telecommunications management at the
University of Toronto and Ryerson University and holds an MBA from Queen’s University. He is
currently completing the Certiﬁcate Program in Strategic Planning & Innovation at the M.I.T.
Sloan School of Management.

Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 1

What’s on for Tonight
Session Learning Objectives

  What is Innovation?
Goals
  What is Marketing?
  Learn some key marketing
and strategy concepts
  Why Marketing Matters?
  Be able to apply them 
to an invention or idea
  The Problem with Ideas:  
  Have a deeper respect  
“The Innovation Paradox”
for marketing as a discipline
  Step by Step overview of how a     Have Fun
marketing as a system of STRATEGIC
activities can transform Ideas to Income
  Our Approach:
–  Key Marketing Principles/Frameworks
–  Best Practices (Examples)
–  Workbook Sections for Reference)
–  Take home exercise (fun for the whole family)


What is Innovation?


Innovation is Good
Wikipedia Says So

INNOVATION [in-uh-vey-shuhn n] 

a new way of doing something. It may refer to incremental,
radical, and revolutionary changes in

-  Thinking
-  Products
-  Processes
-  Organization


10 Types of Innovation
It goes way beyond science & technology

1.  Finance/Business Model
1.  Finance/BusinessModel - -How you make money
How you make money

2.  Networks and Alliances How you join forces with other companies for mutual
2.  Networks and alliances - - How you join forces with other companies for
mutual
beneﬁt beneﬁt

3.  Enabling process - How you support the company's core processes and
workers
4.  Core processes - How you create and add value to your offerings
5.  Offerings - Product performance
5.  Offerings - Product performance How you design your core offerings
How you design your core offerings

6.  Product System
6.  Product System -- How you link and/or provide aaplatform for multiple
How you link and/or provide platform for multiple
products.
7.  Service - How you provide value to customers and consumers beyond and
around your products
8.  Delivery Channel
8.  Delivery Channel -- How you get your offerings to market
How you get your offerings to market

9.  Brand
9.  Brand - How you communicate your offerings
10.  Customer Experience How your customers feel when they interact with your
10.  Customer Experience --How your customers feel when they interact with your
company and its offerings
Source: Doblin – Division of Monitor


Innovation is…

creativity fused with
process that transforms.
ideas income
+
positive
social
change


Innovation is…

creativity fused with
process that transforms.
ideas income


What is Marketing?


Marketing Deﬁnitions
How the professionals describe marketing

“Marketing is the activity, set of institutions and
processes for creating, communicating, delivering and
exchanging offerings that have value for customers,
clients, partners and society at large.”
AMA (American Marketing Association)

“The management process responsible for identifying,
anticipating and satisfying customer requirements
proﬁtability”
Philip Kotler –Author & 
Professor of International Marketing 
Kellog School Of Management, Northwestern University


Where Marketing Fits
Within the Business Functions of a Company

IDEA INCOME

R&D MARKETING SALES SERVICE FINANCE Legal HR

MARKET STRATEGY PRODUCT MARKET PARTNERSHIPS SALESFORCE
RESEARCH MANAGEMENT MANAGEMENT INTEGRATION


The 4P’s as a Framework
A simple linear view of the marketing process
PROMOTION
Sales promotion strategy,
advertising, publicity

PRICE
Pricing strategy, cost accounting,
price setting research

PLACE
Distribution channel strategy,
distribution merchandising

PRODUCT
Product strategy, “needs”
research, development pllan


Benefits of Marketing
What’s in it for start-ups?

Customers
✔   Establishes your relevance/credibility with the right first customers 

Product
✔   Clearly identifies problems and critical transition points and guides the
development of the right prototype and product 

Markets
✔   Creates a more predictable and scalable go-to-market process and alignment
with the right segments 

Investors
✔   Provide a common framework for understanding key areas of the business that
affect success. Shows how a company can grow and make money on a
sustainable basis


Why Marketing Matters
Its in the numbers…

More than

Average 15
Slides
in an Investor Pitch Deck
50%
are marketing related


How an Investor Sees Marketing
Investor Presentation: Table of Contents

1.  Company Overview & Vision
8.  Competitive Advantage/
Intellectual Property
2.  Management & Advisors
9.  Category Map -
3.  Customer Problem
Where our Solution Fits
10.  Competitive Advantage
4.  Market Opportunity/Size
(Value Matrix/Value Curve)
5.  Solution
11.  Business Model
6.  Beneﬁts/Value Proposition
12.  Marketing & Sales
(Customer Acquisition/Sales Cycle)
7.  Success to Date (Customers/ 13.  Financial Projections (3-5 Yr.)
Partners/Patents)
14.  Financing Requirements


How an Investor Sees Marketing
Marketing is threaded across the venture

1.  Company Overview & Vision
8.  Competitive Advantage/
Intellectual Property
2.  Management & Advisors
9.  Category Map
3.  Customer Problem
Where our Solution Fits
10.  Competitive Advantage
4.  Market Opportunity/Size
(Value Matrix/Value Curve)
5.  Solution
11.  Business Model
6.  Beneﬁts/Value Proposition
12.  Marketing & Sales
(Customer Acquisition/Sales Cycle)
7.  Success to Date   13.  Financial Projections (3-5 Yr.)
(Customers/Partners/Patents)
14.  Financing Requirements


So What Happens when
Marketing
Gets it Wrong?


Reasons for Market Failures 
The 7 Deadly Sins

Failure to clearly identify and focus on:
1.  Market Category – Addressable Market
2.  Target Customers – Problem you solve
3.  Competitors (Current and Future) – Who Else is Working on this Problem?
4.  Product Strategy/Positioning – Your Unique Approach
5.  Pricing structure – What End Customers and Channels will Pay for the Product

6.  Distribution Model - Direct or through Partnerships?
7.  Revenue Model – How you Make Money (Partnerships/Licensing)


And it’s getting even
tougher to
compete these days…


Nobody is Safe Anymore
Even some of the most established companies are under seige


But does Marketing
REALLY Matter?


YES


Because


Because…

Marketing helps
get you to FCS


And…

Nothing really happens
until somebody gets to FCS


WT* is FCS ?


=


First Customer Sale


Yay !


But here’s the bad news


:-(


Most Sales Don’t Close


Why Most Sales Don’t Close
Here’s where the process breaks down

No Pain No Power
  No Goal = No prospect   Power buys from power
  Critical points of pain or key   While end-users and influencers are fun
business issues are necessary to to sell to they have not have the authority
initiate a search for a solution to buy
  Ultimate decision-makers may have
different goals (points of pain)

No Solution No Value
  Feature/Function discussions are   Goals should be related back to $$$
useless unless put in context of   Tangible value propositions provide a
the customer’s pain
means of reducing price pressure i.e.
  Solutions must be created in the Reduced cost, increased revenues,
prospects mind through careful, higher customer satisfaction/lower churn
methodical diagnosis etc.


Back to the Drawing Board


Ideas Don’t Have Market Context
Even Webster is pessimistic

idea (n.) i·de·a*

  a form, look or appearance of a
thing as opposed to its reality.
  a conception existing in the
mind

  a thought, a mental image, a
notion
  an opinion, view, or belief
  a groundless supposition; a
fantasy
  a hazy perception
  a vague impression, fanciful
notion, inkling

Source: Random House Webster's Unabridged Dictionary


We have an Innovation Paradox
Not all technologies can spark the creation of a business

Science
Technology
Product Company Business

Source: Neoset Ventures

The Market is Not your Customer
People or organizations with needs and budgets are…

Market Problem Buyer Budget


Transforming Ideas to Income
4 Key Areas of Focus

Science
Technology Product Company Business

1 Market
Opportunity 2 Value
Proposition 3
Distribution
Strategy 4
Financial
Model

Market Problem Buyer Budget



Can we
about marketing as
as a
of activities?

Transforming Ideas to Income
Another way to think about marketing in a strategic context
1
1. Markets
SCAN
(Markets)

2. Customers
2

3. Suppliers, Partners
Networks
CONFIGURE 3
5 (Internal Capabilities)

4. Competitors

5. Financial Engine
4


Looking at Convergent Themes
A free search engine + a paid (Cost-per-Click) ad model

3. Sustain 1. Create

Search Technology
Markets

2. Capture


Eliminating Unrecoverable Cost
Apple focused on what buyers really hated about buying music

MP3 Standard

Customers

2. Capture


Leveraging the Ecosystem
Salesforce.com went beyond SAAS to Software Syndication


CRM Platform
Partners &
Suppliers

2. Capture


Delivering Unexpected Value
Virgin is opportunistic & aspirational in building its brand


Competitors

2. Capture


Tuning the Financial Engine
From simplified logistics to fuel hedging Southwest stays on top

Too many to
mention !

Financial

2. Capture

Too many to
mention !


1. Scan
1
Category: Market
SCAN
(Markets)

Goal:
2
Look for Convergent Themes to
Discover new Markets

Key Questions:

  What market category are you 5 CONFIGURE 3
(Internal Capabilities)
pursuing?
  Are you creating a new category?
  How big is it?
  Do buyers have industry context to 4
make a decision?


2. Filter
1
Category: Customer
SCAN
(Markets)

Goal:
2
Eliminate Unrecoverable Costs

Key Questions:
  Who is your customer?
  What problem do you solve?
5 CONFIGURE 3
  How do you know it’s a
problem?
  How much will customers pay to
solve the problem?
  How did you decide on pricing?
4


3. Synchronize
1
Category: Suppliers, Partners & Networks
SCAN
(Markets)

Goal:
2
Leverage the Ecosystem to help
deliver a better, faster, cheaper
solution

Key Questions:
5 CONFIGURE 3
  Who has the power to get you to (Internal Capabilities)
your target customer segments?
  What degree of inﬂuence do key
suppliers have on your ability to
produce your solution?
  How can you best approach the 4
market opportunity (Direct vs.
Channel)
  Are there syndicated networks
you can use to sell your product?


4. Amplify
1
Category: Competitors
SCAN
(Markets)

Goal:
2
Deliver Unexpected Value that
Competitors Can’t Match

Some Focus Areas:
  Who is your competition?   CONFIGURE
What are their strengths and 5 (Internal Capabilities)
3
weaknesses?
  Apply the concepts in Step 2&3
to strip out unrecoverable costs
that customers do not value. Can
you delight customers on elements
of the product/service where 4
quality can be raised or new
elements can be created to
develop a sustainable advantage?
  Can you demonstrate thought
leadership in the category and use
it to evangelize through industry
opinion leaders?

5. Tune
1
Category: Financial
SCAN
(Markets)

Goal:
2
Optimize revenue and costs

Key Questions:
  What is your method for
capturing revenues (product sales,
royalties, licensing advertising 5 CONFIGURE 3
supported)

  What are the total costs? -
professional services, sales
engineers etc.
  Any upfront payments or 4
recurring revenues? (maintenance,
upgrade revenue sources)
  Do partners need to be paid? -
Sales Channel – Direct,
Distributors, VARS


Market


Social


$1,000,000,000

$100,000,000 10x reduction
every 7.5 years
$10,000,000

$1,000,000

$100,000
10x reduction every
Dollars per MIP

$10,000 4.25 years

$1,000

$100

$10.00

$1.00

$0.10

$0.01
1959 1969 1979 1989 1999 2009

Source: Hans P. Moravec 1998-2003]


Enviornmental


Total economic value
created by VCs.

Total amount of
money raised
by VCs.

SOURCE: NVCA / Thompson Reuters Exit Poll
SOURCE: NVCA / Thompson Reuters VC Fundraising Q3


B2B Tech. Then Today
Corporate Goals
  Revenue Growth
  Cashﬂow

Technology Buyer Focus
  Competing against time
  Competing against inefficiency

Technology Positioning
  Revolutionary Technology
  Evolutionary Technology

Market Segmentation Focus
  Horizontal Market Expansion (for Breadth)
  Vertical Expertise (for Depth)

Sales Approach
  Transaction-Oriented Sales     Consultative Selling Approach 
(Buy what I have)

Salespeople
  Tin-Men (Horizontal Orientation)
  Sales Strategists (Vertical Expertise)

Lead Generation Strategy
  Volume Oriented: Telesales/Cold-Calling
  Exec. Referrals (3-Degrees of Separation) 

Marketing Dept. Role
  Poorly Deﬁned – Non-Integrated Island    Accountable & Aligned with Sales 

Product Management Focus
  Features Development    Focus on Relevance…not just Differentiation 

MarCom Focus
  Info. Overload
  Less is More (Contextual/Diagnostic Sales 
Tools), Thought Leadership through Research


What We Can Learn from the Movies
The power of convergent metaphors

Emerging Technology
Emerging Category
Who Cares?

Visual Recognition Digital Signage
Systems

GPS Location-Based Pay as You Drive
Services Technologies
Insurance

Social media (blogger) Reputation Management
performance monitoring)
for UGC

Public Opinion Brand Reputation
Measurement Software
Management

Gesture Based   “Edutainment Software”
User Interfaces


Category Mapping (CleanTech)
Understanding how the sector forms into “microclusters”

Source: Greentech
Media (2007)


Market Sizing
This is NOT a Believable Revenue Forecast

Market Total Revenues Expected Projected Company
Market Revenues
Share

Automotive $60 billion X 0.1% $60 million

Aerospace $40 billion X 0.1% $40 million

Healthcare $30 billion X 0.1% $30 million

Food Service $30 billion X 0.1% $30 million

Total $160 million


Customer


Technology Creates Market Disruption
Some of the Golden Rules
Clayton Christensen sets out 4 rules that govern disruptive innovations:

  Technology keeps getting better. In every market, technology advances
and improves and is driven by a set of behavioural, economic, regulatory
and institutional factors. Companies take advantage of this by offering
better products at higher prices, and by listening to and targeting
mainstream and high-end users.

  Customers will use a technology, up to a point. Technological progress
inevitably reaches a point where it's far above what customers actually need
and can use.

  Overshooting customer needs enables disruption. When the level of
technological progress is far above what customers actually need and can
use, the phenomena of overshooting creates the opportunity for an upstart
to come in with something that's cheaper, simpler and good enough for a
set of customers who don't need the advanced technology.

  It's not really about technology—it's about the business model. Small,
nimble, disruptive ﬁrms can succeed with business models that are
unattractive to incumbents.


Critically Assessing your Idea 
To drive customer relevance

  What are you best at that no one else is?  
How does that “translate” to proposed customer beneﬁt?
–  Underlying Innovation – product – solution
  Why should a customer care?
–  How much better than current technology/product/solutions
  Which markets desperately need you?
–  Urgency over “nice-to-haves”
  What buyers must have your solution?
–  This is a realistic forecast number
  What problems do you solve?
–  How do customers talk about the problem? What is their point of view?
  What is the real (loaded) customer cost to buy the solution?
–  Time & resources to deliver and implement etc.


Developing a Value Driven Strategy
The Most Important Equation You Should Remember


Minding your P’s & Q’s
What’s YOUR Strategy for Adding Value for Customers?

Higher
Average Value
Inferior Customer Value
for
(Over-priced or Over-specified)
Quality Buyers

Relative Average Value - Superior Value
Parity
Price “Stuck in the via
Middle” Higher Quality

Average Value Superior Value Maximum
Lower for via Buyer
Price Buyers Lower Prices Value

Lower Parity Higher

Relative Quality

Copyright 2008 – Peter Evans - www.linkedin.com/pub/0/192/665 pg 72 KW-025

Segmentation Model (AMD) 
How Microprocessors Cluster on Key Consumer Dimensions


Customer Segmentation 
The Most Important Research You Can Undertake
  A Segment is a Sub-Set of Buyers:
–  Within a market who share similar needs
–  Demonstrate similar buyer behaviour 

  Emphasis is on identifying clusters of buyers who are:
–  Attractive
–  Unattractive
–  Non-addressable  

  Good Segmentation Reveals Clusters that satisfy the following criteria:
–  Identiﬁable - The differentiating attributes of the segments must be measurable so that  
they can be identiﬁed
–  Accessible - The segments must be reachable through communication and distribution channels.
–  Substantial - The segments should be sufficiently large in order to justify the resources required to
target them
–  Unique Needs - To justify separate offerings, the segments must respond differently to  
the different elements of the marketing mix
–  Durable - The segments should be relatively stable to minimize the cost of frequent product changes


Where are you in the Buying Cycle?
There are rules to how markets adopt technology

Source: Moore (2002), Crossing the Chasm: Wiefels (2002), The Chasm Companion


Getting Caught in the Chasm
Pragmatists don’t trust visionaries as references

Visionaries vs. Pragmatists
  Adventurous
  Prudent
  Early buy-in attitude
  Wait-and-see
  Think “big”
  Manage expectations
  Independent of the “herd”
  Part of the “herd”
  Spend ﬁrst
  Spend next
  First use capability
  Staying power
  Think Pragmatists are    Think Visionaries are
pedestrian  reckless


Marketing to Buyers in Organizations
Parinelli’s Influence & Authority Network

Functions Users What to ask:
  Salesperson What are you using for a system now?
  Clerical Staff How are you using it?
  Database Admin. Any serious problems?
  Call Center Sales/Support Who’s who in the org.?

Features Seymours What to ask:
  IT Manager What are the technical criteria?
  Marketing Manager How much? How long?
  Director How big?
How would you design the perfect solution
to this problem?

Benefits VITO’s What to ask:
  CEO/President What are the specific goals for your
organization over the next (quarter, year?)
  Executive Director (Assoc.)
What new markets is your organization
  Executive VP (Industry)
looking to grow in?
  COO/CFO/CMO
What are the criteria for establishing a
business relationship?


Analyzing Customers
Use this guide to better understanding buyer orientation

Vertical
Horizontal
Spatial
Pharma
C-Level
HR
.
Ops.
Marketing
Finance
Robotics
X
X
.
VP-Level
Medical
Academic
X
Devices
Director
Photonics
Manager
Government

User

Key Questions to Ask…
1.  What Experience do they have?
3.  What are their Responsibilites?
2.  Who do they Report to?  4.  What Motivates them? 


Case Study


Where are all the Flying Cars?


They Have been Working on Other Stuff

More features … Less Function…and a bailout package


Is this a Reasonable Request?
The Innovators are working on it…sort of

Taylor Aerocar: 1949

General Motors: Early Prototype?

Moller Skycar: 2008


Ouch !


Assignment for
Next Week’s
Lecture


Q1.
Why are the
ﬂying cars not
taking off ?


Bonus Round
Q2.
If we were to ask the right
questions to PROFITABLY
REDEFINE the category of
“personal aviation”
what would they be?


Hint.
Go back to the slides
and think about MARKET
TRENDS + what
CUSTOMERS (really)
want!


Send your
responses to
pevans@marsdd.com
by 9am Jan 24th, 2008


Worksheets


Establishing
Worksheets

Target
Markets

Identifying/Sizing your Target Market 
Target Market Criteria

Size
  The estimated size of the market to determine whether or not it is
worth going after. Beware of “top-down” sizing
Expected Growth
  The size of the market may be small, but if it is an emerging
market that is growing signiﬁcantly it may be worth going after
Competitive position
  The less competition the more attractive the market
Cost of reaching the market
  Is the market accessible to you?
Compatibility
  Is it aligned with your objectives competencies & resources


Creating a Category Map 
How do you stack up on key factors that drive value

High

Competitor 3

Competitor 2 You?

Performance

Competitor 4
Competitor 1

Low

Low High
Ease-of-Use

Segment Scoring
Try to rank various market segments using this scoring model

Segment G
Segment D
Segment C
Segment A

Segment B

Segment E

Segment F
Market Size [$] $.6 B $1.2B $5.0 B $.16 B $1.5B $0.3B $0.2B

Value Chain Ownership 1 5 8 6 3 2 1

Market Potential $ $0.2B $75M $10M $35M $80M $15M $10M

Time to Market [years] 4 2 1 3 2 4 7

Barriers to entry [#] 6 2 2 5 4 3 9

Differentiation [#] 7 4 5 4 3 5 9

Competitive Threats [#] 2 2 2 4 7 4 2

Investment required [#] 6 5 3 7 9 5 9


Market
Worksheets

Research
Methods

Secondary Marketing Research
A Starting Point

Secondary Research 
Sources
  Information provided by third-party sources   Consulting firm research
(may be syndicated “shared” content)
Reports
  Government reports and
  Information has been gathered from previous statistics
market research
  Newspaper articles
  Web-based articles, reports,
etc.
Advantages
  Census reports
–  Ease of access
  Trade magazines
Scientific and trade journals
–  Lower Cost
 

  Libraries and resource centers
–  Less time consuming
  Books on the industry
  Published reports and studies
Disadvantages
–  Information may not be exactly what is
required to assess new markets
–  Results may be out-of-date
–  Research design may be poorly constructed


Primary Marketing Research 
4 Types of Research Design
1 Qualitative (Focus groups, In-Depth interviews)
  Used for explorative purposes

  Small number of respondents

  Not generalizable to the whole population - statistical significance and confidence not calculated

2 Quantitative (Surveys and Questionnaires)
  Generally used to draw more conclusions and tests a specific hypothesis

  Uses random sampling techniques

  Infers from the sample to the population - involves a large number of respondents

3 Observational (Product in-use Analysis, Empathic Design)
  Observational research that employs a process of watching—without interfering

  Concentrates on viewing the customer doing everyday activities in their own environment 

4 Experimental (Purchase Labs, Test Markets)
  Researcher creates an artificial environment to try to control spurious factors, then manipulates
at least one of the variables


Getting Customer/Market Data
A Qualitative & Quantitative Research Checklist

Online SME
Surveys Interviews
Telephone News Scanning
Focus Patents
Surveys Services
Groups

Customers SME Competitors
Interviews
Demos.
Advertising Websites
Clinical Trials & Speaking Employee
Custom
Panels Blogs

Trade Assoc.
Statistics
Government
Reports Trade Shows

Market

Media Syndicated
Monitoring Economic Research
Reports


Evaluating
Worksheets

Customer
Requirements

Where are you in the Buying Cycle?
Can you identify what group of buyers you are addressing?

Source: Moore (2002), Crossing the Chasm: Wiefels (2002), The Chasm Companion


Segmentation Variables 
How does your market cluster on these key segment
breaks

Consumer Characteristics (Partial Buying Situations (Partial List):
List):
  Outlet type: In-store, catalogue
  Geographic: Region, city size,
metropolitan area, density
  Beneﬁts sought: Product
features, primary motivation
  Demographic: Gender, age, race,
life stage, birth era, residence   Product Usage: Usage rate,
tenure, marital status
awareness and product
knowledge
  Socioeconomic: Income,
education, homeowner,
  Behaviour: Involvement in
purchase decision
  Psychographic: Personality,
values, lifestyle, status


Qualifying your Sales Prospects
Have you addressed these key areas in the sales process?

Customer’s Pain Qualified Buyer Has Authority to Proceed
  No Goal = No prospect   Power buys from power
  Critical points of pain or key   While end-users and influencers are fun to
business issues are necessary to sell to they have not have the authority to buy
initiate a search for a solution
  Ultimate decision-makers may have different
goals (points of pain)

Solution is Understood Value has been quantified
  Feature/Function discussions are   Goals should be related back to $$$
useless unless put in context of   Tangible value propositions provide a
the customer’s pain
means of reducing price pressure i.e.
  Solutions must be created in the Reduced cost, increased revenues,
prospects mind through careful, higher customer satisfaction/lower churn
methodical diagnosis etc.


Pricing Research 
Work through these areas before you set your price
  What’s your fundamental strategic model?
–  Premium Price (Product Leadership)
–  Lowest Price (Operational Excellence)
–  Blended Model (Customer Intimacy)

  What is the Method for Capturing Revenues
–  Product sales
–  Royalties
–  Licensing
–  Advertising supported
  Some other Factors Need to be Considered
–  What are the total costs? - professional services, sales engineers etc.
–  Upfront payments or recurring revenues? (maintenance, upgrade revenue sources)
–  Do partners need to be paid? - Sales Channel – Direct, Distributors, VARS


Some General Pointers
  Beware of OVERESTIMATING your market forecast - Especially if you are not
in an established market category
  Ironically, it can be much harder to compete in a market where there are no existing competitors - Why? You
are competing against “non-consumption” - Customers lack points of reference that can serve to validate
their need for your technology

  When assessing market opportunity don’t overlook the beneﬁts of market
research
  Good market research mitigates risk. Besides interviews with current and prospective customers,
make sure to review reports or interview key technology analysts and other Key Opinion Leaders
covering your space.

  Remember…Differentiated Technology is NOT Enough
  Market relevance is more important than ever in identifying a target market. Look for
“necessary“ product/service requirements that have not been satisﬁed by competitors.

  Look for Areas where you can deliver UNEXPECTED value
  Design your product and service on key attributes of value that amplify the impact you make
with reference customers. The trick to building market share is to over-deliver in areas that
matter most ….and leaving the things that don’t matter to competitors.


Here’s More…
  Understand your VALUE DISCIPLINE: How you can best create value in a
market vs. your competitors
  Clearly understand how your competitors create value - Is their product best in class? Do they lead with low-
price? Or are they customer intimate with a highly specialized product for niche segments? What room have they
left you to exploit the market through a different approach?

  Draw a category MAP to better articulates how you fit vs. competitors and
other product/service substitutes
  A category map that defines your product/service and competitors across key criteria is critical to providing much
needed context to potential buyers

  Identify how you add to the “Customer’s UNDERSTANDING of the Problem at
Hand”
  Do you have a diagnostic process that guides prospects through a method of determining and quantifying the
impacts on their organization? Does this also translate tangibly into financial measures?


And More
  Remember Points of Pain for Customers VARY greatly within the Same
Company
–  Understanding the prospect’s Vertical (C- Level, Director, Manager, User) and Horizontal (Functional - Finance,
Operations, IT, HR) Orientation is critical to mapping out points of pain correctly.

  Identify the optimum point of entry - It’s often NOT the VITO on the ﬁrst call
–  While it’s important to get to the VITO (Very Important Top Officer) don’t overlook the need to research their
agenda with subject-matter-experts who are lower in the organization (often a best point-of-entry is the sales
dept.)

  TRIANGULATE with your Competitors to Float the category !
–  Gaining an understanding of the marketplace by just checking out competitors’ websites is an inexpensive but
myopic approach to benchmarking who you are up against. Supplement your research with regular competitor
meetings where your share a little about what you know about other competitors - and get a lot in return.


Getting Started Guide 
If you want to get going keep these steps in mind

Market Dynamics
  Why is this a good opportunity now?
Look at customer trends, regulations,
technological advances
Market Sizing
  Market Prioritization and Rationale
Look at analyst reports and do “bottom-
  Review your total market and industry up” analysis…not top down
dynamics

Customer Insights
Conduct customer interviews,
  Select segmentation criteria
focus groups, discussions with
experts, etc…
  Divide relevant market into customer
segments

Run some estimates of potential market
Target Market
share, sales volumes, revenues, and
profit (under various funding /resource /
  Describe each customer target group
partner scenarios)

Competitors
Develop a meaningful category map
  Evaluate competitors for partnering that spatially compares competitors on
options or exit possibilities
key factors for creating value.


Ideas to Income: An introduction to marketing

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