Ideas to Income: Introduction to marketing (Part 2)

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With the pace of innovation today, ideas have become cheaper than ever. Everybody has them. Your big idea in a crowded market is worth nothing... until you figure out how to competitively differentiate your product and connect with a market that cares.

MaRS Advisor Peter Evans discusses marketing, focusing on the unique marketing challenges faced by early stage technology companies. It also provides you with proven and practical principles for visioning new products, breaking into a market and building a sustainable business venture.

In this session you learn:
• Why marketing effectiveness often matters as much today as pure product innovation
• How to identify key market trends and better connect with the real needs of potential customers
• How to use “value innovation” methods to competitively design a product as faster, cheaper and better
• Pragmatic ways to position your product and quickly build market acceptance
• How effective marketing must connect to focused business development and sales channel efforts
Whether you are just starting out or fine tuning your marketing strategy, learn how marketing plays a key role in your venture.

Part of the CIBC Presents Entrepreneurship 101 lecture series. Read more: http://www.marsdd.com/ent101

Published in: Business, News & Politics

Ideas to Income: Introduction to marketing (Part 2)

  1. 1. Ideas to Income
 An Introduction to Marketing (Lecture 2)
 MaRS Entrepreneurship 101 January 20, 2010 Peter Evans
 Advisor, MaRS Venture Group
 pevans@marsdd.com T: @Techmarketer HP Garage, Silicon Valley
  2. 2. Why Marketing Matters Definition and fit with strategy © 2010 Peter M. Evans Slide 1
  3. 3. The Innovator’s Paradox The problem with Ideas, Capabilities & Opportunities © 2010 Peter M. Evans Slide 2
  4. 4. Trendspotting © 2010 Peter M. Evans Slide 3
  5. 5. Market Opportunity Size Interactions Scope Landscape Size © 2010 Peter M. Evans Slide 4
  6. 6. Innovation Types © 2010 Peter M. Evans Slide 5
  7. 7. Customer Value/Utility © 2010 Peter M. Evans Slide 6
  8. 8. The Market Actualized Startup
 What’s required for market success? Sustainable Engaged Synchronized Differentiated Relevant On-Trend © 2010 Peter M. Evans Slide 7
  9. 9. TREND IS YOUR FRIEND WHEN YOU LOOK AT THE MARKET IS THERE A WIND AT YOUR BACK ? BE CAREFUL…EVEN TURKEYS CAN FLY IN A TORNADO… © 2009 PETER EVANS
  10. 10. LESS COWBELL IT’S TIME TO STOP ADDING “UNRECOVERABLE COSTS” TO MAKE PRODUCT PERFORMANCE IMPROVEMENTS THAT CUSTOMERS WON’T PAY FOR… © 2009 PETER EVANS
  11. 11. Homework Assignment © 2010 Peter M. Evans Slide 10
  12. 12. Developing a Value Driven Strategy The Most Important Equation You Should Remember © 2010 Peter M. Evans Slide 11
  13. 13. Creating Buyer Utility
 Stages & Utility Levers Stages of the Buyer Experience Cycle (1) (2) (3) (4) (5) (6) (7) Eval./Trial/Reco. Purchase Delivery Use Supplements Maintenance Disposal * Customer Productivity Simplicity Utility Levers Convenience Safety/Risk Enterprise Server Fun and Image Environmental Friendliness Social* Responsibility Source: Blue Ocean Strategy – Kim & Maubourgne * Indicates revision to model © 2010 Peter M. Evans Slide 12
  14. 14. Developing a Value Driven Strategy The Most Important Equation You Should Remember © 2010 Peter M. Evans Slide 13
  15. 15. Pricing 
 Think 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 (Perpetual, Annual/Monthly Sub., One-Time Use) –  Licensing –  Advertising supported –  Brokering Transactions – Cost per acquisition etc.   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 © 2010 Peter M. Evans Slide 14
  16. 16. How do you Make Money Google Knows its Ratios = Revenue Users x Queries x Ads x Clicks x Revenue User Query Ads Click © 2010 Peter M. Evans Slide 15
  17. 17. Premium Price vs. Non. Consumption Start with Identifying the REAL Determinants of Value Functional Spec. = Get your Kid From A-B $10 $1,200 Free? © 2010 Peter M. Evans Slide 16
  18. 18. CONTRARIANS RULE MARKET LEADERS WOULD SOONER ZIG THAN ZAG. THE KEY TO THE KINGDOM IS TO DELIVER DIFFERENTIATE YET “UNEXPECTED VALUE” TO CUSTOMERS © 2009 PETER EVANS
  19. 19. Notable Contrarians An asymmetric collection of warriors and economists Vilfredo Pareto Sun Tzu Noriaki Kano Bradley Gale 80/20 Asymmetric Unexpected Customer Value Rules Warfare Value Design © 2010 Peter M. Evans Slide 18
  20. 20. Case Study: 
 FAA Light Sport Aircraft Category Weight •  Maximum gross takeoff weight of not more than 1,320 pounds (600 kg) or 1,430 pounds (650 kg) for operation on water Airspeed •  Max. in level flight of 120 knots (220 km/h; 140 mph); •  Max. stall speed of 45 knots (83 km/h; 52 mph); Seating •  Max. of 2 persons Equipment •  Fixed undercarriage •  Fixed-pitch or ground adjustable propeller •  Single electric motor or reciprocating engine © 2010 Peter M. Evans Slide 19
  21. 21. Why Now? Are these favourable conditions for launching a new aviation venture? ✔ Political ✔ Economic ✔ Sociological ✔ Technology Legal ✔Capital © 2010 Peter M. Evans Slide 20
  22. 22. You have Competition
 It comes in many forms Direct Indirect Substitutes Potential Entrants Non-Consumption © 2010 Peter M. Evans Slide 21
  23. 23. Famous and Not So Famous Flops Did these crossover products do anything really well? Pontiac Aztec RJ Reynolds’ Smokeless Cigarettes Apple Pipin Microsoft WebTV © 2010 Peter M. Evans Slide 23
  24. 24. Foldable
  25. 25. Floatable
  26. 26. Portable
  27. 27. Easy-to-Fly
  28. 28. Safer
  29. 29. Affordable A5 Test Flight 2008
  30. 30. Lets go back to primary benefit?
 How do you best achieve what the customer (really) wants? Portable Floatable Roadable Vertical © 2010 Peter M. Evans Slide 32
  31. 31. What’s the Real Opportunity?
 And how do you best achieve what the customer (really) wants Necessary Unique Elements Requirements Driving Choice High Portable Floatable “Fits on a “Amphibiou Trailer” s Hull” Degree of Not Relevant or Distinctive Unique Elements but not Driving Choice Relevance Roadable Vertical “Drives on “No Roads” runway required” Low Degree of Differentiation © 2010 Peter M. Evans Slide 33
  32. 32. Personal Aircraft The Market Today High Low Traditional Float Plane Terrafugia Flying Car ERRC Framework by Kim & Mauborgne (Blue Ocean Strategy) Data here is for illustration purposes only and has not been validated © Peter M. Evans Slide 34
  33. 33. A New Product Category
 Icon Aircraft: Sample ERRC Grid Eliminate Reduce Which factors should be reduced well below the industry’s standard?   Facility Requirements   Training (Certification) Time   Operating Cost   Payload   Range Raise Create Which factors should be raised well above the Which factors should be created that the industry’s standard? industry has never offered?   Performance (Maneuverability)   Driveway Storage   Safety to Operate   Enhanced Ergonomics & Instrumentation   Accessibility to Remote Regions   Winch & Tow Transportability   Design Aesthetic   Ease of Purchase ERRC Framework by Kim & Mauborgne (Blue Ocean Strategy) Data here is for illustration purposes only and has not been validated © Peter M. Evans Slide 35
  34. 34. Personal Aircraft
 Strategy Canvas Eliminate Reduce Raise Create High Low Traditional Float Plane Terrafugia Flying Car Icon A5 ERRC Framework by Kim & Mauborgne (Blue Ocean Strategy) Boat Data here is for illustration purposes only and has not been validated © 2010 Peter M. Evans Slide 36
  35. 35. Creating Buyer Utility Stages & Utility Levers Stages of the Buyer Experience Cycle (1) (2) (3) (4) (5) (6) (7) Eval./Trial/Reco. Purchase Delivery Use Supplements Maintenance Disposal * Customer Productivity Simplicity Utility Levers Convenience Risk Fun and Image Environmental Friendliness Social Responsibility * Indicates revision to model © 2010 Peter M. Evans Slide 37
  36. 36. Segmentation Model (Example)
 Customers cluster on key dimensions of value © 2010 Peter M. Evans Slide 38
  37. 37. Customer Segmentation
 Learn this slide!   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: 1.  Identifiable - The differentiating attributes of the segments must be measurable so that 
 they can be identified 2.  Accessible - The segments must be reachable through communication and distribution channels. 3.  Substantial - The segments should be sufficiently large in order to justify the resources required to target them 4.  Unique Needs - To justify separate offerings, the segments must respond differently to 
 the different elements of the marketing mix 5.  Durable - The segments should be relatively stable to minimize the cost of frequent product changes © 2010 Peter M. Evans Slide 39
  38. 38. Segment Scoring (Sample Template) Developing a Objective Model to Find the Right Targets 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 © 2010 Peter M. Evans Slide 40
  39. 39. Marketing to B2B Buyers 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? © 2010 Peter M. Evans Slide 41
  40. 40. Sir. James Dyson (1986) Dr. Helen Greiner James Spangler (2002) Hoover (1908) © 2010 Peter M. Evans Slide 42
  41. 41. Positioning Aligned with Primary Benefit New Growth in a Mature Category Requires Focus = Automation Trade Off: May miss the tight corners = Performance Trade Off: Doesn’t clean the house automatically = Portability Trade Off: Performance © 2010 Peter M. Evans Slide 43
  42. 42. Simplicity of Function & Design Marissa Mayer VP of Search Products & User Experience, Google "Google has the functionality of a really complicated Swiss Army knife, but the home page is our way of approaching it closed. It's simple, it's elegant, you can slip it in your pocket, but it's got the great doodad when you need it. A lot of our competitors are like a Swiss Army knife open--and that can be intimidating and occasionally harmful." © 2010 Peter M. Evans Slide 44
  43. 43. Google: Simplicity Sells
 The importance of a focused product Google Yahoo! 66% Search Market Share vs. 17% Search Market Share comScore Nov. 2009 Estimates © 2010 Peter M. Evans Slide 45
  44. 44. Sustainable Credible Engaged Synchronized Differentiated Relevant On-Trend © 2010 Peter M. Evans Slide 46
  45. 45. iSYNCHRONIZE WHAT RESEARCH, SUPPLY AND DISTRIBUTION PARTNERSHIPS GIVE YOU AN UNFAIR ADVANTAGE IN THE MARKET? © 2009 PETER EVANS © 2010 Peter M. Evans Slide 47
  46. 46. Customers want Whole Products How will you build, buy, partner and connect to be a synchronizer? Consulting Hardware Post-sales
 Service &
 Software Support The Complementary
 Complementary
 Services Core Products Pre-sales
 Product Services Peripherals Legacy
 Connectivity Interfaces Source: Chasm Group © 2010 Peter M. Evans Slide 48
  47. 47. CONVERSUATION WHAT IS THE ONE KEY THING YOU ARE GOOD AT? REMEMBER: CLEAR BENEFIT + DRAMATIC DIFFERENCE + REASONS TO BELIEVE & U Value © 2009 PETER EVANS
  48. 48. Key Lessons from ShamWow Can you can’t argue with success Clear Benefits Utility Driver 1: Absorbency (Acts like a vacuum..works twice as hard) Utility Driver 2: More Uses (Doesn’t Disintegrate like paper towels) Utility Driver 3: Reusable (Can wash and reuse) Dramatic Difference •  Functional: Holds 12x it’s weight in liquid = Get More Done •  Financial: 10x Cheaper (Assumes Paper Towels $20/Mo.?) = Save Money Reasons to Believe •  Personification: “Hi it’s Vince” •  Tone: Smooth talking condescension •  Visuals: Product demos – see it in action •  Authenticity: Association with German quality •  No Financial Risk: Money-back guarantee •  Exclusive Offer: Use of scarcity of supply (“call now” tactics) Unexpected Value •  Extra set of towels free (call within 20 min.) •  Free ShamWow mop (supplies are limited) © 2010 Peter M. Evans Slide 51
  49. 49. Engagement: A 360-Degree Exercise The way we were PR & Investor Advertising Relations Promotional Behaviour Materials Physical People Environments Brand Corporate & Investor Products Communications Customer Trade Shows Service & & Events Support Online Identity/ Presence Logos Source: Interbrand © 2010 Peter M. Evans Slide 52
  50. 50. © 2010 Peter M. Evans Slide 53
  51. 51. Think about Visual Thinking It pays to “Disnify” your solution to engage visual thinkers   Process Driven Visualization –  Forces a disciplined approach to mapping the value proposition in a sequential/parallel process-driven way (i.e. Diagram by XPLANE) 
   Benefits –  Taps in to the high percentage of visual thinkers –  Mitigates the compressed timeframes people have to learn –  Great for VITO’s (many are big picture people) –  Creates a richer story for analysts and media © 2010 Peter M. Evans Slide 54
  52. 52. What is your Product? Example of a Core Platform (Infrastructure) - “Disnified” © 2010 Peter M. Evans Slide 55
  53. 53. What Does it do? Functionality - “Disnified” © 2010 Peter M. Evans Slide 56
  54. 54. Visual Thinking Works Everywhere Even SEC filings ought to be in pictures NASDAQ: F-1 Filing Prospectus © 2010 Peter M. Evans Slide 57
  55. 55. Sustainable Engaged Synchronized Differentiated Relevant On-Trend © 2010 Peter M. Evans Slide 58
  56. 56. The Value Creation Cycle Category: Online Search/Advertising 3. Sustain 1. Create Search Technology Market Value 2. Capture © 2010 Peter M. Evans Slide 59
  57. 57. The Value Creation Cycle Category: Recorded Music 3. Sustain 1. Create MP3 Standard Market Value 2. Capture © 2010 Peter M. Evans Slide 60
  58. 58. The Value Creation Cycle Category: CRM Software (ASP Model) 3. Sustain 1. Create CRM Platform (ASP) Market Value 2. Capture © 2010 Peter M. Evans Slide 61
  59. 59. Fail Tales From blunders to boo-yas! V1.0 = Fail V2.0 = Boo-Ya! 2007 1995 1983 1993 1993 2007 © 2010 Peter M. Evans Slide 62
  60. 60. How Markets Adopt Technology How markets move and your position changes with it Customer Goal: Competitive Solve Problem Adopt Obvious Extend Paradigm Advantage Customer Need: Potential of Complete Solution Safe Choice Better Value Technology Vendor Goal: Validate Technology Segment Share Market Share Profitability Strategy: Demo the Technology Show ROI Gorilla Power! Segment Focus Skills: Technology Proficiency Customer Intimacy Closing Deals Relationship Mgmt. “The Chasm Companion” Paul Wiefels “Crossing the Chasm” by Geoffrey Moore © 2010 Peter M. Evans Slide 63
  61. 61. Sustaining your Market Position The Teeth Whitening Market: A Case Study in Value Migration _____ Teeth Whitening Market: Channel Options High Professional Multi-Level Retail Kiosk Cost Retail Store Low Convenience High © 2010 Peter M. Evans Slide 64
  62. 62. Connecting your Ideas to Income
 Think Big Picture ….But get out there and build something!* •  Go beyond products Set a course for market •  Use multiple innovation types success •  Engage the whole org. •  Study customers & non-customers Look to the edges for the •  Identify changing trends best ideas •  Look for converging trends Build fewer, bolder •  Focus on massive shifts in buyer utility •  Solve big problems vs. incremental improvements concepts •  Focus on Prototypes (not just analysis) Commit to •  Remember the importance of failure implementing quickly •  Build with cross-functional teams •  Identify quick victories •  Celebrate collective success * Inspired by Larry Keeley, Doblin Group (Division of Monitor) © 2010 Peter M. Evans Slide 65
  63. 63. Thank You Peter Evans, Advisor, MaRS Venture Group 
 E pevans@marsdd.com T: @techmarketer

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