Ideas to Income: Introduction to marketing (Part 2)

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

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

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

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. 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

26. Foldable

27. Floatable

28. Portable

29. Easy-to-Fly

30. Safer

31. Affordable A5 Test Flight 2008

34. 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

35. 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

36. 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

37. 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

38. 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

40. 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

41. 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

42. 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

44. 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

45. 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

49. 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

52. 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

53. 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

55. 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

64. 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

65. 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

66. 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

67. Thank You Peter Evans, Advisor, MaRS Venture Group   E pevans@marsdd.com T: @techmarketer

Ideas to Income: Introduction to marketing (Part 2)

Ideas to Income: Introduction to marketing (Part 2)

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