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Market and Customer Development - Entrepreneurship 101


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In order to craft your value proposition, you need to make certain assumptions about your target market. It is important to validate these assumptions through market research techniques and analysis.

In this lecture, market research experts introduce the principles of market research and analysis, including analytical frameworks such as the PEST analysis and Porter’s Five Forces.

Published in: Business, Economy & Finance
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Market and Customer Development - Entrepreneurship 101

  1. 1. Usha  Srinivasan,  Director  of  Market  Intelligence  –  MaRS  Dan  Colquhoun  –  VP  Global  Customer  Research  –  Frost  &  Sullivan  
  2. 2.   Market  &  Industry  Intelligence   Understand  CompeCng  Technologies/Patents/Companies;     EsCmate  Market  size  &  share;     VerCcal/Industry  market  entry  and  potenCal                                  InnovaCon   Research   Develop   TesCng   Analysis   IntroducCon     Customer  Intelligence     Concept  TesCng;  Customer  Profiling  &  SegmentaCon;  Packaging  research;  Pricing;   Messaging  and  CommunicaCons  development      
  3. 3.      Ques7ons  to  ask:    -­‐Is  my  technology  really  disrupCve?  If  so  what  is  it  replacing  ?    -­‐Who  is  my  direct  compeCtor  at  my  price  point?    -­‐Does  my  compeCtor  have  a  diversified  porRolio?            How  to  find  the  answers:   1.  Consider  patent  or  prior  art  searches  –  Public   databases  like  USPTO  or  WIPO,  or  paid  databases  like   Thomson  InnovaCon  or  Total  Patents   2.  Understand  your  posiCon  in  the  “value  chain”  as  that   will  determine  your  compeCtor   3.  Compare  product/technology  capability/claims:  use   product  brochures  from  trade  shows  or  product   claims  from  websites  or  even  company  annual  reports      
  4. 4.        -­‐What  is  my  potenCal  market  vs  addressable  market?    (i.e.  What  you  wish  it  to  be  vs.  what  is  realisCc  ?)  -­‐What  is  my  market  share  among  compeCtors?    -­‐What  is  my  market  share  in  Canada/Ontario?     1.  Consult  market  reports  from  mulCple  vendors     2.  Be  clear  about  the  “definiCon”  used     3.  Sizing  the  market  in  publicly  traded  space  can  be  easier  than   with  privately  held  companies:     a.  Bo^om  up  method  –  aggregate  revenues  of  all  players   –Tier  1,  2  or  3  –  You  are  likely  in  Tier  3   b.  Use  unit  price  and  volume  of  sale  as  a  means  to   determine  market  share  of  the  company  and  total   market  size;  Sizing  based  on  potenCal  buyers  –  e.g.,   no.  of  hospitals,  no.  of  people  viewing  a  parCcular   website,  no.  of  uCliCes  etc.   c.  Look  at  annual  reports,  tax  filings,  press  releases,  Tech   blogs,  product  brochures  etc.   4.  Market  sizing  at  regional  levels  is  more  logical    –  NA,  EU,   Asia,  Middle  East   5.  UlCmately  make  realisCc  assumpCons!!    
  5. 5.          Should  I  be  selling  this  to  the  DOD  instead  of  healthcare?      Are  barriers  to  entry  low  in  certain  verCcals?  Less  regulaCons,  price  agnosCc  ?      Could  one  industry  be  my  first  entry  point  before  I  tackle    another  verCcal?      Should  I  target  government  or  the  private  sector?              1.  Understand  the  verCcal  markets  of  your  compeCtors  and     target  least  compeCCve  verCcals    2.    Are  there  any  investments  happening  in  a  parCcular   sector,  government  agency  or  country  that  could  be  an   advantage?    a.  Afer  9/11  and  other  global  incidences  –  increase  in   security  technologies    b.  Cleantech  -­‐  Ontario’s  Green  Energy  Act  and  FIT  program   in  bringing  in  investors  into  the  province;  China  invesCng   $5  B  in  cleantech  in  next  3  years    
  6. 6. Early  stage  development  of  a  new  product  and  is  used  to  uncover  reacCons  to  the  basic  idea.  • Launching  a  new  product  or  exisCng  product  variant  • Changing  the  composiCon  of  a  product  Can  be  conducted  using  qualitaCve  or  quanCtaCve  methodologies,  or  a  mix  of  both.  The  choice  of  methodology  is  typically  a  funcCon  of  several  variables  including  the  stage  of  development,  and  the  type  of  end-­‐user.  Ideals  •  ReducCon  of  bias  associated  with  halo  effects  •  The  sample  should  represent  the  audience  for  the  product  Efficient  Approaches  •  Small  scale  focus  group  using  advisory  board  members  or   other  interested  parCes  (hint:  make  sure  they  are   unbiased)  •  On-­‐line  capabiliCes  are  inexpensive  and  accessible  (hint:   tap  a  researcher  or  body  of  knowledge  for  best  pracCces)  
  7. 7. SegmentaCon  can  be  completed  on  almost  any  data  that  relates  to  the  customer,  but  should  answer:   Level  of Business•  Who  are  the  best  customers  now?   Analysis Application•  Which  groups  or  segments  represent  the  greatest   Attitudes  (Why) Complex Strategic opportunity  for  growth?  •  Are  there  pockets  of  customers  out  there  wherein  the   Needs  (Why) product  is  more  favorably  perceived?   Behavior  (What,  when,  how)Ideals   Price/Channel   (Where)•  The  customer  segments  exist  (i.e.,  not  an  arCficial  or  hoped  for   construct)   Geography  (Where)•  The  segments  targeted  can  be  efficiently  reached   Simple TacticalEfficient  Approaches  •  Secondary  research  or  using  exisCng  data  (e.g.,  SIC  groups)  •  Use  compeCtor  profiles  of  their  customers  to  construct  your   own  segments  •  On-­‐line  capabiliCes  are  inexpensive  and  accessible  (hint:  tap  a   researcher  or  body  of  knowledge  for  best  pracCces)  
  8. 8. •  OpCmized  packaging  should  be  based  on  an   understanding  of  customer  needs  (e.g.,  a  product  that   will  be  opened  in  a  surgical  theatre  by  end-­‐users   wearing  gloves).  •  Pricing  reflects  the  relaCve  compeCCve  set,  the  margin   required  and  the  decision  as  to  whether  to  price  for   share  or  price  for  margin.  Ideals  •  Pricing  data  reflects  actual  purchasing  condiCons  •  Packaging  research  encompasses  aestheCcs  as  well  as  usability  Efficient  Approaches  •  Focus  groups  with  “volunteers”  (hint:    don’t  run  these  yourself   as  you  are  biased)  •  Produce  inexpensive  packaging  schemaCcs  using  computer   graphics  tools  •  On-­‐line  capabiliCes  are  inexpensive  and  accessible  (hint:  tap  a   researcher  or  body  of  knowledge  for  best  pracCces)  
  9. 9. •  Determine  the  opCmal  personality  and  posiConing  for   your  brand    •  Ensure  that  the  value  proposiCon  is  relevant,   meaningful  and  differenCated  •  Determine  the  opCmal  way  to  express  the  proposiCon   to  the  end  customer  •  Ensure  that  the  brand  and  value  proposiCon  are   perfectly  aligned  to  perform    well,  and  withstand   challenges  in  the  marketplace  Ideals  •  The  posiConing  strategy  reflects  key  category  purchase  drivers   and  leverages  the  best  properCes  of  the  product  •  The  message  can  be  efficiently  and  effecCvely  delivered  Efficient  Approaches  •  Inventory  the  key  product  a^ributes  (hint:    keep  it  simple)  •  Collect  and  audit  all  data  sources  around  the  brand,  category   and  customer  to  “leverage-­‐able”  insights  •  The  insights  are  combined  to  develop  or  inspire  a  range  of   potenCal  brand  Ideas  
  10. 10.    Is  there  really  a  market  need  here?    Whether  the  answer  is  a    “Go”  or  “No  go”  understanding  your  market  /  customer  /  industry  dynamics  will  be  key.        
  11. 11.    Tips  to  be  on  top  of  your  industry  :    1.   A^end  industry  events/trade  shows    2.   Subscribe  to  relevant  industry  journals/newsle^ers  and  even  contribute  arCcles  3.   Track  industry  analysts  –  through  research  publicaCons,  blogs  etc.  4.   ParCcipate  in  research  industry  events  such  as  MRIA  (Market  Research  and  Intelligence  AssociaCon),  ESOMAR  (European  Society  of  MarkeCng  and  Research);  MRA  (Market  Research  AssociaCon).      
  12. 12. Usha Srinivasan PhDProgram DirectorBusiness Acceleration ProgramMaRS Discovery DistrictT 416-673-8144E usrinivasan@marsdd.comW pg 15