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E/ME 105 Lecture 3 Marketing October 3, 2006. Mission Statement 2 minute Team Mission Presentations Due on Thursday. Send in ppt 1 hour before class.

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Presentation on theme: "E/ME 105 Lecture 3 Marketing October 3, 2006. Mission Statement 2 minute Team Mission Presentations Due on Thursday. Send in ppt 1 hour before class."— Presentation transcript:

1 E/ME 105 Lecture 3 Marketing October 3, 2006

2 Mission Statement 2 minute Team Mission Presentations Due on Thursday. Send in ppt 1 hour before class

3 Since last week Friday phone conversation with Landivar –They are working on the developing world barriers thought process –We will meet with them by Skype on Thursday mornings They may be one lecture behind at the end of the week but they will have seen the Tuesday Lecture and the Thursday ppt. –Tried Adobe collaboration product Not impressed –Teams formed?

4 What is Marketing?

5 What is Marketing? 4 Ps of Marketing Process of planning and executing Product Promotion Pricing Place (or distribution system) of ideas, goods and services to satisfy customers True for developing world as well

6 Importance of Marketing Perhaps the single most important failure mode in the product development process –Sloppy research (confirm prejudices) –In development, not really understanding the customer Poor communication The Margaret Mead effect –Ephemeral nature Not in an equilibrium state –(rightwrong) –Poorly coupled to design Treated as a separate activity –Too well coupled into design Constant changes in specifications

7 Some good attributes Strong Customer involvement –Customer cares –Customer has pain Can define market segment (to be discussed) Market growing Competitive advantage Others

8 Techniques Interviewing Polling Working together to a common purpose Filming Other?

9 Consider in turn P1 Product –Needs identification –How product would actually be used –Context discovery –Brainstorming of concept –Chilero or coolness – Modification of existing product for new market

10 Consider in turn P2 Pricing –What the customer can afford –What value does the product bring –What financing arrangements are possible? –What is the price of a competitive product? –What price is necessary to return a profit? What is the reason for keeping the price as low as possible? How does the cost effect the price (dont confuse!)? Is it immoral to earn a fat profit?

11 Consider in turn P3 Promotion –How do you make the customer aware of the existence of the product? Word of mouth Brochures pictures? Demo at market Someone use it for free Product advertises itself Radio –Evangelical stations Use Saturday loudspeakers Door to Door Use local languages –How can you generate excitement about the product? Pizzazz Personal experiences- testimonials Promotion lower price Celebrity endorsements football players, community leaders, church leaders –What are the costs of Promotion Need to budget

12 Consider in turn P4 Placement (Distribution) –How do you get the product to the customer? –Consider where it will be manufactured –Consider who will sell it? (effect on price!) –Consider how you get it to the person who will sell it –Consider how it will be maintained

13 Marketing Research Primary Research –Original research - data collected from the target market Secondary Research –Meta research- data collected from literature, internet We have defined a third research classification Proxy research –Research through knowledgeable third parties People with first hand experience in the specific market

14 Marketing Research Primary Research –Original research- data collected from the target market Landivar students lead here –Use in-country contacts (NGOs, professors, other students) Use teleconferencing Interview people from indigenous villages in LA? Other?

15 Marketing Research Meta research- data collected from literature trade association data industry publications and databases Economist and other publications government databases (e.g., US Dept of Commerce, State Dept, Guatemalan trade) UN, NGO databases Other? Go quickly from general to particular

16 Marketing Research –Proxy research- data collected from people with first or second hand information Mentors Returning Peace Corps volunteers Returning NGOs Landivar partners Others?

17 Target Markets Who are the people who will use your product? –Geographic Location, climate, population size and growth rate –Demographic Age, sex, ethnicity, income, occupation, education – Psychographic Life-style, activities, interests, opinions –How will they use product (use patterns)? –What benefits will they derive? Do for –Primary market- the first market addressed –Secondary market- the next market(s)

18 Segmentation- continued Psychographic variables –life-style –Activities –Interests –Opinions –product use patterns –and product benefits

19 Barriers What are some of the reasons why your customer wont adopt your product? What can you do to mitigate this risk?

20 After approval of your Mission Statement... Research Market –Begin Research Write script

21 Script Begin with Market hypotheses (3-6) –Examples? Design questions to test these hypotheses Keep short- you are using up peoples time!! 30 minutes tops. 10 minutes better Can your customers use internet?

22 Market segmentation Market strategy –There are 1.3B Chinese. Even if we got only 1% of the market... Whats wrong with this?

23 The Technology Adoption Model as the Basis for Segment Focus A measure of the rate of adoption of a cluster of new technologies by a community over time Early Majority Innovators Rate of Adoption Laggards Late Majority Early Adopters Time Where are you on this curve?

24 The New Idea Adoption Model in the developing world as the Basis for Segment Focus A measure of the rate of adoption of a cluster of new ideas by a community over time Early Majority Innovators Rate of Adoption Laggards Late Majority Early Adopters Time Where is your target segment on this curve?

25 The New Idea Adoption Model in the developing world as the Basis for Segment Focus Early Majority Innovators Rate of Adoption Laggards Late Majority Early Adopters Time Consider age, sex, leadership position in village, respect, income, political savvy, entrepreneurial spirit, etc.

26 Generate Hypotheses & Identify Underlying Assumptions EVALUATION QUESTIONS: For Which Customers Do I Solve Important Problems? Does The Value vs. Competitive Alternatives Justify Change? How Many Customers & What Will They Pay? Requirements to Attract, Sell & Support These Customers? State your assumptions regarding what your product is, what it does, and the implications for related technologies Quantify the problem you solve vs. alternatives in each target segment By Industry By Application (Use the product to…) By other segment variable Quantify total cost of adoption/ switching vs. current methods or alternatives for each target segment Is it worth it to a customer? Consider the cultural issues that are barriers to change! Why will solving this problem be important to more customers over time? What will customers be willing to pay & what are the implications for your business model? What will it take to generate word-of-mouth and brand awareness? What kind of distribution model does the business model require? What support will customers need to evaluate and use the product?

27 Recruit Interview Targets How do I get them to talk to me? –Use your personal, student and other Guatemalan contacts! –Remember 6 degrees of separation! Do you know someone who knows someone? – addresses and numbers often on the web –Tap your network for contacts, kiss frogs –With IPOs, you are a credible student group building products and services for Guatemala. -- meeting is a chance to influence those investments –With American Universities use the Caltech name! Be shameless! –From Guatemalan company names get HQ city, find phone number.

28 For the real customer Develop relationships in the village through multiple contacts Socialize Help them with what they are doing Use influencers (heads, other volunteers) Others (Landivar! Help!)

29 Interview How do I approach them? –Use your 30-second pitch for in-person calls – , follow-up phone calls work well –Send them a 2-pager on what you know to date –Provide agenda and general topics in advance -- gives the target a chance to think

30 Open Ended Interview Questions Flow from general to increasingly specific, but always open ended Question DOs –Why? How do you measure that? How do you define that term? Whats working, what isnt? Can you draw a diagram of that so I can see where it fits in your overall problem? How did you determine the value of that? How would you make tradeoffs among those things? How will you remove barriers to your success? What would the ideal situation look like? Question DONTs –Dont you think if…? Would you like it if…? Black or white, yes or no…? We think, what do you think? If we do this, will you do that? What do you want? What will you pay for it? What should we do?

31 Competition The competitive landscape –Provide an overview of product competitors, their strengths and weaknesses –Position each competitors product against new product –No competition is also competition i.e., doing nothing is an alternative A B C D Performance Price Note: Size of circle can represent market share

32 Competition Why have previous attempts at development products failed in your marketplace How are you going to do better? Why should you succeed? Write as hypothesis and test in your market study

33 Stakeholders Who has to touch the product and the process for it to be successful? –Consider everyone involved Everyone who can help Everyone who can get in the way Important part of understanding market -people you ignore at your peril


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