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Assessing the Market and the Competition for a New Product or Service Andy Mindlin REALWORLD Marketing, Inc. TEL +1 714-377-6312.

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Presentation on theme: "Assessing the Market and the Competition for a New Product or Service Andy Mindlin REALWORLD Marketing, Inc. TEL +1 714-377-6312."— Presentation transcript:

1 Assessing the Market and the Competition for a New Product or Service Andy Mindlin REALWORLD Marketing, Inc. andy@REALWORLDmarketing.com TEL +1 714-377-6312 Presented to UCI Graduate School of Management Center for Entrepreneurship and Innovation January 9, 2013 © 2013 REALWORLD Marketing, Inc.

2 Assessing the Market and the Competition for a New Product or Service © 2013 REALWORLD Marketing, Inc.

3 About the Speaker 25 years experience in Marketing; Emphasis on Startups and New Products Core Experience Procter & Gamble (Brand Management) BA in International Economics, Vanderbilt University, Phi Beta Kappa Recent Experience Co-founded fabless semiconductor company Served as Vice President of Marketing & Sales Raised $13 million in venture capital Current Activities Include Helping business leaders solve marketing problems Serving on corporate Boards Mentoring students at UC Irvine Paul Merage School of Business Judging UC Irvine annual Business Plan Competition © 2013 REALWORLD Marketing, Inc. | Page 3

4 1. In the Business School? 2. Taken business classes? 3. Started a business before? 4. Anything particular you want to learn tonight? Quick Questions © 2013 REALWORLD Marketing, Inc. | Page 4

5 What Well Cover As advertised How to Assess the Market How to Assess the Competition Plus Nomenclature Examples 9 Questions every business plan should answer How the Judges Will Assess Your Business Idea Your questions © 2013 REALWORLD Marketing, Inc. | Page 5

6 Why its Important Whats wrong with most business plans? (They) waste too much time on numbers and devote too little to the information that really matters. William A. Sahlman Harvard Business Review July-August 1997, p. 98 Based on research of over 100 startups and their original business plans If you want to speak the language of investors, base your business plan on… the four interdependent factors critical to every new venture: The People The Opportunity The Context Risk and Reward © 2013 REALWORLD Marketing, Inc. | Page 6

7 Situation Analysis Have a new product idea Potential seems strong Need money to build it Other next steps not certain © 2013 REALWORLD Marketing, Inc. | Page 7

8 Start at Ground Zero Look at some fundamentals Basic blocking and tackling In marketing, translates as: 1.Know who your customers are 2.Listen to them Consider alternate paths to market © 2013 REALWORLD Marketing, Inc. | Page 8

9 Where We Want to Go Sales, Funding, Management Support Idea © 2013 REALWORLD Marketing, Inc. | Page 9

10 Alternate Paths to Market Typical Technology Path Prototype Patent ??? Sales, Funding, Management Support Idea © 2013 REALWORLD Marketing, Inc. | Page 10

11 Alternate Paths to Market Typical Technology Path Prototype Patent ??? Market Oriented Path Customers Profit Principle Sales, Funding, Management Support Idea © 2013 REALWORLD Marketing, Inc. | Page 11

12 Marketing (defined) Going to the market To learn what prospects will buy, then creating & delivering that product... when, where and how they want it Our Company OUTSIDE The Market IN © 2013 REALWORLD Marketing, Inc. | Page 12

13 Why do Companies Fail? The company had fallen into the classic trap of building a product it thought customers ought to like – instead of what our customers wanted to buy. Why Successful Companies Fail By John J. Cullinane Based on the history of Cullinet Software, Inc., the first software company to be listed on the New York Stock Exchange, and reach $1 billion dollars in valuation. It got caught in the rapid technological changes of the 80s, resulting in a sale to Computer Associates for $400 million. © 2013 REALWORLD Marketing, Inc. | Page 13

14 Keys to Success in Marketing 1.Know who your customers are 2.Listen to them The rest is execution. © 2013 REALWORLD Marketing, Inc. | Page 14

15 Now Todays Goal is in Sharper Focus Its not just assess the market and assess the competition This is a critical success factor towards getting what we want © 2013 REALWORLD Marketing, Inc. | Page 15

16 © 2013 REALWORLD Marketing, Inc. | Page 16 Assessing the Market

17 1.What do we want to learn? 2.What will we do with the information? 3.How do we gather the information? Three Key Questions Precede Research © 2013 REALWORLD Marketing, Inc. | Page 17

18 What do we Mean by The Market? A market is people exchanging goods & services (for value) Key to an investor, because this is where customers part with their money One of two key transactions investors care about The market can be described as consisting of 3 components 1.Customers 2.Competitors 3.Dominant Trends (that affect us all) © 2013 REALWORLD Marketing, Inc. | Page 18

19 What do we Mean by The Market? Investor needs to know: Who is going to give you money for what you propose to do? Customers Answer the key questions (5 Ws and 1 H) Who are they? What are they? Where are they? When do they buy? Why do they buy? How much do they buy? (How much? How often?) Consider both the many and the few © 2013 REALWORLD Marketing, Inc. | Page 19

20 What do we Mean by The Market? Competitors Who are the major players? Who are the newcomers? Whos probably working on the same thing? Well discuss more on Competition later Investor needs to know: Who else is after these same dollars? © 2013 REALWORLD Marketing, Inc. | Page 20

21 What do we Mean by The Market? Investor needs to: Gauge the attractiveness of this market Trends Answer the key questions Size? Direction? Growth? News? Regulatory? Financial? Needs (Pain)? © 2013 REALWORLD Marketing, Inc. | Page 21

22 How do we Gather This Information? Starting with General Information Market Analysts Gartner/Dataquest, Forrester Research, Yankee Group[Fee, but may pity students] Stockbrokers Merrill Lynch, Goldman Sachs, E*TRADE, Schwab Web Googlewww.google.com[Go ahead, enter a question] Aboutwww.about.com[Like asking a web librarian] Hoovers www.hoovers.com Mantawww.manta.com Inc. Business Resourceswww.inc.com Yahoo! Financefinance.yahoo.com [Find a public company in the same space and read reports on their market] Government Economic Indicatorswww.commerce.gov Census, Demographicswww.census.gov Edgar Databasewww.sec.gov/edgar.shtml [Youre paying for it, use it; but take care to avoid settling for numbers] © 2013 REALWORLD Marketing, Inc. | Page 22

23 How do we Gather This Information? Getting Specific Information Ask prospects Pump your network Ask your coach, mentor and angel for suggestions If you dont have several, find and adopt them The specific answers are usually out there For almost every market theres a –Market research report –Industry analyst –Industry (trade) magazine –Trade association –Trade show Ask a librarian (degrees in Information!) © 2013 REALWORLD Marketing, Inc. | Page 23

24 World Population= Source: US Bureau of the Census http://www.census.gov/population/popclockworld.html Jan 9, 2013 How to Connect With Anybody on the Planet It no longer takes even "Six Degrees of Separation 3 Degrees of Separation is based on this principle (www.LinkedIn.com)www.LinkedIn.com Degrees of Separation Qty People You Know1918 1 People They Know 19183,679,6832 People They Know 19187,058,552,0933 Number of People You Can Connect to 7,058,552,093 © 2013 REALWORLD Marketing, Inc. | Page 24

25 If the Market isnt There yet Gauge the opportunity somehow What was the market for bottled water before Perrier? Who knew? And the % of homes dissatisfied with the taste of their water But you could have quantified the: Market for liquid refreshment © 2013 REALWORLD Marketing, Inc. | Page 25

26 If the Market isnt There yet Gauge the opportunity somehow What was the market for overnight delivery before Federal Express? Who knew? Also could get testimonial quotes from responsible people who have the problem But you could have quantified the: B usiness spending on urgent communications © 2013 REALWORLD Marketing, Inc. | Page 26

27 If the Market isnt There yet Gauge the opportunity somehow No one ever asked us to design a Mini-Van Who knew? Again, testimonial quotes from responsible people who have the problem would add support But you could have quantified the: # of moms with kids and % dissatisfied with station wagons © 2013 REALWORLD Marketing, Inc. | Page 27

28 Market vs. Target Market Market The set of all actual and potential buyers of a product or service Target Market That group of people pre-disposed to buying © 2013 REALWORLD Marketing, Inc. | Page 28

29 Market vs. Target Market Market © 2013 REALWORLD Marketing, Inc. | Page 29

30 Market vs. Target Market MarketTarget Market Focusing on people pre-disposed to buying © 2013 REALWORLD Marketing, Inc. | Page 30

31 Target Market (Example) Get specific Telegraph that your sales force knows exactly where to aim © 2013 REALWORLD Marketing, Inc. | Page 31

32 Charlies New Business Success Factors 1.Pick a BIG market 2.SEGMENT it 3.EXECUTE better than anybody Arnold O. Beckman Founder of Beckman Instruments, Beckman Coulter Inventor of accurate and easy- to-use scientific instruments that revolutionized the study and understanding of human biology © 2013 REALWORLD Marketing, Inc. | Page 32

33 Market Segmentation Dividing a market into distinct and meaningful groups of buyers… who might merit separate products and (or) marketing mixes © 2013 REALWORLD Marketing, Inc. | Page 33

34 What to do With the Information Not just: –Gather information –Report –Deliver a plan Goal is to PERSUADE © 2013 REALWORLD Marketing, Inc. | Page 34

35 How do we Show What we Learned? Following are a few examples of Assessing the Market Likes? Dislikes? © 2013 REALWORLD Marketing, Inc. | Page 35

36 IC Market Make-up Today © 2013 REALWORLD Marketing, Inc. | Page 36

37 SiRiFICs Addressable Market © 2013 REALWORLD Marketing, Inc. | Page 37

38 Competitors by Segment Real Property Facilities Maintenance Fleet/Vehicles Fixed Assets IT Assets Property Management Help Desk © 2013 REALWORLD Marketing, Inc. | Page 38

39 Assessing the Market – Guidelines Be curious –Ask a lot of questions Be resourceful –Let it be an indicator of how youll solve the problems that come up in your business –China Morning Post Recognize that professional investors know more than you do –So you can never know enough about your market © 2013 REALWORLD Marketing, Inc. | Page 39

40 Remember the Keys to Success 1.Know who your customers are 2.Listen to them The rest is execution. © 2013 REALWORLD Marketing, Inc. | Page 40

41 Listening to Customers (2009 BPC) Surveyed 2009 BPC participants –64% interviewed prospective customers; 36% did not Of THOSE WHO DID –94% said it was valuable (67% said very valuable) –80% were surprised at what they learned Of TEAMS THAT WON AN AWARD (1st, 2nd, 3rd, 4th) –100% listened to customers –100% said it was valuable – 90% were surprised by what they learned n=33 © 2013 REALWORLD Marketing, Inc. | Page 41

42 Benefits of Listening 1.You get a third party perspective on your product, providing feedback & request for things you may have overlooked 2.Getting actual testimonials from customers for the pitch; 3.Understanding what is important to customers and focus on it 4.Get a reality check of the market and its state to accept the product or not 5.Know what they really want and dont want 6.We got to verify our secondary research 7.Validated or debunked certain assumptions 8.Identifying opportunities to make our business idea more unique and competitive. 9.It gives an understanding of the customers' needs 10.Learned price point of our product 11.Understanding our markets and where we would be most effective 12.Face to face interaction 13.Being able to refine and fine-tune the product 14.Got a better understanding of the costumer needs and helped update our business model accordingly © 2013 REALWORLD Marketing, Inc. | Page 42

43 Top Excuses Preferred to wait until we have developed the product further [29%] Hesitant to reveal Intellectual Property [29%] Didnt know any to call; didnt know where to find them [26%] Didnt feel comfortable (calling strangers; asking questions) [13%] Why Teams Didnt Listen to Customers © 2013 REALWORLD Marketing, Inc. | Page 43

44 Top ExcusesWhat to Do About It Preferred to wait until we have developed the product further [29%] Why bother if theyre not interested? Hesitant to reveal Intellectual Property [29%] Focus on what you do, not how Didnt know any to call; didnt know where to find them [26%] Pump your network (e.g. coach, professors, LinkedIn) Didnt feel comfortable (calling strangers; asking questions) [13%] Failure here costs nothing! Its ok, really! Have 1 teammate try it once Why Teams Didnt Listen to Customers © 2013 REALWORLD Marketing, Inc. | Page 44

45 Tips for Listening to Customers 1.Decompress (not selling anything) 2.Write out your intro & questions in advance 3.Appeal to their sense of helpfulness (ask for "help") 4.Understand that people generally like new ideas...and they've been in your shoes 5.Respect their time (set and declare a time limit) 6.#1...get referred in (Charlie Baecker suggested I call you)!!! © 2013 REALWORLD Marketing, Inc. | Page 45

46 © 2013 REALWORLD Marketing, Inc. | Page 46 Assessing the Competition

47 1.What do we want to learn? 2.What will we do with the information? 3.How do we gather the information? Three Key Questions Precede Research © 2013 REALWORLD Marketing, Inc. | Page 47

48 Your Approach is a Key Issue Not recommended We have no competition There is nothing like this Alternatives to Consider Who does this exactly? Who does something somewhat like this? How is this problem solved currently (and by whom?) Who else is competing for the same (budget) dollars? © 2013 REALWORLD Marketing, Inc. | Page 48

49 Your Biggest Competitors Will Include 1.Doing Nothing (DN) [Leaving the money in their wallet] 2.Home brewed (DIY) [Boss, we can build that] Recognize this in your plans The key isnt just to gather information and report… But to make a PERSUASIVE case That you can get people to part with their money (instead of giving to others, or keeping it to themselves) © 2013 REALWORLD Marketing, Inc. | Page 49

50 How do we Identify the Competitors? Be a customer Online Ask around Ask the customers How do you solve this problem currently? Who are their competitors? Who else (have you heard) is working on this? [Get on Google or About and look for someone to solve the problem] [Find a trade journal and call the editor, asking who does this?] © 2013 REALWORLD Marketing, Inc. | Page 50

51 How do we Find out More About Them? If theyre public Get their annual reports Look at their web sites Attend industry conferences (attend their presentation) If theyre not Check out their patents (www.uspto.gov)www.uspto.gov Ask VCs and other investors in the field Look at their website for open positions Ask recruiters who theyre hiring Call them and ask for information © 2013 REALWORLD Marketing, Inc. | Page 51

52 Know Their Present and Future Competitive Product roadmap (example) © 2013 REALWORLD Marketing, Inc. | Page 52

53 How do we Show the Information? Summary charts are great Again, go beyond sharing information Make a point that you can be #1 in your niche Examples follow Likes? Dislikes? © 2013 REALWORLD Marketing, Inc. | Page 53

54 Competitive Summary © 2013 REALWORLD Marketing, Inc. | Page 54

55 Competitive Details © 2013 REALWORLD Marketing, Inc. | Page 55

56 XeroCoat vs Competitive Technologies © 2013 REALWORLD Marketing, Inc. | Page 56

57 Product Offerings by Company Dräger offers the broadest range of monitors to care providers © 2013 REALWORLD Marketing, Inc. | Page 57

58 How do we Present the Information? Perceptual Map of the marketplace Marketers favorite tool A graph that simplifies the often-confusing competitive landscape It is an elegant visual communication device Show the competitive set Arrange them along axes indicating what customers care about © 2013 REALWORLD Marketing, Inc. | Page 58

59 Perceptual Map of Beer Market Perceptual Map of the Attributes © 2013 REALWORLD Marketing, Inc. | Page 59

60 Perceptual Map of Beer Market Perceptual Map of the Products © 2013 REALWORLD Marketing, Inc. | Page 60

61 © 2013 REALWORLD Marketing, Inc. | Page 61 Summary

62 What we Covered As advertised How to Assess the Market How to Assess the Competition Plus Nomenclature Examples 9 Questions every business plan should answer How the Judges Will Assess Your Business Idea Your questions © 2013 REALWORLD Marketing, Inc. | Page 62

63 9 Questions Every Business Plan Should Answer 1.Who is the customer? 2.How does the customer make decisions about buying this product? 3.To what degree is this a compelling purchase for the customer? 4.How will the product be priced? 5.How will we reach all the identified customer segments? 6.How much does it cost (time & resources) to acquire a customer? 7.How much does it cost to produce & deliver the product? 8.How much does it cost to support a customer? 9.How easy is it to retain a customer? Source: William A. Sahlman, "How to Write a Great Business Plan, Harvard Business Review, www.hbr.com © 2013 REALWORLD Marketing, Inc. | Page 63

64 Use the New Business Idea Evaluator Tool to evaluate new business ideas youre considering Identifies the Critical Success Factors for a new venture Rate each idea (1 thru 5) in each box provided Compare the ratings for several ideas Where you cant rate an idea highly… –Those are areas that need improvement –Before putting in much time or money –Or asking others to do so © 2013 REALWORLD Marketing, Inc. | Page 64

65 © 2013 REALWORLD Marketing, Inc. | Page 65 Questions

66 Andy Mindlin andy@REALWORLDmarketing.com TEL +1 714-377-6312 © 2013 REALWORLD Marketing, Inc.


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