1. Customer-centric Market Entry of an Innovative Product/Service Pia Kähärä 5.6.2013

2. Agenda Innovations– Where to Start? Productization– Value of Customer Centricity Going International– Opportunity to Expand Your Markets 10.2.2013 © 2013 Sarus Oy / © 2013 facts & figures

3. What prevents Finnish hi-tech companies from succeeding Finnish Linked in group” Finnish High-Tech Start up – community” defines their main challenges as follows: 1.Lack of marketing thinking, too much emphasis on engineering knowledge and technology 2.Lack of financial capital (resources) to reach the marketing targets 3.Lack of knowledge on international markets: different habits and cultures 4.Finnish cultural deficiencies: cautiousness, unwillingness to take risks, fear of failure © 2013 Sarus Oy / © 2013 facts & figures 10.2.2013

4. “Startups need knowledge and networks often more than funding” 10.2.2013 © 2013 Sarus Oy / © 2013 facts & figures

5. What is innovation ”Development of new values through solutions 1.that meet new requirements, inarticulate needs or 2.old customer and market needs in value adding new ways”. - Wikipedia 10.2.2013 © 2013 Sarus Oy / © 2013 facts & figures

6. Innovation vs. invention Motivation is the differentiator: Innovation = Making money with ideas Invention = Making ideas against payment (R&D) » by Fredrik Hacklin, ETH Corporate Innovation Lab, Zuerich, Switzerland 10.2.2013 © 2013 Sarus Oy / © 2013 facts & figures

7. Innovativeness and fast commercialization is possible when.. all staff members work as entrepreneurs the best effort is given by everyone for developing an invention to an innovation networking is extended outside the organization: dare to take risks – cooperation between startups and large corporations is enabled 10.2.2013 © 2013 Sarus Oy / © 2013 facts & figures

8. How to create a fertile environment for innovations? 1.Minimize hierarchies and bureaucracy. 2.Dare to fail. 3.Step outside your comfort zone. 4.Let passion of your staff flourish. 5.Be open-minded about who can have creative ideas e.g. – Senior staff members – Ex-entrepreneurs… 10.2.2013 © 2013 Sarus Oy / © 2013 facts & figures

9. Involve customers at early development stage Key Questions: Which problem of the customer does your innovation solve? Do you understand, which factors would make your potential customers to replace their existing solution to that problem with your solution?  Communicate the REAL VALUE for customer The potential customer wants to understand, how your solution: 1. saves them money 2. makes them money 3. takes away their headache 10.2.2013 © 2013 Sarus Oy / © 2013 facts & figures

10. Ensure the business potential and competitiveness of your solution © 2013 Sarus Oy / © 2013 facts & figures Inventor: ”I WANT TO SELL MY INNOVATIVE PRODUCT” Market Demand, Customer Needs Feedback about technical/servi ce ability of your innovative product Customer: ” I HAVE A PROBLEM”

11. Agile productization Productization is the process of transitioning an R&D project into a product ready for volume manufacturing. 1. Use simple methods and tools 2. Test and adapt to the market response 3. Keep it fast & swift 4. Focus on functionality instead of extensive documentation 5. Keep the customer involved in the R&D throughout the project 6. Concentrate on simple milestones rather than mega long projects 7. Is completed by motivated individuals 10.2.2013 © 2013 Sarus Oy / © 2013 facts & figures

12. Customer 3 Customer 2 Customer 1 Productization and core product 10.2.2013 © 2013 Sarus Oy / © 2013 facts & figures Productization Core Product Pricing Financing Distribution Packaging Story Easiness to buy Added value

13. Where to Start Commercialization? INNOVATION Is there market potential for us? Is the product ready for the market? In which countries there is the best potential for it? Who can help me to go to international markets? What are the needed investments for commercializat ion? How much does it cost to enter a new market? © 2013 Sarus Oy / © 2013 facts & figures

14. Why test the market? To gain… understanding of your business potential in the new target market insight for competiveness of your offering by direct feedback from potential customers and partners (e.g. your product/service concept and technical features) support for your business decisions © 2013 Sarus Oy / © 2013 facts & figures

15. Study the market demand You need to do: Target market environment analysis Competitor & partner information gathering Qualitative interviews with key customer segments and potential partners You get important information to build your: Product/service concept to meet the target market requirements Positioning strategy Go-to-market strategy Service model plan 10.2.2013 © 2013 Sarus Oy / © 2013 facts & figures

16. Conduct pilot testing … for analyzing the usability/functionality of an existing product/service You need to do: Find a pilot testing partner for technical validity of your solution (e.g. potential customer or unbiased testing authority) Collect and analyze the results You get important information to meet the customer needs and technical requirements of your product/service: Required market entry data to support R&D and usability work Tools and customer feedback to design/adapt the product/service to target market 10.2.2013 © 2013 Sarus Oy / © 2013 facts & figures

17. Case: ERP as a SaaS service for small HVAC, electrician and plumbing companies Terms: ERP = Enterprise Resource Planning System which collects all functions of the company into one operational system in real time: offers, billing, purchasing, customer and project management, book keeping, salaries, material handling, banking information, automated reporting for the management of the company etc. HVAC = heating, ventilation, air conditioning 10.2.2013 © 2013 Sarus Oy / © 2013 facts & figures

18. Case: ERP as a SaaS service for small HVAC, electrician and plumbing companies Background: – usually ERPs are available for large companies – conventional ERP usage requires experience users and technical support inside the company – ERPs are too big investments for small companies – Small companies do not have resources either to implement or use them effectively, but they have many separate systems which do not give them management reports in real time - in project business the profitability information of the projects is calculated afterwards – Small companies do not have systems that give them good enough reports for making good business decisions 10.2.2013 © 2013 Sarus Oy / © 2013 facts & figures

19. Case: ERP as a SaaS service for small HVAC, electrician and plumbing companies Solution: – To develop an lighter and modular service with simple and easy-to-use user interface as SaaS service to meet the need of the targe group (using Microsoft Dynamics Nav as an engine) – Features and holistic approach that bigger companies get available for even the smallest companies – Maximum automation of functions, eg.billing, means less work – Access from everywhere, also by mobile phone 10.2.2013 © 2013 Sarus Oy / © 2013 facts & figures

20. Case: ERP as a SaaS service for small HVAC, electrician and plumbing companies Customer centric-approach for R&D: Interviews of about 3000 end-customers from different groups by phone simultaneously when developing the features and modules 20 minutes interviews about their operations at the moment: Different company sizes: from 1-5 people, 6-10, 11-20, 21-50, 50 - How they operate now in billing, purchasing, project management, reports they get for steering the business What is their existing system /which different systems they use What are their problems with existing systems: which functions does their basic systems include (sales billing, purcase bills, offers, real time project management, salary management, bookkeeping reports etc.) When do they plan to change the system  Joint working: marketing + R&D 10.2.2013 © 2013 Sarus Oy / © 2013 facts & figures

21. Case: ERP as a SaaS service for small HVAC, electrician and plumbing companies Outcome: in-depth understanding of the customer problems and needs – Possibility to develop a system for the real needs of the end-customers – Possibility to segment the market to sub-groups – Understanding of the competitors – Possibility to concentrate in R&D work for the functions that provide help for the customers’ most acute problems – Potential customers list for the future work – Possibility to create marketing messages that address the real needs of the customers:  How we can help you to save money, make money, remove extra work from you… 10.2.2013 © 2013 Sarus Oy / © 2013 facts & figures

22. Case: ERP as a SaaS service for small HVAC, electrician and plumbing companies Outcome: – Pilot testing companies found and involved in an early stage od product/service development  Possibility to improve the already existing service better by getting early customer feedback  Faster development process, earlier commercial income 10.2.2013 © 2013 Sarus Oy / © 2013 facts & figures

23. Market entry: Internationalization Same basic rules apply as in domestic market entry But, cultures and markets are different e.g. – Communication culture – Political environment – Geographics – Purchasing behaviour and habits 10.2.2013 © 2013 Sarus Oy / © 2013 facts & figures

24. Requirements for internationalization – general rules Needed and Must in internationalization: Product portfolio competitiveness at home territory Marketing resources (physical, financial, knowledge) Going abroad decision (strategy, commitment) 10.2.2013 © 2013 Sarus Oy / © 2013 facts & figures It would be beneficial for exporting company to have had several years of experience in the domestic market. The Products, Systems or Services must be ready for export. The typical export company has sufficient resources to carry out expanded sales activities in foreign markets and is committed to devoting resources towards the growth of their exports. It would be beneficial for exporting company to have had several years of experience in the domestic market. The Products, Systems or Services must be ready for export. The typical export company has sufficient resources to carry out expanded sales activities in foreign markets and is committed to devoting resources towards the growth of their exports.

25. Six steps internationalization process (things to study -> decisions to make) 10.2.2013 © 2013 Sarus Oy / © 2013 facts & figures 1. Readiness analysis -> internationali zation 2. Environment -> customer segmentation and target groups 3. Customer needs -> demand – supply, support and partner profiles 4. Distribution methods and partners applicability - > strategy, partnerships and logistics 5. Requirement for sales and marketing (demonstrati on, presentation, promotion) and proposal suggestions - > contract 6. Need for partner/custo mer support - > continuous support

26. BRANDING: Integrated marketing communications To whom? With which products /services? To which markets? CUSTOMER: Purchasing decision R&D Production Distribution Marketing communication Sales, customer service Which goals? Resellers/partners At which price? Unique customer promise and concept Marketing decisions © 2013 Sarus Oy / © 2013 facts & figures 10.2.2013

27. Market Entry: Study Target Market Factors Demand / potential End-user behaviour, preferences Competition Sales/distribution channels Stakeholders Barriers of entry etc.  Communicate the right things! 10.2.2013 © 2013 Sarus Oy / © 2013 facts & figures

28. A good company presentation and communication include: 1.Description of a typical problem or the customer's situation, which the product or service is intended to solve 2.A brief description of your solution (what it does). 3.Benefits of your service/product (not only the features, technical details) 4.Proof and examples: why a customer should believe your claims 5.Your service/product price. 6.Service/product delivery content. 7.How your service/product can be purchased? 8.Reference(-­‐s) (clients, projects) of previous orders. 9.Illustrative charts or diagrams to support your message. 10.Pictures of your product/service. 10.2.2013 © 2013 Sarus Oy / © 2013 facts & figures

29. Success Factors for international, customer-centric market entry 1.Thoroughly completed market research to support decision making 2.Clear goal setting for sales, marketing and distribution channels 3.Customer-centric packaging/productization of product or service 4.Branding, which stands out of the mass: be different, be interesting, be valuable for your customers 5.Elevator pitch: crystallization of value-adds for customers 6.Focused sales and customer service skills and attitude 7.Language skills and culture sensitivity: appreciation and acceptance of different business culture styles 8.Proactivity and systematic end-customer and distributor cooperation 9. Sufficient resources and distribution of tasks and responsibilities for own staff 10. Perseverance no matter what!

30. Sarus Ltd offers sales, marketing and coaching/training services works with companies who want to begin exports/achieve growth in Finland and Europe, Kazakhstan, Russia and the other CIS countries. uses concrete actions to help companies to build an effective framework for profitable sales 10.2.2013 © 2013 Sarus Oy / © 2013 facts & figures

31. Sarus services: consulting, operational work, coaching, training Market test drive (market potential testing) Pilot test drive (pilot testing) Partner (investors eg.) and potential customer search Establishing business in Finland: gateway to Europe Business culture trainings Various sales and marketing services 10.2.2013 © 2013 Sarus Oy / © 2013 facts & figures

32. Sarus staff at Your service: © 2013 Sarus Oy / © 2013 facts & figures

33. KIITOS! СПАСИБО! «Кто ни рискует, тот не пьёт шампанского!» Contact: Pia Kähärä mob. +358 400 193 333 pia.kahara@sarus.fi www.sarus.fi