1. Building Data-Rich Market Validation Plans for University Technologies Francis Moran Peter Hanschke March 29, 2012 © Francis Moran and Associates Inc., 2012 All rights reserved

2. Agenda Intros Validation assessment Why? How? Examples Q&A © Francis Moran and Associates Inc., 2012 All rights reserved

3. Introductions Francis Moran I bring technology to market I work with technology-driven ventures to build and implement the strategies that will identify customers, develop the right product, differentiate effectively and hit revenue objectives Peter Hanschke 20+ years of hi-tech product management and marketing experience Specialize in helping companies align their product strategy with their business strategy Frequent blogger and speaker © Francis Moran and Associates Inc., 2012 All rights reserved

4. Why a market validation plan? © Francis Moran and Associates Inc., 2012 All rights reserved

5. Must be worth it Costly to bring technology to market Can the technology be monetized? At some point? Mobile space is full of free; monetization must occur at some point Extremely difficult to shed products What do you do with existing customers? © Francis Moran and Associates Inc., 2012 All rights reserved

6. Avoid surprises We brought it to market and… “the customer really wants this…instead.” “the market is much smaller than we thought” “we can’t reach the customer because…” “Carriers don’t buy from startups” “Cisco owns the market” “our product is too late or too early” “our price is too high” “the pricing has collapsed in the market” © Francis Moran and Associates Inc., 2012 All rights reserved

7. Framework © Francis Moran and Associates Inc., 2012 All rights reserved

8. Value assessment questions 1.What is the need? 2.Why is the need unmet? 3.How is the Industry attempting to satisfy the need and by when? 4.How large is the market, in dollar terms, if the need is satisfied? © Francis Moran and Associates Inc., 2012 All rights reserved

9. 1. What is the need? Truly a need or a nice-to-have? Pull or push? Drivers creating this need? Universal across the industry or only for certain market segments? What does the market look like right now? Segments Key stakeholders and value chain Business model Pricing model © Francis Moran and Associates Inc., 2012 All rights reserved

10. 2. Why is the need unmet? What are the barriers preventing the need from being satisfied? Technology Government or legal Industry standards Key stakeholder control Macroeconomic, microeconomic Timing of adjacent adoption curves © Francis Moran and Associates Inc., 2012 All rights reserved

11. 3. How is the industry attempting to satisfy the need and by when? Many ways of satisfying the need at different levels in the value chain Do not underestimate the incumbent solution or technology Do not ignore indirect solutions Consider all potential barriers Review strengths and weakness of each current solution © Francis Moran and Associates Inc., 2012 All rights reserved

12. 4. How large is the market? What is the financial value that this need meets in the market place? How much could I charge for this product? Can we construct a business case for target clients showing attractive ROI? © Francis Moran and Associates Inc., 2012 All rights reserved

13. Market segment evaluation FactorsDescriptionWeight (%) Score (0 – 1) 1Accessible, well-funded target customer 20 2Painfully compelling reason to buy30 3Feasible whole product10 4Known partners & allies5 5Effective whole product distribution5 6Attractive whole product pricing5 7Opportunity not preempted by competition 10 8Consistency with current position5 9Good follow-on segment potential10 Critical factors that need to discussed, described in detail, and scored. © Francis Moran and Associates Inc., 2012 All rights reserved

14. Market segment evaluation FactorsDescriptionWeight (%) Score (0 – 1) 1Accessible, well-funded target customer 20 2Painfully compelling reason to buy30 3Feasible whole product10 4Known partners & allies5 5Effective whole product distribution5 6Attractive whole product pricing5 7Opportunity not preempted by competition 10 8Consistency with current position5 9Good follow-on segment potential10 Weighting defines the relative importance of each factor. © Francis Moran and Associates Inc., 2012 All rights reserved

15. Factor: Accessible target FactorsDescriptionWeight (%) Score (0 – 1) 1Accessible, well-funded target customer 20 2Painfully compelling reason to buy30 3Feasible whole product10 4Known partners & allies5 5Effective whole product distribution5 6Attractive whole product pricing5 7Opportunity not preempted by competition 10 8Consistency with current position5 9Good follow-on segment potential10 Can I get to this customer? Do they have budget in place? Are they willing to spend money? Can I get to this customer? Do they have budget in place? Are they willing to spend money? © Francis Moran and Associates Inc., 2012 All rights reserved

16. Factor: Compelling reason FactorsDescriptionWeight (%) Score (0 – 1) 1Accessible, well-funded target customer 20 2Painfully compelling reason to buy30 3Feasible whole product10 4Known partners & allies5 5Effective whole product distribution5 6Attractive whole product pricing5 7Opportunity not preempted by competition 10 8Consistency with current position5 9Good follow-on segment potential10 Is this an Urgent Need? Is their current method of addressing the need painful? Is this an Urgent Need? Is their current method of addressing the need painful? © Francis Moran and Associates Inc., 2012 All rights reserved

17. Factor: Whole product FactorsDescriptionWeight (%) Score (0 – 1) 1Accessible, well-funded target customer 20 2Painfully compelling reason to buy30 3Feasible whole product10 4Known partners & allies5 5Effective whole product distribution5 6Attractive whole product pricing5 7Opportunity not preempted by competition 10 8Consistency with current position5 9Good follow-on segment potential10 Do customers need more than a point solution? Does your product provide everything they need? Do customers need more than a point solution? Does your product provide everything they need? © Francis Moran and Associates Inc., 2012 All rights reserved

18. Factor: Partners and allies FactorsDescriptionWeight (%) Score (0 – 1) 1Accessible, well-funded target customer 20 2Painfully compelling reason to buy30 3Feasible whole product10 4Known partners & allies5 5Effective whole product distribution5 6Attractive whole product pricing5 7Opportunity not preempted by competition 10 8Consistency with current position5 9Good follow-on segment potential10 Are there partners and/or allies that you can leverage? © Francis Moran and Associates Inc., 2012 All rights reserved

19. Factor: Product distribution FactorsDescriptionWeight (%) Score (0 – 1) 1Accessible, well-funded target customer 20 2Painfully compelling reason to buy30 3Feasible whole product10 4Known partners & allies5 5Effective whole product distribution5 6Attractive whole product pricing5 7Opportunity not preempted by competition 10 8Consistency with current position5 9Good follow-on segment potential10 Are there viable channels of distribution? © Francis Moran and Associates Inc., 2012 All rights reserved

20. Factor: Product pricing FactorsDescriptionWeight (%) Score (0 – 1) 1Accessible, well-funded target customer 20 2Painfully compelling reason to buy30 3Feasible whole product10 4Known partners & allies5 5Effective whole product distribution5 6Attractive whole product pricing5 7Opportunity not preempted by competition 10 8Consistency with current position5 9Good follow-on segment potential10 Can you price your product so that the market buys it? © Francis Moran and Associates Inc., 2012 All rights reserved

21. Factor: Competition FactorsDescriptionWeight (%) Score (0 – 1) 1Accessible, well-funded target customer 20 2Painfully compelling reason to buy30 3Feasible whole product10 4Known partners & allies5 5Effective whole product distribution5 6Attractive whole product pricing5 7Opportunity not preempted by competition 10 8Consistency with current position5 9Good follow-on segment potential10 Is the competitive landscape too formidable? Is there an angle to exploit? Is the competitive landscape too formidable? Is there an angle to exploit? © Francis Moran and Associates Inc., 2012 All rights reserved

22. Factor: Current position FactorsDescriptionWeight (%) Score (0 – 1) 1Accessible, well-funded target customer 20 2Painfully compelling reason to buy30 3Feasible whole product10 4Known partners & allies5 5Effective whole product distribution5 6Attractive whole product pricing5 7Opportunity not preempted by competition 10 8Consistency with current position5 9Good follow-on segment potential10 Is this consistent with your current position? Or is it new? © Francis Moran and Associates Inc., 2012 All rights reserved

23. Factor: Segment potential FactorsDescriptionWeight (%) Score (0 – 1) 1Accessible, well-funded target customer 20 2Painfully compelling reason to buy30 3Feasible whole product10 4Known partners & allies5 5Effective whole product distribution5 6Attractive whole product pricing5 7Opportunity not preempted by competition 10 8Consistency with current position5 9Good follow-on segment potential10 Can success in this segment easily lead to other segments? © Francis Moran and Associates Inc., 2012 All rights reserved

24. Applying the assessment matrix Be honest. Be critical. Be truthful. Challenge assumptions. Avoid group think. Apply to every potential segment, start with: Accessible, well-funded target Painfully compelling reason to buy Feasible whole product Competition Good follow-on potential Select top segments worth going after © Francis Moran and Associates Inc., 2012 All rights reserved

25. Market segment assessment example FactorsScore (0 – 1) Weight (%) Weighted Score (%) 1Accessible, well-funded target customer 120 2Painfully compelling reason to buy.43012 3Feasible whole product.8108 4Known partners & allies155 5Effective whole product distribution.753.5 6Attractive whole product pricing.351.5 7Opportunity not preempted by competition.7107 8Consistency with current position155 9Good follow-on segment potential.5105 Total Weighted Score67 © Francis Moran and Associates Inc., 2012 All rights reserved

26. Validation © Francis Moran and Associates Inc., 2012 All rights reserved

27. Variety of sources Important to gather info from a variety of sources Avoids group think Sources include Target market(s) Non-buying experts Ex-employees Ensure NDAs are in place or use interview techniques that are nondescript © Francis Moran and Associates Inc., 2012 All rights reserved

28. Target market(s) These are the potential buyers Search LinkedIn, Facebook for potential companies LinkedIn has good search tools Use your rolodex Caution: May jeopardize early sales © Francis Moran and Associates Inc., 2012 All rights reserved

29. Non-buying experts Wouldn’t buy, but are regarded as industry experts Analysts, consultants, educators, writers They have a broad view of the market; know what is going on and who is doing what Search the internet, based on applicable keywords Blogs, tweets, Facebook Comments usually have good nuggets Google Alerts is a good tool to get info as it happens © Francis Moran and Associates Inc., 2012 All rights reserved

30. Employees: Ex and current Ex-employees are those who have moved on to other segments Current employees are in companies that do not compete with yours Find out whatever you can about the industry and market Don’t assume they have a non-communicate clause; just reach out Search LinkedIn for employees © Francis Moran and Associates Inc., 2012 All rights reserved

31. Examples © Francis Moran and Associates Inc., 2012 All rights reserved

32. Online, interactive mapping Started with a preconceived notion of the target market Performed this evaluation and decided on other segments Defined the whole product and pricing Got independent validation from potential customers and industry expert © Francis Moran and Associates Inc., 2012 All rights reserved

33. Touch Bionics First product was marketed through clinics. Go-to-market strategy was a business development function. Second product required a clinical capability. Key question: Where to establish? Certain industries are more likely to have the sorts of injuries the product treated. Where are they clustered? Jurisdictions vary on compensation, reimbursement. Where are the favorable ones? © Francis Moran and Associates Inc., 2012 All rights reserved

34. Summary Critical to have a validation plan Determines whether it’s worth it Helps to avoid surprises Perform assessment on each segment Scores determine highest potential segment Honesty, critical thinking and knowledge are vital Validate with a variety of sources Potential customers; segment experts; employees within the segment © Francis Moran and Associates Inc., 2012 All rights reserved

35. Utilize the chat box to the bottom left of your screen to submit a question to the panel. Please address your question to a specific presenter. Or Press * 1 on your touchtone phone and this will place you into the phone queue. © Francis Moran and Associates Inc., 2012 All rights reserved