1. Jaine Lucas Executive Director, IEI

2. MARKET vs. INDUSTRY MARKET The organized exchange of goods, services, or resources between buyers and sellers within a specific geographic area and during a given period of time. A buyer gives up money and gets a good, while a seller gives up a good and gets money INDUSTRY One or more business firms that produce similar products

3. MARKET vs. INDUSTRY Examples of industries – Automotive – Cosmetics – Appliances – Baking Examples of markets – 2014 Philadelphia hospitality market – May 2013 global smart phone market – 2013 Canadian soft drinks market

4. MATCHING PRODUCTS & SERVICES WITH CUSTOMERS MARKET Customer & Benefits Segment, Size Channels Perceptual Space Value Proposition INDUSTRY Industry Structure Competitive Space Competitive Dynamics Positioning

5. REMEMBER WHO PAYS! The key to success is falling in love with your customers You must know them, study them, honor them, serve them… The single most crucial step towards starting a successful business is discovering and articulating what you can provide that your customers want enough to pay for

6. KNOW YOUR CUSTOMERS! 1.Why do your customers want your product or service? What do you provide? What are your customers really buying? How much will they pay? 2.Who, exactly, are your customers? 3.How do your customers buy? When do they buy? Where do they buy? What rules or expectations govern their buying?

7. REMEMBERING THAT… There can be many that influence purchasing decisions The people who use or consume the product may not be the one who actually makes the purchase Especially true in business and in families

8. EXERCISE WHY PEOPLE AND BUSINESSes BUY… DESIGNER HANDBAGS PUBLIC RELATIONS SERVICES

9. WHY CUSTOMERS BUY People and businesses have different requirements Both people and businesses buy benefits They buy solutions to their problems and satisfaction of their needs and wants People and businesses do not buy features Like torque or braking power or acceleration Products or services are a means to an end People or businesses may not buy what you think you sell

10. WHY CONSUMERS BUY Meet biological needs Increase security Gain status or recognition – to belong Live out fantasies Reduce anxiety or other strong emotions Save time or money Solve problems Can be irrational, more emotional

11. WHY BUSINESSES BUY Provide their own goods or services more cost effectively Save money Cement relationships Position themselves strategically Improve public relations Solve problems More rational, logical

12. WHAT DO BUSINESSES CARE ABOUT? Quality Dependability Cost Customization Market exclusivity Delivery schedules Guarantees Strategic relationships

13. FORCES THAT AFFECT BUYING BEHAVIOR Demographics Social Change Economics Politics/ Regulations Technology Environmental Change

14. BUYERS BUY BENEFITS A benefit is the value a customer places on a function and/or feeling the product produces through its features Identify - through testing - the few, crucial benefits that will affect customers’ buying decisions... Use these to drive marketing strategy, packaging, pricing, branding, and sales plans

15. FEATURES SUPPORT BENEFITS Features are what make up the product’s or service’s ability to perform functions for customers Some features are more equal than others: Of the dozens of features an iPad may have, perhaps only two or three – such as a high res camera or downloadable apps – might be important to customers Which differentiate you from the competition? Are they protected or protectable by copyrights, patents or trademarks?

16. EXERCISE BENEFIT 1. 2. 3. FEATURES THAT SUPPORT BENEFIT 1. 2. 3. METHOD TO COMMUNICATE BENEFIT 1. 2. 3. COMMUNICATE BENEFITS

17. KNOW YOUR CUSTOMERS! 1.Why do your customers want your product or service? What do you provide? What are your customers really buying? How much will they pay? 2.Who, exactly, are your customers? 3.How do your customers buy? When do they buy? Where do they buy? What rules or expectations govern their buying?

18. WHO WANTS YOUR PRODUCT OR SERVICE? Develop an intimate knowledge of who buys Customers’ behavior Personal and institutional motivations The key words, concepts, associations that trigger behavior Segment who buys Identifiable, organized, or organize- able & reachable subgroups of customers Marked by demographics, behaviors, location, interests

19. CONSUMER CUSTUMER PROFILE Describe your ideal customer or client by answering the questions below. The questions take you from specific characteristics to a definition of a market or market segment: How will they use your product or service? Why might they buy it? What will they pay for it? Are they men, women, or both? What is their age group? What is their approximate average income? What is their employment type (blue-collar, white-collar, managerial, professional, homemaker, etc.)? What is their lifestyle (personality, self-image, etc.)?

20. CONSUMER CUSTUMER PROFILE Where are they (local, state, national and globally)? How many of them are there? How many do you expect to get as customers? What percentage of the market do you expect to get? What’s the growth trend of your target market? What are their buying habits? What magazines do they read? What organizations do they belong to? What conventions or events do they attend? Is there a directory that lists them? Are there mailing lists of them available? What is the best way to reach them?

21. BUSINESS CUSTOMER PROFILE Describe your ideal customer or client by answering the questions below. The questions take you from specific characteristics to a definition of a market or market segment: How will the firm benefit from buying your product or service? How much are the benefits worth to them – in savings, increased market share, profile, etc. Who buys? Who influences? Who facilitates? Who decides? What buying procedures are in place? What controls? What level of service to they expect? How are they used to buying? Salesperson? Directly? Other?

22. BUSINESS CUSTOMER PROFILE How is the transaction started, facilitated, completed? What industry norms govern the transaction? Discounts, payment terms, warranties, types of contracts. Where are they located ? What piece of the market are you aiming for? How many of target firms are there? How many do you expect to get as customers? What’s the growth trend of your target market? What are their buying habits? What organizations do they belong to? What conventions or events do they attend? Is there a directory that lists them? Are there mailing lists of them available? What is the best way to reach them?

23. WHAT IS MARKET SEGMENTATION? Process of dividing a market into subsets of consumers with common needs or characteristics

24. SEGMENT ANALYSIS Talk to customers! Interviews & surveys Observe customers using/buying similar items Read what they read, go where they go Talk to others who serve the same customers How do they segment, communicate, etc? Examine how competitors segment Define segments and estimate size

25. TARGET SEGMENTS [ CONSUMERS ] DEMOGRAPHIC o Age o Gender o Marital Status o Income Level o Occupation o Education o www.demographics.co m www.demographics.co m GEOGRAPHIC Country Region State County City/Town Size of Population Climate Population Density www.census.gov www.oscda.missouri.uic.ui capps.xtabs3.html www.geocode.com/eagle. html-ssi

26. TARGET SEGMENTS [ CONSUMERS ] PSYCHOGRAPHIC o Leader or follower o Extrovert or introvert o Achievement-oriented or content with status quo o Independent or Dependent o Conservative or liberal o Traditional or experimental o Socially-conscious or self- centered BEHAVIORAL o Rate of usage o Benefits sought o Methods of usage o Frequency of usage o Frequency of purchase o Travel patterns

27. TARGET SEGMENTS [ CONSUMERS ] SOCIOCULTURAL o Cultures (Chinese, Spanish, Brazilian) o Religion (Moslem, Catholic, etc.) o Subcultures (African American, Asian, Caucasian) o Social class (lower, middle, upper) o Family life cycle (single, young marrieds, empty nesters) USE-RELATED o Usage rate o Awareness status o Brand loyalty

28. MORE MARKET SEGMENTATION Use-Situation Time, objective, location & person Benefit Segmentation Convenience, social acceptance, value, economy Hybrid Segmentation Demographic/psychographic Geodemographics www. claritas.com, PRIZM SRI VALS – Innovators, thinkers, believer, achievers, strivers, experiencers, makers survivors

29. TARGET SEGMENTS [ BUSINESSES ] BUSINESS MARKETS o Type of business (manufacturer, retail, wholesale, service) o SIC / NAICS Code o Size of Business o Financial Strength o Number of Employees o Location o Structure o Sales Level o Special Requirements o Distribution Pattern o www.imarketinc.com, www.findsvp.com, Lexis/Nexis, Business Source Premier, Business and Company Resource Center, Business Industry Database www.imarketinc.com www.findsvp.com

30. EXERCISE CUSTOMER PROFILE Define your customer Define his/her segment What channels would you use to reach your customer?

31. KNOW YOUR CUSTOMERS! 1.Why do your customers want your product or service? What do you provide? What are your customers really buying? How much will they pay? 2.Who, exactly, are your customers? 3.How do your customers buy? When do they buy? Where do they buy? What rules or expectations govern their buying?

32. EXCHANGE ANALYSIS What changes hands? Why? What is the value proposition to the buyer? What dimensions of value matter? Who sells? Who buys? Who influences? Who facilitates? Who holds the most power? When does the exchange happen? How long is the sales cycle? How are transactions started, facilitated, completed? What rules, regulations, norms shape the exchange? What norms govern the exchanges? Discounts & payment terms, warranties, types of contracts, style & culture

33. PERCEPTUAL SPACE How does your product or service stack up against competitors? What mind space do you occupy? What unique value can you offer? What will be your unique selling proposition?

34. PRODUCT COMPARISON CHART List competitive products/services – the from customers’ point of view Note crucial dimensions of value PriceQualitySegmentChannel Product1$$$ HA Sales Product2$ LB Web Product3 $$ MC Direct Substitute1$ LD Sales Substitute2 $ ME Shows Notes

35. PRODUCT COMPETITIVE ANALYSIS: COMPETITIVE OFFERINGS MATRIX Differentiation Attractiveness L H H Product Y Product X Product Z Product B Product A Product C L

36. PRODUCT COMPETITIVE ANALYSIS: PERCEPTUAL MAP Quality Cost Map key products or services along dimensions most important to buyers & influencers

37. WHAT IS A VALUE PROPOSITION? Or “unique selling proposition” One of two essential elements for effective positioning (communicating benefits is the other) Distinct benefit or point of difference for the product or service Consequences of poor/ineffective value proposition? Little or no market uptake = failure Perception of product or service as “me too”

38. “WHAT’S IN IT FOR ME?”- CUSTOMER SEGMENTATION TARGET SEGMENT MARKET POSITION PSYCHOLOGICAL VALUE PROPOSITION

39. VALUE PROPOSITION Define what you provide/will provide As simply and concretely as possible, emphasizing function, not form Describe your customer As precisely as possible, emphasizing why they care, i.e., the type and magnitude of the problem they have that you solve Define precisely the value you provide to your customer in terms of benefits they will receive Quantifying you claim when possible, especially for businesses, and supporting it with testimony

40. VALUE PROPOSITION [ EXAMPLES ] iPod: “best digital jukebox” Lexus: “quality, zero defects” Dell: “customized PCs made quickly and sold economically” Southwest: “friendly, fun customer service at economical prices” Gap: “wearable, affordable, hip American style”

41. WHAT’S THE VALUE PROPOSITION? Dove Soap V-8 Juice McDonald’s Happy Meal

42. EXERCISE WRITE YOUR VALUE PROPOSITION “Our company provides x that does y (solves y problem) for z in a way that....” “Automsoft’s RapidPharma provides 100% accurate and reproducible data at the finest level to help pharmaceutical firms bring new production processes to scale, while providing batch assurance and full compliance with CFR Chapter 21 Part 11.”

43. SOURCES OF CONSUMER DATA www.fedstats.gov – economy, business and all demographics of US population www.fedstats.gov www.census.gov – data on age, education, income and occupation of US residents by state and region www.census.gov World Fact Book – key stats on any country worldwide www.cia.gov.publications.factbook www.cia.gov.publications.factbook Claritas – demographic and lifestyle profiles Yankelovich – consumer lifestyles and consumption patterns Mediamark Research – segmentation studies of consumers’ leisure activities and buying cycles

44. BIBLIOGRAPHY Matching Products & Services with Markets Tony diBennedetto lectures Jaine Lucas lectures Jeffrey Dobkin, How to Market a Product for under $500!, (Danielle Adeams Publishing Company, 1995). Craig Fleisher & Babette Bensoussan, Strategic and Competitive Analysis (Prentice-Hall, 2003). TL Hill lectures Jill Kapron, BizPlan Express, (South-Western College Publishing Company, 1998). Philip Kotler, Marketing Management, 9 th Edition, (Prentice-Hall, 1997). Small Business Development Center business planning program – 2000. Barbara Wright presentations