1. 1  2000-2003 Copyright – MIT 15.390 New Enterprises, Anderson/Zolot Administrivia  Executive summary due today  Three paper copies, one electronic  PowerPoint due next Wed, 3/5  PowerPoint presentations to Howard and Ken on Thu 3/6 and Tue 3/11  20 minute presentations  Sign up for time slot before leaving today  Details to be provided via email  Muddy Charles office hours Mon 3/3

2. 2  2000-2003 Copyright – MIT 15.390 New Enterprises, Anderson/Zolot 15.390 class 7 Marketing Analysis and Segmentation

3. 3  2000-2003 Copyright – MIT 15.390 New Enterprises, Anderson/Zolot The Marketing & Sales Sections of your Business Plan...  Probably the weakest sections in most plans  Simple questions:  what is the universe of people who might buy this?  how will you identify and call on each of those individual buyers?

4. 4  2000-2003 Copyright – MIT 15.390 New Enterprises, Anderson/Zolot Aspects of Marketing and Sales  Market Analysis and Segmentation (26-Feb)  How big is the market, what are the trends, what have similar companies done before, what are analysts saying about the future? (identifying a group of buyers)  Competitive Analysis (3-Mar)  who are the other players in this market, where are they strong and weak, what options do your buyers have?  Marketing and Sales Strategy (12-Mar)  How are you going to identify individual buyers, how are you going to make the product appealing to and get it in front of these buyers? Are you going to sell direct or through a distributor?  Salesmanship (5-Mar) and Sales Tactics (10-Mar)  How are you going to send salespeople to call upon and close (or use distributors for) each of these buyers?

5. 5  2000-2003 Copyright – MIT 15.390 New Enterprises, Anderson/Zolot Assignments due  (due on 17-Mar) Competitive Analysis  (due on 2-Apr) Market analysis, Marketing and Sales strategy

6. 6  2000-2003 Copyright – MIT 15.390 New Enterprises, Anderson/Zolot The Overall Flow  How big is the current market?  How is it growing, on what does growth depend?  What segment of the market do you serve?  How do you get access to it?  Once you have access to it, how do you identify the buyer?  How do you get a proposal in front of the buyer?  How do you close?

7. 7  2000-2003 Copyright – MIT 15.390 New Enterprises, Anderson/Zolot How big is the market (and “Who’s gonna want this thing?”)  All users of a general class of products/services similar to yours  All users of your direct competitors’ products  Those who have the pain  Those who you can identify and get access to  Those whose attention you can grab  Those who have the capacity/willingness to buy

8. 8  2000-2003 Copyright – MIT 15.390 New Enterprises, Anderson/Zolot Once you’ve identified these people...  What do they spend now?  Who do they spend it with?  How do they make their spending decisions?  What features are important to them?  What overall values, quirks, tastes do they have?

9. 9  2000-2003 Copyright – MIT 15.390 New Enterprises, Anderson/Zolot Know who buys your product...  For example, if you’re in the food business, it’s not enough to say your market is people who eat: are you selling fast food or operating a 5-star French restaurant? Very different buyer profiles, very different features sought.  Think of those questions on product registration cards: why do the manufacturers want to know all those things about who’s buying the product?

10. 10  2000-2003 Copyright – MIT 15.390 New Enterprises, Anderson/Zolot What are the trends?  Is the market growing? How fast? What makes it grow? (i.e. new home sales influence the market for lumber)  Is your market the result of a growing overall market, or the result of people switching from an existing supplier in a mature market, or both?  Why will people switch to your product? Why will new buyers consider your product? (overlaps with the competitive analysis, which we’ll get into in the next class)

11. 11  2000-2003 Copyright – MIT 15.390 New Enterprises, Anderson/Zolot Slicing the total market pie A segment for each customer type... -geography: customers in the northeast buy 60% of this type of product -industry: financial services firms comprise 75% of the market -type of buyer: 40% of the market is early adopters seeking a technological edge and willing to bet on an early technology A segment for each major competitor... coke owns 45%, pepsi owns 40%, assorted juice drinks own 15%

12. Aylin Sasa, Viktor Hediger & Amit Chhabra, PANACEA SIZE OF DRUG TARGET MARKET 4 Prescription drugs ($140 billion) 100% = $2.1 trillion* Total U.S. health care Oncology Neurologics Respiratory Other 100% = $140 billion Pharmaceutical sales by therapeutic area Alimentary/ metabolism Anti-infectives Cardio- vascular * Estimates for 2002, estimated 16.6% of GDP Source: Internet research, IMS, Evaluate

13. Aylin Sasa, Viktor Hediger & Amit Chhabra, PANACEA US SALES POTENTIAL PER YEAR – e.g. PROSTATE CANCER Incidence (million) Diagnosed (%) X Cases diagnosed (million) Treated (%) X Price per treatment (USD) Number of treatments X Price per patient (USD) Number of treated patients (million) Panacea Market penetration (%) Market potential USD millions Sales potential USD millions XX 3,000 5 150 0.15 20,000 0.2 75 0.5 40 10,000 2 Source:Medical books, Internet research, WHO Global Health statistics PROSTATEC ANCER

14. 14  2000-2003 Copyright – MIT 15.390 New Enterprises, Anderson/Zolot Getting Information about the Market Size  Analysts (Yankee, Gartner, IDC, Forester, Giga, etc.)  Wall Street Equities Analysts  Internet  Your own surveys, footwork  How would you spend $50,000 doing market research?

15. 15  2000-2003 Copyright – MIT 15.390 New Enterprises, Anderson/Zolot Summary  Most poorly researched plans: This is a great product, and here’s why it’s so wonderful and why we’re so well equipped to build it, and here’s what it will cost to build it.  Your plans: This is a great product. The market for such products is $x billion, growing at y% per year. Here’s the segment of the market we’re going after. This is the type of buyer who currently buys similar products, and the buying criteria that he/she uses. Here are the other players who own the market now, and their current sales numbers and growth trends.

16. 16  2000-2003 Copyright – MIT 15.390 New Enterprises, Anderson/Zolot The end