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Lecture 4

Lecture 4. Marketing (cont.) Jan 13, 2011. What are some of the intrinsic problems in introducing a new product into a new market from a new company with a new team?. Marketing triangle for an established company. Market. Company. Technology.

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Lecture 4

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  1. Lecture 4 Marketing (cont.) Jan 13, 2011

  2. What are some of the intrinsic problems in introducing a new product into a new market from a new company with a new team?

  3. Marketing triangle for an established company Market Company Technology Risk is minimized by changing only one of the vertices

  4. Fundamental Problem of Initial Introduction of a New Product from a New Company • How do you know what the “market needs”? • Your Low Bandwidth requires High Focus- lots of targets, little resource • Optimization- biggest bang for the buck • Achieving “Customer intimacy”- understanding the customer • Credibility- Why should anyone give you the time • Counter to culture of attacking a big target- contrary to why you are doing this in the first place High Wire Act Big decisions based on insufficient data

  5. But not no data!Where do you start?

  6. Ben Shapiro Harvard Business School “Because different customers have different needs, a marketer cannot effectively satisfy a wide range of them equally. The most important strategic decision is to choose the important customers. [To align priorities in a timely manner] Customer selection must involve all operating functions.”

  7. Market segmentation • Market “strategy” • This product would be attractive to Teenagers. There are 25 M teenagers. All we need is 1% of the market to be successful • Comment? What’s wrong with this? people are different wrong 1% competition and substitutes No room for growth

  8. Segmentation • Consumer Markets can be characterized by Segment : Example:

  9. Segmentation • Consumer Markets can be characterized by segment including • Demographic • Age • Sex • Ethnicity • Income • Occupation • Education • Household status • Geographic location

  10. Segmentation- continued • Psychographic variables • Life-style • Activities • Interests • Opinions • Product use patterns • and product benefits.

  11. See Also • http://www.businessplans.org/Segment.html • http://en.wikipedia.org/wiki/Market_research • http://www.telesian.com/techlibrary/archive/positioning.cfm • Need to think through: What is the demographic for your product (if consumer)? What are the key companies in the market (if B toB)?

  12. Advantages of knowing segment

  13. Early Majority Late Majority Early Adopters Rate of Adoption Innovators Laggards Time The Technology Adoption Model as the Basis for Segment Focus A measure of the rate of adoption of a cluster of new technologies by a community over time Where are you on this curve?

  14. Consider adaptation of a new technology • Age ? • Income ? • Geography ? • Education ? • Sex ?

  15. Why should a customer adopt a new technology?Early adopter?Late majority?

  16. Can corporate customers be characterized in a similar way? • Are there companies who are leaders • Are there companies who are followers? • What determines whether a company will be aggressive in adopting a new technology?

  17. Who are the leaders? • Aviation • Computers Hardware • Computers software • Biotech • Energy • Medical devices

  18. Example: A new medical imaging methodology(MRI+) Mass of US Hospitals Top 100 Teaching Institutions Top 15 Luminary Medical Centers “Can I recover my Fees from insurer and keep my patients? “I love writing papers and Peer approval “Can I build my practice by doing better surgery?”

  19. Thus for medical imaging equipment (MRI, PET, Ultrasound, X-Ray etc.) • GE Strategy • Target segment: a few luminary institutions • Presentation at large professional meetings and Publication of results in peer-reviewed journals; • Sell to larger hospitals • Eventually reduce price, de-feature and sell to smaller institutions • Globalize to Europe and Asia (typically lower cost) • Move to service model of installed base

  20. Use www/Library Data Base Sources to Determine: • Major trends in technology, standards, regulations (Barriers and enablers) • Drivers and barriers to growth- consider rate of market adoption • Business model options and key players (competitors/ partners) at each layer of the food chain • Size of segment, major sub-segments/rough distribution of market revenues/units • Forecasts or prognostications of rate of segment growth • Value chain, ecosystem and customer players

  21. What about dealing with large industrial companies (e.g., OEMs)?Are all customers the same? • Look for the “Teacher customer” • Not always easy to find! • Opinion Leader • Early adopter of New Technologies • In pain • Respected • Influencer • Inside company • Within industry

  22. The Teacher customer is necessary • To teach you your value and your position in the market • To provide credibility to investors, employees, partners • To strongly influence other early adopters • To co-create your product strategy, priorities and plans • To generate early revenue from volume deployments • To be patient with your failures

  23. Finding the Teacher Customer • Talk to friends and friends of friends (Mentor(s), academics, experts) Network!! • Do your (secondary literature research) homework. Use Library and Internet. Consultant studies? Kristin can help get you started here. 3. Industry Groups, Publications can very helpful 4. Develop hypotheses and assumptions you MUST validate 5. Review literature to identify community influencers and potential Innovators • Each segment has Innovator companies • Every company has Innovator individuals (the “go-to” person) 6. Look for Scientific or Journal publications/ Contact author 4444

  24. Finding the Teacher customer • Talk to the wrong people to get to the right people • Assemble your interview tools: 60 second “elevator” pitch 2-pager on what “it” is Open ended questions Interviewee should do 90% of the talking 9. Say “thank-you”, follow-up and nurture the relationship as appropriate

  25. Breakout • Who is your Prime Customer? • What is the market segment of your Prime customer?

  26. Generate Hypotheses & Identify Underlying Assumptions

  27. Recruit Interview Targets • How do I get them to talk to me? • Start now to identify and schedule conversations • Use phone and e-mail follow up • Tap your network for contacts, Mentors! Professors! Alums! • Go to friends, friends of friends, etc. Much better than blind call!! • From company names get HQ city, find phone number • Email addresses and numbers often on the web • Calling early in morning sometimes gets people in before their assistants can intercept phone • You are researching applications in products and services for key segments and customers of a new Caltech technology (use the name!) • Be prepared for disappointment- this is hard. Don’t take it personally! It’s not about you!

  28. Interview • How do I approach them? • Use a 30-second pitch • E-mail with follow-up phone calls or reverse can both work well • Send them a 1-pager. • Provide agenda and general topics in advance -- gives the target a chance to think, and clarifies that this is not a sales call! • They choose the time. Accommodate them! • Let them know that this will be brief ~ 20 minutes • Be persistent

  29. Open-Ended Interview Questions • Write a script • Flow from general to increasingly specific, but always open-ended • Question “DOs” • Why? • How do you measure that? • How do you define that term? • What’s working, what isn’t?

  30. Open-Ended Interview Questions • Can you draw a diagram so I can see where it fits into your overall system? • How did you determine the value of that? • How would you make tradeoffs among features? • How will you remove barriers to your success? • What would the ideal situation look like?

  31. Question “DON’Ts”- Questions which pre-judge or “sell answer” • Don’t you think that…? • Wouldn’t you like it if…? • Black or white, yes or no…? • We think this, what do you think? • If we do this, will you do that? • What do you want? • What should we do?

  32. 6-Step Interview Planning Process 1. Select targets to interview • Set objective for each interview • Recruit and schedule interviews (Can be long lead item!!) • Develop the discussion guide (script) • Conduct the interviews • Meet shortly after the interview (like immediately!) to Agree on what you heard Summarize what you learned Focus on testing hypotheses Change path if necessary

  33. Formal Interview Roles • Moderator • Asks most of the questions (from discussion guide) • Clarifies extensively • Controls flow and timing • Note Taker • Primary stenographer • Leads post visit debriefing -- The Three Main Points • Devises format and “buckets” for notes • Compiles, distributes notes • Observer • Notes body language and “emotional” quotes

  34. Telephone interviews • Speakerphone for interviewers • International can use Skype (use microphones) • Have info sent in advance • Identify everyone on the call • Thanks and follow up e-mail

  35. Trade Organizations • Tens of thousands of them • Deeply knowledgeable • Library can help to identify • Best one-stop shopping for interview subjects, market studies, innovation leaders

  36. Trade Shows • There are tens of thousands • Many are in LA region • People are in talk/marketing mode • One stop shopping for info, performing market studies • Is there a meeting held during this quarter? • Student discounts or funds available as E102 expense

  37. Consultant Studies • Consider large and small consultancies • Library can help • Interview subjects can help • Can negotiate cost- zero is good • Alternative- interview consultants

  38. On-line Market surveys you create Zoomerang.com and others • Excellent for getting data “easily” and analyzing • Only as good as the questions and the respondent list • Direct people to the site (trade group assistance?) • Keep short • Consider Colorado Avenue passers-by

  39. Summary of HW for Next Tuesday,Jan 18 • All Teams E-mail HW in PDF form prior to noon on Tuesday to Weston ,Ken and Mentor. Presenting teams can use a pdf of ppt • Volunteer two teams to present HW for Tuesday and two for Thursday Content • Prepare a signed Team Rules Statement • Show roles and names of people initially assuming these roles • Present Market Hypotheses • Present Vision Statement • Prepare elevator speech for mentors (doesn’t have to be sent)

  40. HW for Tuesday Jan 25Begin Market Research! • Write script • Call at least 5 people • Interview at least 2 • After each interview • Review what went wrong • Review what went right • Revise Hypotheses • Continue to define the market using secondary research

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