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Assessing the Market and the Competition for a New Product or Service. Presented to UCI Graduate School of Management Center for Entrepreneurship and Innovation January 14, 2014. Andy Mindlin REALWORLD Marketing, Inc. [email protected] TEL +1 714-377-6312.

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Assessing the market and the competition for a new product or service

Assessing the Market and the Competition for a

New Product or Service

  • Presented to UCI Graduate School of Management Center for Entrepreneurship and Innovation

  • January 14, 2014

  • Andy Mindlin

  • REALWORLD Marketing, Inc.

  • [email protected]

  • TEL +1 714-377-6312


Assessing the market and the competition for a new product or service

Assessing the Market and the Competition for a New Product or Service


About the speaker

About the Speaker

30years experience in Marketing;Emphasis on Startups and New Products

Core Experience

  • Procter & Gamble (Brand Management)

  • BA in International Economics, Vanderbilt University, Phi Beta Kappa

    Recent Experience

  • Co-founded fabless semiconductor company

  • Served as Vice President of Marketing & Sales

  • Raised $13 million in venture capital

    Current Activities Include

  • Helping business leaders solve marketing problems

  • Serving on corporate Boards

  • Mentoring students at UC Irvine Paul Merage School of Business

  • Judging UC Irvine annual Business Plan Competition


Quick questions

Quick Questions

  • In the Business School?

  • Taken business classes?

  • Started a business before?

  • Anything particular you want to learn tonight?


What we ll cover

What We’ll Cover

As advertised

  • How to Assess the Market

  • How to Assess the Competition

    Plus

  • Nomenclature

  • Examples

  • “9 Questions every business plan should answer”

  • “How the Judges Will Assess Your Business Idea”

  • Your questions


Why it s important

Why it’s Important

“What’s wrong with most business plans? (They) waste too much time on numbers and devote too little to the information that really matters.”

  • “If you want to speak the language of investors, base your business plan on… the four interdependent factors critical to every new venture:”

  • William A. Sahlman

  • Harvard Business Review

  • July-August 1997, p. 98

  • Based on research of over 100 startups and their original business plans

The People

The Opportunity

The Context

Risk and Reward


Situation analysis

Situation Analysis

  • Have a new product idea

  • Potential seems strong

  • Need money to build it

  • Other next steps not certain


Start at ground zero

Start at Ground Zero

  • Look at some fundamentals

  • “Basic blocking and tackling”

  • In marketing, translates as:

    • Know who your customers are

    • Listen to them

  • Consider alternate “paths to market”


Where we want to go

Where We Want to Go

Idea

Sales, Funding, Management Support


Alternate paths to market

Alternate Paths to Market

Idea

Typical Technology Path

Prototype

Patent

???

???

Sales, Funding, Management Support


Alternate paths to market1

Alternate Paths to Market

Idea

Market Oriented Path

Typical Technology Path

Customers

Prototype

Profit

Patent

Principle

???

???

Sales, Funding, Management Support


Marketing defined

Marketing (defined)

Going to the market

To learn what prospects will buy,

then creating & delivering that product...

when, where and how they want it

Our Company

The Market

OUTSIDE

IN


Why do companies fail

Why do Companies Fail?

“The company had fallen into the classic trap of building a product it thought customers ought to like – instead of what our customers wanted to buy.”

  • Why Successful

  • Companies Fail

  • By John J. Cullinane

Based on the history of Cullinet Software, Inc., the first software company to be listed on the New York Stock Exchange, and reach $1 billion dollars in valuation.

It got caught in the rapid technological changes of the 80s, resulting in a sale to Computer Associates for $400 million.


Keys to success in marketing

Keys to Success in Marketing

  • Know who your customers are

  • Listen to them

    The rest is execution.


Now today s goal is in sharper focus

Now Today’s Goal is in Sharper Focus

  • It’s not just“assess the market” and“assess the competition”

  • This is a criticalsuccess factor towards“getting what we want”


Assessing the market

Assessing the Market


Three key questions precede research

Three Key Questions Precede Research

  • What do we want to learn?

  • What will we do with the information?

  • How can we gather the information?


What do we mean by the market

What do we Mean by “The Market?”

A market is people exchanging goods & services(for value)

Key to an investor, because this is where customers part with their money

  • One of two key transactions investors care about

    “The market” can be described as consisting of 3 components

  • Customers

  • Competitors

  • Dominant Trends (that affect us all)


What do we mean by the market1

What do we Mean by “The Market?”

Customers

Answer the key questions (“5 W’s and 1 H”)

  • Who are they?

  • What are they?

  • Where are they?

  • When do they buy?

  • Why do they buy?

  • How much do they buy? (How much? How often?)

    Consider both the “many” and the “few”

Investor needs to know:“Who is going to give you money for what you propose to do?”


What do we mean by the market2

What do we Mean by “The Market?”

Competitors

  • Who are the major players?

  • Who are the newcomers?

  • Who’s probably working on the same thing?

    We’ll discuss more on “Competition” later

Investor needs to know:“Who else is after these same dollars?”


What do we mean by the market3

What do we Mean by “The Market?”

Trends

Answer the key questions

  • Size?

  • Direction?

  • Growth?

  • News?

  • Regulatory?

  • Financial?

  • Needs (Pain)?

Investor needs to:Gauge the “attractiveness” of this market


How do we gather this information

How do we Gather This Information?

Starting with General Information

  • Market AnalystsGartner/Dataquest, Forrester Research, Yankee Group[Fee, but may pity students]

  • StockbrokersMerrill Lynch, Goldman Sachs, E*TRADE, Schwab

  • Web

    Googlewww.google.com[Go ahead, enter a question]

    Aboutwww.about.com[Like asking a web librarian]

    Hoovers www.hoovers.com

    Mantawww.manta.com

    Inc. Business Resourceswww.inc.com

    Bizstatswww.bizstats.com

    Yahoo! Financefinance.yahoo.com[Find a public company inthe same space and readreports on their market]

  • Government

    Economic Indicatorswww.commerce.gov

    Census, Demographicswww.census.gov

    Edgar Databasewww.sec.gov/edgar.shtml

  • [You’re paying for it, use it;

  • but take care to avoid settling for “numbers”]


How do we gather this information1

How do we Gather This Information?

Getting Specific Information

  • Ask prospects

  • Pump your network

  • Ask your coach, mentor and angel for suggestionsIf you don’t have several, find and adopt them

  • The specific answers are usually out thereFor almost every market there’s a

    • Market research report

    • Industry analyst

    • Industry (trade) magazine

    • Trade association

    • Trade show

  • Ask a librarian (degrees in Information!)


3 degrees of separation

“3 Degrees of Separation”

How to Connect With Anybody on the Planet

  • It no longer takes even "Six Degrees of Separation”

7,140,502,093

World Population

=

Source: US Bureau of the Census

  • http://www.census.gov/population/popclockworld.html

  • Jan 14, 2014

Number of

People You

Can Connect to

Degrees of Separation

Qty

People You Know

1926

1926

1

People They Know

1926

3,708,109

2

People They Know

1926

7,140,502,093

3

is based on this principle (www.LinkedIn.com)


If the market isn t there yet

If the Market isn’t There yet

Gauge the opportunity somehow

“What was the market for bottled water before Perrier?”

  • Who knew?

  • And the “% of homes dissatisfiedwith the taste of their water”

But you could have quantified the:Market for “liquid refreshment”


If the market isn t there yet1

If the Market isn’t There yet

Gauge the opportunity somehow

“What was the market for overnight delivery before Federal Express?”

  • Who knew?

  • Also could get testimonial quotesfrom responsible people whohave the problem

But you could have quantified the:Business spending on urgent communications


If the market isn t there yet2

If the Market isn’t There yet

Gauge the opportunity somehow

“No one ever asked us to design aMini-Van”

  • Who knew?

  • Again, testimonial quotes from responsible people who have the problem would add support

But you could have quantified the:“# of moms with kids” and“% dissatisfied with station wagons”


Market vs target market

Market vs. Target Market

Market

  • The set of all actualand potential buyersof a productor service

    Target Market

  • That group of peoplepre-disposed to buying


Market vs target market1

Market vs. Target Market

Market


Market vs target market2

Market vs. Target Market

Market

  • Target MarketFocusing on peoplepre-disposed to buying


Target market example

Target Market (Example)

  • Get specific

  • Telegraph that your sales force knows exactly where to aim


Charlie s new business success factors

Charlie’s New Business Success Factors

  • Pick a BIG market

  • SEGMENT it

  • EXECUTE better than anybody

  • Arnold O. Beckman

  • Founder of Beckman Instruments, Beckman Coulter

  • Inventor of accurate and easy-to-use scientific instruments that revolutionized the study and understanding of human biology


Market segmentation

Market Segmentation

Dividing a market into distinct and meaningful groups of buyers…

who might merit separate productsand (or) marketing mixes (4 P’s)


What to do with the information

What to do With the Information

  • Not just:

    • “Gather information”

    • “Report”

    • “Deliver a plan”

  • Goal is to PERSUADE


How do we show what we learned

How do we Show What we Learned?

  • Following are a few examples of“Assessing the Market”

  • Likes? Dislikes?


Ic market make up today

IC Market Make-up Today


Sirific s addressable market

SiRiFIC’s Addressable Market


Competitors by segment

Competitors by Segment

Property

Management

Real Property

Help Desk

Facilities

IT Assets

Maintenance

Fixed Assets

Fleet/Vehicles


Assessing the market guidelines

Assessing the Market – Guidelines

  • Be curious

    • Ask a lot of questions

  • Be resourceful

    • Let it be an indicator of how you’ll solve the problems that come up in your business

    • “China Morning Post”

  • Recognize that professional investors know more than you do

    • So you can never know enough about your market


Remember the keys to success

Remember the Keys to Success

  • Know who your customers are

  • Listen to them

    The rest is execution.


Listening to customers 2009 bpc

Listening to Customers (2009 BPC)

  • Surveyed 2009 BPC participants

    • 64% interviewed prospective customers; 36% did not

  • Of THOSE WHO DID

    • 94% said it was valuable (67% said “very valuable”)

    • 80% were surprised at what they learned

  • Of TEAMS THAT WON AN AWARD(1st, 2nd, 3rd, 4th)

    • 100% listened to customers

    • 100% said it was “valuable”

    • 90% were “surprised” by what they learned

  • n=33


Benefits of listening

Benefits of “Listening”

  • “You get a third party perspective on your product, providing feedback & request for things you may have overlooked”

  • “Getting actual testimonials from customers for the pitch;

  • Understanding what is important to customers and focus on it

  • Get a reality check of the market and its state to accept the product or not”

  • “Know what they really want and don’t want”

  • “We got to verify our secondary research”

  • “Validated or debunked certain assumptions”

  • “Identifying opportunities to make our business idea more unique and competitive.”

  • “It gives an understanding of the customers' needs”

  • “Learned price point of our product”

  • “Understanding our markets and where we would be most effective”

  • “Face to face interaction”

  • “Being able to refine and fine-tune the product”

  • “Got a better understanding of the costumer needs and helped update our business model accordingly”


Why teams didn t listen to customers

Why Teams Didn’t Listen to Customers


Why teams didn t listen to customers1

Why Teams Didn’t Listen to Customers


Tips for listening to customers

Tips for “Listening to Customers”

  • Decompress(not selling anything)

  • Write out your introduction & questions in advance

  • Appeal to their sense of helpfulness (ask for "help")

  • Understand that people generallylike new ideas...and they've beenin your shoes

  • Respect their time(set and declare a time limit)

  • #1...get referred in(Charlie Baecker suggested I call you)


Assessing the competition

Assessing the Competition


Three key questions precede research1

Three Key Questions Precede Research

  • What do we want to learn?

  • What will we do with the information?

  • How can we gather the information?


Your approach is a key issue

Your Approach is a Key Issue

Not recommended

  • “We have no competition”

  • “There is nothing like this”

    Alternatives to Consider

  • Who does this exactly?

  • Who does something somewhat like this?

  • How is this problem solved currently (and by whom?)

  • Who else is competing for the same (budget) dollars?


Your biggest competitors will include

Your Biggest Competitors Will Include

  • Doing Nothing (DN)[Leaving the money in their wallet]

  • Home brewed (DIY)[“Boss, we can build that”]

    Recognize this in your plans

  • The key isn’t just to gather information and “report”…

  • But to make a PERSUASIVE case

    That you can get people to part with their money

    (instead of giving to others, or keeping it to themselves)


How do we identify the competitors

How do we Identify the Competitors?

Be a customer

  • Online

  • Ask around

    Ask the customers

  • “How do you solve this problem currently?”

  • “Who are their competitors?”

  • “Who else (have you heard) is working on this?”

[Get on Google or About and look for someone to solve the problem]

  • [Find a trade journal and call the editor, asking “who does this?”]


How do we find out more about them

How do we Find out More About Them?

If they’re public

  • Get their annual reports

  • Look at their web sites

  • Attend industry conferences (attend their presentation)

    If they’re not

  • Check out their patents (www.uspto.gov)

  • Ask VCs and other investors in the field

  • Look at their website for open positions

  • Ask recruiters who they’re hiring

  • Call them and ask for information


Know their present and future

Know Their Present and Future

Competitive Product roadmap (example)


How do we show the information

How do we Show the Information?

Summary charts are great

  • Again, go beyond“sharing information”

  • “Make a point” that you canbe #1 in your niche

  • Examples follow

  • Likes? Dislikes?


Competitive summary

Competitive Summary


Competitive details

Competitive Details


Xerocoat vs competitive technologies

XeroCoatvs Competitive Technologies


Product offerings by company

Product Offerings by Company

Dräger offers the broadest range of monitors to care providers


How do we present the information

How do we Present the Information?

“Perceptual Map” of the marketplace

  • Marketer’s favorite tool

  • A graph that simplifies the often-confusing competitive landscape

  • It is an elegant visual communication device

  • Shows the competitive set

  • Arranges them along axes indicating what customers care about


Perceptual map of beer market

Perceptual Map of Beer Market

Perceptual Map of the Attributes


Perceptual map of beer market1

Perceptual Map of Beer Market

Perceptual Map of the Products


Summary

Summary


What we covered

What we Covered

As advertised

  • How to Assess the Market

  • How to Assess the Competition

    Plus

  • Nomenclature

  • Examples

  • “9 Questions every business plan should answer”

  • “How the Judges Will Assess Your Business Idea”

  • Your questions


9 questions every business plan should answer

9 Questions Every Business Plan Should Answer

  • Who is the customer?

  • How does the customer make decisions about buying this product?

  • To what degree is this a compelling purchase for the customer?

  • How will the product be priced?

  • How will we reach all the identified customer segments?

  • How much does it cost (time & resources) to acquire a customer?

  • How much does it cost to produce & deliver the product?

  • How much does it cost to support a customer?

  • How easy is it to retain a customer?

Source: William A. Sahlman, "How to Write a Great Business Plan“, Harvard Business Review, www.hbr.com


Use the new business idea evaluator

Use the “New Business Idea” Evaluator

  • Tool to evaluate new business ideas you’re considering

  • Identifies the “Critical Success Factors” for a new venture

  • Rate each idea (1 thru 5) in eachbox provided

  • Compare the ratings for several ideas

  • Where you can’t rate an idea highly…

    • Those are areas that need improvement

    • Before putting in much time or money

    • Or asking others to do so


Questions

Questions


Assessing the market and the competition for a new product or service

Andy Mindlin

[email protected]

TEL +1 714-377-6312


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