Market and Competition Who’s buying, and how much, and from whom? How are you different? KNOWLEDGE IS POWER

1. Class 5 – Market & Competition Foundations of Entrepreneurial Leadership Market and Competition Who’s buying, and how much, and from whom? How are you different? KNOWLEDGE IS POWER MGT 190/290 Prof Frey: Frey@gwu.edu

2. In This Session • Quick Review: Industry/Context • Quick Review: Women and Negotiation • New: Market and Competition • 5 pitches – 1-2 minutes each • Presenter Summary – Peer Forum • Quiz – postponed until next week

3. From last time: Context/Industry • What are the key elements included in this part of the Feasibility Plan? • FACTS uncovered in Concept/Industry drafts? • Any data that changed your concept?

4. From last time: Industry/Context Starbucks brainstorm…. • “Space” in which concept exists • How large? (dollars, people, geographical, sector?) • New or mature? • Fast growing, stable, declining growth? • Seasonality issues? • Other Industry/Context Issues • Technology trends • Social/cultural trends • Political issues • Regulatory climate • Economy () impact

5. Anatomy of a Feasibility Plan Executive Summary Concept Value Proposition Value Model Industry/Context Market General Specific Competition Direct/indirect Strategic Differentiation Financial Information Startup Costs Pro Forma Income Statements Balance Sheet Sources of Funding Management Team Operations Milestones Harvest Strategy You are here

6. Anatomy of a Feasibility Plan Executive Summary Concept Value Proposition Value Model Industry/Context Market General Specific Competition Direct/indirect Strategic Differentiation DUE NEXT WEDS – 9am FUNGER 315 Market Analysis Section Includes Market Competition You are here

7. Feasibility: Market Analysis Market descriptions 1. General market: Size/trends 2. Target market • Description • Size c. Characteristics: social, psycho, demographic Refer to Market Research Doc – Session 3

8. 1. General Market • The “population” that may be interested in product/service/concept that you are offering • Consumers? • Income, Age, Gender, Occupation, Marital Status, Family size, Ethnic group, Education, Home Ownership, Other • Businesses? • Industries, Sector, Years in Business, Revenues, Number of Employees, Number of Branches, Square Footage, Social Values, Organization Culture • Other? • Schools, organizations, associations, etc.

9. 1. General Market: Size/trends • Size: How big is overall population? • Value in $ (Amount of revenue spent on this kind of concept) • Value in “other”: (ex: volunteer hours, donations, attendees) • Characteristics of this general population • Demographics, psychographics, social

10. 2. Target Market: Specific 2a. Describe the specific group of customers/users you will reach 2b. Size of Market: • Value in $ • “Ten million dollars is spent annually on used baby clothes in DC metro area” • Value in “other” • “250,000 dog owners live in Arlington, VA” 2c. Characteristics • Who are these people? What do they want, like, need? Love them, care about them…they will know if you don’t. • Celestial Seasonings Example

11. 2b. More on Target Market: Size Two ways to describe market size • “Top Down”: • Size of entire target market • Market is worth 100 million, “we will get 1% market share” • Meaningless assessment • “Bottom Up” or Addressable Market: • Fact-based estimate of ACTUAL number and dollar value of customers you can obtain • Of the potential users/customers, how many can I realistically expect to get? • Realistic assessment

12. In-class: Market Research Exercise - Establish need – survey • Buy side dynamics • Practice “how you are different” in pitch • Outline market • Total • Your niche • Growth • Trends Tip: Don’t hang your hat on 1% of 1 billion dollar market

13. “Addressable Market” Example #1 • Soccer Training School (CTS) • There are 25 Soccer Clubs in Arlington County. Each club has 12 teams. Clubs hire trainers for each team. • Target Market: 300 trainer positions • (CTS) will sign contracts with 10 of those clubs in year one (10 x 12= 120 trainer positions) • Results in 120 trainer contracts @ $2000 per contract • Estimated market value in year one: $240,000

14. “Addressable Market” Example #2 • There are 50,000 water sport tourists in Costa Rico each month who spend an average of $20 to enter water parks. • 10,000 of those tourists pay specifically for surfing privileges. • Our data indicate that surfers want X,Y, Z, in their park of choice. Our park specializes in X,Y,Z and can accommodate 2000 surfers per month. • The Polo Water Park will operate 10 months a year. • We estimate an existing addressable market of 20,000 customers/year generating revenue of $40,000/month, $400,000/year

15. 2c. Target Market: Characteristics • What does this group look like as a whole? • Who are the customers/users? Where are they? How many are there? What characteristics define this market? Trends? • Demographics, psychographics, social factors

16. 2a/c. Who are they: Demographics 2a & c? Brief description at outset, delving into more later in market section of plan • Consumer • Income, Age, Gender, Occupation, Marital Status,Family size, Ethnic group, Education, Home Ownership, • Business • Industries, Sector, Years in Business, Revenues, Number of Employees, Number of Branches, Square Footage, Social (Values, Lifestyles)

17. 2c. Target Market: Social Trends • Consider changes in target market affecting: • Ability to Afford Product/Service • Need for Product/Service • Use of Product/Service • Ties into Value Prop • Social Values/Concerns Affecting Product/Service • What else is happening in society that affects your target market and feasibility of your business

18. 2c. Target Market: Psychographics • Psychological factors that influence purchasing decisions • Consumer: “Techie”, status, trend-setter, socially responsible, family-focused, bargain seeker • Business: Industry leader, innovative, conservative, fiscally prudent, “green”

19. 2c. Target Market: Social Trends • Consider changes in target market affecting: • Ability to Afford Product/Service • Need for Product/Service • Use of Product/Service • Ties into Value Prop • Social Values/Concerns Affecting Product/Service • What else is happening in society that affects your target market and feasibility of your business

20. 2c. Target Market: Social Trends What else is happening in society that affects your target market and feasibility of your business • Time starved dual income families • “Busy” kids • Singles • DINKs • Aging Boomers

21. Feasibility: Competition XQ: Who is your competition? A: No One X 1. Name Direct specifically and Indirect generally 2. Distinctive Competencies of Direct Competitors • Brief summary of products/services • Specifically: why are they a threat (educated vs. naïve) 3. Your Strategic Differentiation: How are you different? • Tip: Think about the term “unfair competitive advantage” or “what would keep someone else from replicating?”

22. E-Scan: Competition (Rhonda Abrams) External (Customer Perception) Service/Features Purchase Price Quality Durability/Maintenance Image, Style, Design Perceived Value Brand Recognition Location, Delivery time Credit Policies Customer Service Internal Operational Factors Financial Resources Marketing Budget/Program Technological Competence Access to Distribution Access to Suppliers Operational Efficiencies Sales Structure Patents & Trademarks R&D Ability to Innovate

23. SFL Strategic Differentiation Visual Quality of Trainers Number of Services

24. SFL Strategic Differentiation Visual

25. New and improved SWOT chart Link to SWOT template

26. Feasibility: Next Steps • Financial Projections • Sources of Funding • Management team • Operations/Action Plan • Milestones • Executive Summary (first in plan, last in prep)

27. 5 pitches – 1-2 minutes each Court + 4 volunteers (who did not pitch last week) • Your idea in a sentence • Who you serve (dig into market) • Industry context • Why you’re better

28. Presenter Summary – 1 minute each Reflect on the comments of your peers. • Jameise • Lindsey

29. For Next Session 1. Market Analysis Plan Draft • DUE 9 am, Funger 315, WEDS!! 2 pg max. All else = appendix 2. Reading: • Essentials Chapter 10 & 13 • Any additional readings posted on blog • Hot Mommas® Project case “Susan” 3. Skill Building: Financial Literacy 4. Quiz: Sessions 3, 4, & 5 5. Provide online feedback: Peer forum

30. Your Market Plan Due This Week MARKET 1. General market: Size/trends 2. Target market • Description • Size • Characteristics: social, psycho, demographic COMPETITION • Name Direct specifically and Indirect generally • Distinctive Competencies of Direct Competitors a. Brief summary of competitor products/services b. Specifically: why are they a threat c. Your Strategic Differentiation: How are you different?