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 13, 2016
Andy Mindlin
REALWORLD Marketing, Inc.
andy@REALWORLDmarketing.com
TEL +1 714-377-6312
© 2013 REALWORLD Marketing, Inc.
Assessing the Market
and the Competition
for a New Product or Service
© 2013 REALWORLD Marketing, Inc.
About the Speaker
30 years 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
© 2013 REALWORLD Marketing, Inc. | Page 3
Quick Questions
1. In the Business School?
2. Taken business classes?
3. Started a business before?
4. Anything particular you
want to learn tonight?
© 2013 REALWORLD Marketing, Inc. | Page 4
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
© 2013 REALWORLD Marketing, Inc. | Page 5
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:”
The People
The Opportunity
The Context
Risk and Reward
© 2013 REALWORLD Marketing, Inc. | Page 6
William A. Sahlman
Harvard Business Review
July-August 1997, p. 98
Based on research of over
100 startups and their
original business plans
Situation Analysis
• Have a new product idea
• Potential seems strong
• Need money to build it
• Other next steps not certain
© 2013 REALWORLD Marketing, Inc. | Page 7
Start at Ground Zero
• Look at some fundamentals
• “Basic blocking and tackling”
• In marketing, translates as:
1. Know who your customers are
2. Listen to them
• Consider alternate “paths to market”
© 2013 REALWORLD Marketing, Inc. | Page 8
Where We Want to Go
Idea
Sales, Funding, Management Support
© 2013 REALWORLD Marketing, Inc. | Page 9
Alternate Paths to Market
Idea
Typical Technology Path
Prototype
Patent
???
???
Sales, Funding, Management Support
© 2013 REALWORLD Marketing, Inc. | Page 10
Alternate Paths to Market
Idea
Typical Technology Path
Market Oriented Path
Prototype
Customers
Patent
Profit
???
Principle
???
Sales, Funding, Management Support
© 2013 REALWORLD Marketing, Inc. | Page 11
Marketing (defined)
Going to the market
To learn what prospects will buy,
then creating & delivering that product...
when, where and how they want it
The Market
© 2013 REALWORLD Marketing, Inc. | Page 12
OUTSIDE
IN
Our
Company
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.
© 2013 REALWORLD Marketing, Inc. | Page 13
Keys to Success in Marketing
1. Know who your
customers are
2. Listen to them
The rest is execution.
© 2013 REALWORLD Marketing, Inc. | Page 14
Now Today’s Goal is in Sharper Focus
• It’s not just
“assess the market” and
“assess the competition”
• This is a critical
success factor towards
“getting what we want”
© 2013 REALWORLD Marketing, Inc. | Page 15
Assessing the Market
© 2013 REALWORLD Marketing, Inc. | Page 16
Three Key Questions Precede Research
1. What do we want to learn?
2. What will we do with the
information?
3. How can we gather the
information?
© 2013 REALWORLD Marketing, Inc. | Page 17
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
1. Customers
2. Competitors
3. Dominant Trends (that affect us all)
© 2013 REALWORLD Marketing, Inc. | Page 18
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?”
© 2013 REALWORLD Marketing, Inc. | Page 19
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?”
© 2013 REALWORLD Marketing, Inc. | Page 20
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
© 2013 REALWORLD Marketing, Inc. | Page 21
How do we Gather This Information?
Starting with General Information
• Market Analysts
Gartner/Dataquest, Forrester Research, Yankee Group
[Fee, but may pity students]
• Stockbrokers
Merrill Lynch, Goldman Sachs, E*TRADE, Schwab
• Web
Google
About
Hoovers
Manta
Inc. Business Resources
Bizstats
Yahoo! Finance
www.google.com
www.about.com
www.hoovers.com
www.manta.com
www.inc.com
www.bizstats.com
finance.yahoo.com
[Go ahead, enter a question]
[Like asking a web librarian]
www.commerce.gov
www.census.gov
www.sec.gov/edgar.shtml
[You’re paying for it, use it;
but take care to avoid
settling for “numbers”]
[Find a public company in
the same space and read
reports on their market]
• Government
Economic Indicators
Census, Demographics
Edgar Database
© 2013 REALWORLD Marketing, Inc. | Page 22
How do we Gather This Information?
Getting Specific Information
• Ask prospects
• Pump your network
• Ask your coach, mentor and angel for suggestions
If you don’t have several, find and adopt them
• The specific answers are usually out there
For almost every market there’s a
–
–
–
–
–
Market research report
Industry analyst
Industry (trade) magazine
Trade association
Trade show
• Ask a librarian (degrees in Information!)
© 2013 REALWORLD Marketing, Inc. | Page 23
“3 Degrees of Separation”
How to Connect With Anybody on the Planet
It no longer takes even "Six Degrees of Separation”
World Population
7,140,502,093
=
Source: US Bureau of the Census
http://www.census.gov/population/popclockworld.html
Jan 14, 2015
Qty
People You Know
People They Know
People They Know
Number of
People You
Can Connect to
Degrees of
Separation
1926
1926
1
1926
1926
3,708,109
7,140,502,093
2
3
is based on this principle (www.LinkedIn.com)
© 2013 REALWORLD Marketing, Inc. | Page 24
If the Market isn’t There yet
Gauge the opportunity somehow
“What was the market for bottled water before Perrier?”
• Who knew?
• But you could have quantified the:
Market for “liquid refreshment”
• And the “% of homes dissatisfied
with the taste of their water”
© 2013 REALWORLD Marketing, Inc. | Page 25
If the Market isn’t There yet
Gauge the opportunity somehow
“What was the market for overnight
delivery before Federal Express?”
• Who knew?
But you could have quantified the:
• Business spending on
urgent communications
• Also could get testimonial quotes
from responsible people who
have the problem
© 2013 REALWORLD Marketing, Inc. | Page 26
If the Market isn’t There yet
Gauge the opportunity somehow
“No one ever asked us to design a
Mini-Van”
• Who knew?
But you could have quantified the:
• “# of moms with kids” and
“% dissatisfied with station
wagons”
• Again, testimonial quotes from
responsible people who have the
problem would add support
© 2013 REALWORLD Marketing, Inc. | Page 27
Market vs. Target Market
Market
• The set of all actual
and potential buyers
of a product
or service
Target Market
• That group of people
pre-disposed to buying
© 2013 REALWORLD Marketing, Inc. | Page 28
Market vs. Target Market
Market
© 2013 REALWORLD Marketing, Inc. | Page 29
Market vs. Target Market
Market
Target Market
Focusing on people
pre-disposed to buying
© 2013 REALWORLD Marketing, Inc. | Page 30
Target Market (Example)
Handset
Manufacturer
1 Nokia
#
Market Key
Share Contact
27% Zac R.
2 Motorola
16%
Janeice W.
3 Ericsson
4 Samsung
5 Panasonic
11%
6%
6%
Tom D.
Muzibul K.
Jim M.
6 Siemens
5%
Gerhard S.
7 Alcatel
8 Philips
4%
3%
Richard S.
Don G.
9 NEC
3%
Russ M.
10 Mitsubishi
3%
Shuzo K.
11 Hyundai
1%
12 Kyocera
Audiovox
13
(Toshiba)
14 NeoPoint
15 Sanyo
Title
Phone
E-mail
New Technology Sourcing Manager
General Manager, Personal Networks
Group
VP, Business Operations
Director of Product Management
R&D Manager
RF Development Manager, Mobile
Phones
Program Manager
Director of Strategic Development
Product Manager, Wireless
Engineering
VP, Engineering
214-555-7383
zac.r@nmp.nokia.com
508-555-4000
919-555-7000
972-555-7000
770-555-6000
tom.d@ericsson.com
mk@sta.samsung.com
jm@panasonic.atlanta.com
+49 89 555-4630
gerhard.s@mch.siemens.de
richard.s@alcatel.fr
510-555-0655
972-555-7441
mr@ccgate.dl.nec.com
619.555.8800
shuzo.k@cmtsd.mea.com
Young Ki C. General Manager
+82-555-639-7912
younk@hei.co.kr
1%
Darin H.
Program Manager
(858) 555-2283
h@qcpi.com
NA
Jim P.
VP, Engineering
516-555-3300
jp@audiovox.com
NA
NA
Mark C.
Kuichi T.
Program Manager
858-555-6675
201-555-2333
mc@neopoint.com
16 Denso
NA
Jim K.
17 LG
18 Acer
NA
NA
Curtis W.
Irwin C.
19 Globalstar
NA
Clemons K. Product Manager
Director, Hardware Development
Group
Manager, Field Engineering
V.P., Wireless Technology Center
760-555-3331
619-555-5325
858-555-9988
cw@lginfocomm.com
sc@apa.acer.com
858-555-1121
• Get specific
• Telegraph that your sales force knows exactly where to aim
© 2013 REALWORLD Marketing, Inc. | Page 31
Charlie’s New Business Success Factors
1. Pick a BIG market
2. SEGMENT it
3. EXECUTE better than
anybody
Arnold O. Beckman
Founder of Beckman
Instruments, Beckman Coulter
Inventor of accurate and easyto-use scientific instruments
that revolutionized the study
and understanding of human
biology
© 2013 REALWORLD Marketing, Inc. | Page 32
Market Segmentation
Dividing a market into
distinct and meaningful
groups of buyers…
who might merit
separate products
and (or)
marketing mixes (4 P’s)
© 2013 REALWORLD Marketing, Inc. | Page 33
What to do With the Information
• Not just:
– “Gather information”
– “Report”
– “Deliver a plan”
• Goal is to PERSUADE
© 2013 REALWORLD Marketing, Inc. | Page 34
How do we Show What we Learned?
• Following are a few
examples of
“Assessing the Market”
• Likes? Dislikes?
© 2013 REALWORLD Marketing, Inc. | Page 35
IC Market Make-up Today
© 2013 REALWORLD Marketing, Inc. | Page 36
SiRiFIC’s Addressable Market
© 2013 REALWORLD Marketing, Inc. | Page 37
Competitors by Segment
Property
Management
Real Property
Help Desk
Facilities
IT Assets
Maintenance
Fixed Assets
Fleet/Vehicles
© 2013 REALWORLD Marketing, Inc. | Page 38
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
© 2013 REALWORLD Marketing, Inc. | Page 39
Remember the Keys to Success
1. Know who your
customers are
2. Listen to them
The rest is execution.
© 2013 REALWORLD Marketing, Inc. | Page 40
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
© 2013 REALWORLD Marketing, Inc. | Page 41
Benefits of “Listening”
1. “You get a third party perspective on your product, providing feedback &
request for things you may have overlooked”
2. “Getting actual testimonials from customers for the pitch;
3. Understanding what is important to customers and focus on it
4. Get a reality check of the market and its state to accept the product or not”
5. “Know what they really want and don’t want”
6. “We got to verify our secondary research”
7. “Validated or debunked certain assumptions”
8. “Identifying opportunities to make our business idea more unique and
competitive.”
9. “It gives an understanding of the customers' needs”
10. “Learned price point of our product”
11. “Understanding our markets and where we would be most effective”
12. “Face to face interaction”
13. “Being able to refine and fine-tune the product”
14. “Got a better understanding of the costumer needs and helped update our
business model accordingly”
© 2013 REALWORLD Marketing, Inc. | Page 42
Why Teams Didn’t Listen to Customers
Top Excuses
Preferred to wait until
we have developed the
product further [29%]
Hesitant to reveal
Intellectual Property [29%]
Didn’t know any to call;
didn’t know where to find
them [26%]
Didn’t feel comfortable
(calling strangers; asking
questions) [13%]
© 2013 REALWORLD Marketing, Inc. | Page 43
Why Teams Didn’t Listen to Customers
Top Excuses
What to Do About It
Preferred to wait until
we have developed the
product further [29%]
• “Why bother if they’re not
interested?”
Hesitant to reveal
Intellectual Property [29%]
• Focus on “what” you do, not
“how”
Didn’t know any to call;
didn’t know where to find
them [26%]
• Pump your network
(e.g. coach, professors,
LinkedIn)
Didn’t feel comfortable
(calling strangers; asking
questions) [13%]
• Failure here costs nothing!
• It’s ok, really!
• Have 1 teammate try it once
© 2013 REALWORLD Marketing, Inc. | Page 44
Tips for “Listening to Customers”
1. Decompress
(not selling anything)
2. Write out your introduction &
questions in advance
3. Appeal to their sense of helpfulness
(ask for "help")
4. Understand that people generally
like new ideas...and they've been
in your shoes
5. Respect their time
(set and declare a time limit)
6. #1...get referred in
(Charlie Baecker suggested I call you)
© 2013 REALWORLD Marketing, Inc. | Page 45
Assessing the Competition
© 2013 REALWORLD Marketing, Inc. | Page 46
Three Key Questions Precede Research
1. What do we want to learn?
2. What will we do with the
information?
3. How can we gather the
information?
© 2013 REALWORLD Marketing, Inc. | Page 47
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?
© 2013 REALWORLD Marketing, Inc. | Page 48
Your Biggest Competitors Will Include
1. Doing Nothing (DN)
[Leaving the money in their wallet]
2. 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)
© 2013 REALWORLD Marketing, Inc. | Page 49
How do we Identify the Competitors?
Be a customer
• Online
[Get on Google or About and look for
someone to solve the problem]
• Ask around
[Find a trade journal and call the editor,
asking “who does this?”]
Ask the customers
• “How do you solve this problem currently?”
• “Who are their competitors?”
• “Who else (have you heard) is working on this?”
© 2013 REALWORLD Marketing, Inc. | Page 50
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
© 2013 REALWORLD Marketing, Inc. | Page 51
Know Their Present and Future
Competitive Product roadmap (example)
© 2013 REALWORLD Marketing, Inc. | Page 52
How do we Show the Information?
Summary charts are great
• Again, go beyond
“sharing information”
• “Make a point” that you can
be #1 in your niche
• Examples follow
• Likes? Dislikes?
© 2013 REALWORLD Marketing, Inc. | Page 53
Competitive Summary
© 2013 REALWORLD Marketing, Inc. | Page 54
Competitive Details
© 2013 REALWORLD Marketing, Inc. | Page 55
XeroCoat vs Competitive Technologies
© 2013 REALWORLD Marketing, Inc. | Page 56
Product Offerings by Company
Dräger offers the broadest range of monitors to care providers
© 2013 REALWORLD Marketing, Inc. | Page 57
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
© 2013 REALWORLD Marketing, Inc. | Page 58
Perceptual Map of Beer Market
Perceptual Map of the Attributes
© 2013 REALWORLD Marketing, Inc. | Page 59
Perceptual Map of Beer Market
Perceptual Map of the Products
© 2013 REALWORLD Marketing, Inc. | Page 60
Summary
© 2013 REALWORLD Marketing, Inc. | Page 61
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
© 2013 REALWORLD Marketing, Inc. | Page 62
9 Questions Every Business Plan Should Answer
1. Who is the customer?
2. How does the customer make decisions about buying this
product?
3. To what degree is this a compelling purchase for the customer?
4. How will the product be priced?
5. How will we reach all the identified customer segments?
6. How much does it cost (time & resources) to acquire a
customer?
7. How much does it cost to produce & deliver the product?
8. How much does it cost to support a customer?
9. 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
© 2013 REALWORLD Marketing, Inc. | Page 63
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 each
box 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
© 2013 REALWORLD Marketing, Inc. | Page 64
Questions
© 2013 REALWORLD Marketing, Inc. | Page 65
Andy Mindlin
andy@REALWORLDmarketing.com
TEL +1 714-377-6312
© 2013 REALWORLD Marketing, Inc.