lecture 7: market research techniques - part 1
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Duke ECE 490L: How to Start New Ventures in Electrical and Computer Engineering
Poornima Vijayashankerpoornima@femgineer.com
Jeff Glass jeff.glass@duke.edu
Akshay Rautar118@duke.edu
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Review
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• Why do we need a team
• When to assemble a team
• How to assemble a team
• How to manage a team and keep them motivated
• Dealing with departures
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Announcements
• Lab 2 - Prep Work
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Idea Summary
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Agenda
• Risk
• Positioning
• Competitive Analysis
• Differentiation Techniques
• Goal: Identify and Attract Early Adopters
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Still no building...
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Motivation is to bring idea to product phase. We begin validating our idea by exploring ways to productize it.
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Storytime: mistakes.
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RISK.
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Mitigating Personal Risk
• Market Awareness• Past, Present, Future
• Domain Expertise• Experienced pain
• Deep understanding
• Networking
• Market Readiness• Invention v. Re-Invention
• Capital Requirements
• Indicators: first mover, existing solutions
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Case Study: Gilt Groupe
• Market Awareness & Domain Expertise• Enjoyed NYC sample sales
• Understood designer fashion and high end brands
• eBay, Bvlgari
• Market Readiness• Re-Invention: online sample sals
• Vente Privee
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Positioning.
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Supplemental Reading: Positioning
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Create an image or identity in the minds of the target market.
Occupy a position in a prospective customer’s mind - one that reflects company’s strengths and weaknesses as well as those of the competitor.
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Re-positioning: changing identity of a product, relative to competitor. e.g. luxury line
De-positioning: changing identity of a competing product, relative to the identity of own product. e.g. Apple - Design
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Product/Market Fit.
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Why is this important?
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Additional Factors that affect Positioning
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• Price• Promotion• Distribution• Packaging aka design• Competition
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VS
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Case Study: Flip Cam
• Market: consumer electronics• Camcorders
• Competitors building for professionals and amateurs
• Position• User segment: amateurs, short clips
• Price: $200-$300
• Design: not multi-functional, ease-of-use: 1-button, HD
• Size, simplicity, affordability.
• Technical specs• Touch screen
• Used flash storage
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Case Study: Flip Cam
• Understanding the user segment• amateurs want something simple and affordable
• amateurs record short amounts of time
• features designed around user segment use cases
• positioning around simplicity and affordability
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How do we develop a position?
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Goal is to identify early adopters for next phase product development: customer development.
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User SegmentationDifferentiation TechniquesCompetitive Analysis
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User SegmentationDifferentiation TechniquesCompetitive Analysis
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Competitive Analysis
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• Define Industry
• Competitors
• Customers and benefits they expect
• Key success factors in industry
• e.g. Social network and Search - land grab!
Don’t rely on intuition!
Supplemental Reading: Competitor Analysis
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3 More Steps
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Supplemental Reading: Competitor Analysis
1. Understand history of key competitors.
2. Product - not a feature list! Adoption and rate of innovation.
3. Distribution - customer reach. Who do they not have? Why?
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Market Sizing
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• TAM: Total Addressable Market • How big is the universe?
• SAM: Served Available Market• How many can I reach with my distribution channels?
• Target Market• Who will be the most likely early adopters?
Supplemental Reading: Market Size Hypothesis
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Market Sizing
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Supplemental Reading: Market Size Hypothesis
TAM SAM Target Market
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Things to Keep in Mind
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Supplemental Reading: Market Size Hypothesis
• Data from market research firms is from the past!• Need to spot trends and piece together different sources of data.
• Primary demand for a product based on particular brand e.g. Tablets - Apple iPad
• First mover advantage or leader
• Bottoms up approach• e.g. 2M girls born in US, 1/2 cannot afford $90 doll. Targeting 6-8 year old, leaves
at most 3M.
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Why are there so many products?
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Why aren’t there more products?
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MEKKO CHART
0
50
100
150
200
$10M-$50M $50M-$100M $100M-$500M $1B
AppleSamsungAcerToshiba
Market Size of One Product: TabletSales
of Tablets
* Fake data!
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0
50
100
150
200
$10M-$50M $50M-$100M $100M-$500M $1B
AppleSamsungAcerToshiba
Moving Across Market Caps
What does each market segment look like?
* Fake data!
Salesof
Tablets Market Size of One Product: Tablet
What does it take to move across segments?
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Purpose of Mekko Chart
• Understand size and competitors.
• Where to start?• Identify holes in market.
• Mobility in market.• Where you can go next, and what it’s going to take to get there.
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User SegmentationDifferentiation TechniquesCompetitive Analysis
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Differentiation Techniques
• Really need to understand competition!• But this does NOT mean a feature checkbox comparison.• Holistic brand building strategy.
• Heart v. Head• Price• Distribution• Promotion: sell v. buy attitude• Packaging aka Design
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User SegmentationDifferentiation TechniquesCompetitive Analysis
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User Segmentation
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• High Level Segmentation• Within market what are the various customer demographics
• Take 3 competitors• Dig into what customers love/hate
• Understand substitutes• Easy to displace? Customer’s comfort with change or being ready for it.
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Start by focusing on needs of neglected segment- what doesn’t competitor ‘get’?- what will make this group loyal?
Willing to switch?
What will it take?- price- features- credibility- comfort
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Goals of market research?
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Goals
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• Look at #s and market trends
• Have #s lead to questions• Who is currently servicing the market? And how much of it?• Who can we service? (Positioning)• How can we service them? (Productizing Idea)
• Answers lead to identifying early adopters
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Case Study: Mint
Finance
Business MarketsPersonal Finance
People who care but don’t want to spend
time:
People who care and spend time:
40+Affluent20-30 somethings
$75k
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Resist the urge to build.
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1. Come up with a hypothesis. 2. Figure out what you want to measure3. Run an experiment. 4. Measure results from experiment.5. Learn.6. Move on to next hypothesis.
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Let’s form a hypothesis and set some goals.
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Let’s test our hypothesis!
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Case Study: Mint
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• User Segment: Americans 20-30 • Budget conscious but want more money to enjoy life• Don’t want to spend time managing their money• May have some credit card debt
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Value propositions.
Supplemental Reading: Original Mint.com Landing Pages
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How did we perform these tests?
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Created ads and tested across a few channels.
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Customer Channel
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Started with search.
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Because it’s the fastest.
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Landing page test.
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Goal: we want to see if there is an interest in our product or service to a particular user segment.
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Landing Page Test
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• Headline• Core value proposition that describes what you are offering to the point
• Picture• Benefit statement
• How your potential customers will benefit from the product or service
• Call to action• What do you want the potential customer to do?
• Trust indicators
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Landing Page Test
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• Landing Page Design: in house or use Unbounce• Measure: Google Analytics• Drove Traffic: Google AdWords
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Review
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• Risk
• Positioning
• Competitive Analysis
• Differentiation Techniques
• Goal: Identify and Attract Early Adopters
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