entrepreneurship 101 - the market research business
DESCRIPTION
Speaker: Chris Sullivan, Vice-President, Finance & Operations, IDC (Canada) Ltd. More information including webcast found on the MaRS site at: http://www.marsdd.com/Events/Event-Calendar/Ent101/2008/marketing2-20080116.htmlTRANSCRIPT
©2007 IDC
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The Market Research Business
Presented by: Chris SullivanVice-President, Finance & OperationsIDC (Canada) Ltd.
16 January 2008
©2007 IDC
My backgroundMy background
After a year at the University of Western Ontario Computing Centre, 8 years with a small Canadian company, mostly managing software development
Started as a timesharing operation in mid-70’s Developed communications gear for own use in 1977 Marketed it as a product in 1978, the year I joined (now 22 employees) Won huge contract with Ford Motor Credit in 1982 Went public in about 1983 at $7 Minority interest taken by Rogers Cable Opened offices worldwide, then closed them (around 140 employees) Stock fell to $1.50 Developed technology for Home Shopping, major investment by JC Penney I left the company (July 1986) Stock rose to $100 Sold off the communications division Home Shopping Pilot failed Stock fell to $1.50 Sold off its technology Delisted from TSE (now TSX)
©2007 IDC
My background, cont’dMy background, cont’d
Went to Digital Equipment Corporation in 1986
Stock at $100, business growing fast, huge margins, hot products and hiring boom
Chased IBM into the enterprise while Sun Microsystems chipped away at the low end
Raised VMS prices exploiting demand inelasticity of proprietary operating system making excellent short term profits.
Demand turned out to be elastic in long term as more and more customers adopted UNIX
Shrank from 140,000 employees to 50,000
Recovered slightly in late 90’s, then bought by Compaq in 1998
©2007 IDC
My background, cont’dMy background, cont’d
Compaq Canada Bought Extreme Networks, Tandem, Digital Product lines had nice architectural fit, but sales approach was
totally different I left for IDC Growth slowed, bought by HP
IDC Canada Started in Global partnering and alliances practice, based in
Toronto, mostly doing workshops in various parts of the world Moved to manage marketing and sales operations Moved to manage Finance, HR, IT, Research Operations,
Research & Analysis, and the small vendor program called the “Market Acceleration Program (MAP)”
©2007 IDC
About my companyAbout my company
IDC analysts in 50 countries around the world Over 850 analysts providing a global information
network
©2007 IDC
Researching the researchersTop 6 companies in IT Market ResearchResearching the researchersTop 6 companies in IT Market Research
Est. 2005 Revenue ($M)
Est. 2005 Growth
Est. 2001 – 2005 CAGR
Est. 2005 Market Share
Gartner 989 10.6% 0.7% 42.3%
IDC 266 14.2% 8.8% 11.4%
Forrester 153 10.7% -0.9% 6.6%
AMR 44 10.0% -2.7% 1.9%
Ovum 33 22.8% NA 1.4%
Yankee 29 0.0% -6.5% 1.2%
*Source: Outsell’s Publishers and Information Providers Database, 2006
©2007 IDC
Key Trends in Emerging Markets – Central Europe, Middle East, AfricaKey Trends in Emerging Markets – Central Europe, Middle East, Africa
EU Enlargement The 2004 enlargement is still impacting IT markets in new
member states; 2007 saw new additions to the union.
Russian JuggernautHigh oil prices, manufacturing, and other extraction industries have
turned Russia into an economic powerhouse.
Transition in the Middle East Economic liberalization, development, and modernization are opening IT and telecom markets and driving investment as oil revenue floods the region.
Africa Enters the Information Age IT and communications are key to economic development. Low installed bases and a move toward mobility are creating significant opportunities.
©2007 IDC
Emerging Asia* Approaches BRIC-Like Performance
A US$15.6-billion IT market containing almost 800 million people, with IT spending growing 80% over its market size in 2005. (*comprising Pakistan, Sri Lanka, Bangladesh, Thailand, Malaysia, Vietnam,
Indonesia, and the Philippines)
Unstoppable Growth in China & India Benefits Surrounding EconomiesIncreased investments in China and India have sent costs spiraling in these markets, which benefits economies like Pakistan and the Philippines, as companies realize greater cost benefits there.
China Goes Online Over 150 million Internet users will drive rapid developments in the Internet market and create new IT and telecom opportunities.
Key Trends in Emerging Markets – Asia-PacificKey Trends in Emerging Markets – Asia-Pacific
©2007 IDC
Key Trends in Emerging Markets – Latin AmericaKey Trends in Emerging Markets – Latin America
Stable Economic Environment With historically low interest rates, a weak U.S. dollar, more financing options available, and low inflation, Latin American
consumers have high confidence leading to an explosion in the consumer electronics markets.
Brazil: Growth Acceleration ProgramMeasures to stimulate investment in infrastructure and tax
breaks for targeted sectors will help accelerate GDP growth beyond the country’s sluggish long-term average, increasing
IT spending in the country.
Mexico: New rules for Government IT SpendingThrough the Austerity Decree the federal government declared its preference to contract IT services instead of purchasing hardware or software that eventually goes out of date.
©2007 IDC
Analyze The FutureSupply-SideShipments
WW
Industry/Pop Demographics
WW
Standard Definitions & Taxonomies
WW
Forecast Methodologies
WW
MarketModels
WW
Customer Behavior
(Global Surveys)WW
Technology Adoption
(Panels/SurveysWW)
Analyst Insight(50 Countries
WW)
How We Analyze The Future
©2007 IDC
What is marketing?What is marketing?
Brand image
Qualified leads
Media Relations
CollateralPricing
Events
©2007 IDC
Which is the more appropriate measurement?Which is the more appropriate measurement?
Time
First time buyers
Revenue
InnovatorsEarly
MajorityLate
Majority LaggardsEarly
Adopters
11 22 33 44
“early market”
1 S.D.1 S.D.
©2007 IDC
Key Life-Cycle QuestionsKey Life-Cycle Questions
1 “Will this work for me? in my environment?”
“Can you make my life easy when I buy your product?”
3
4“Can you reduce my buying costs?”
“Can you solve my problem?”2
Voice of the customer asks…
© Frank Lynn & Associates, IDC
©2007 IDC
Buyer motivationBuyer motivation
11 “I will work with vendors of bleeding edge technologies, to fundamentally reshape my business or my competitive environment”
“I will use stable but not yet common technology to develop a competitive advantage
22
“I will deploy proven technology to deliver services expected by my customers”
33
44“I will buy commodity technology to cut costs”
© IDC
©2007 IDC
For ExampleFor Example
©2007 IDC
Co-Specialization Alliance ObjectivesCo-Specialization Alliance Objectives
Time
Product capability (technology alliances)
Endorsements, embedded OEM, access channels & integrators, availability of resources
Endorsement, global support and financial resources, OEM agreements
Endorsement, global support and financial resources, MDF
Differentiation Pipeline sharing, access to new markets (vertical, solutions, etc.)
MDF, product support, regional coverage
Support, MDF
Technology revitalization, protection from obsolescence
Access to large & complex deals
Packaging and bundling
Packaging and bundling
protection from obsolescence; marketing cachet
Access to large & complex deals
Packaging and bundling
Packaging and bundling
1 2 3 4
1
2
3
4
Vendor A
Vendor B
© IDC
©2007 IDC
Why does the world need market intelligence?Why does the world need market intelligence?
You can’t manage what you can’t measure– G. Edwards Deming
Everything that can be counted does not necessarily count; everything that counts cannot necessarily be counted.
– Albert Einstein
©2007 IDC
Why is this important?Why is this important?
WW Installed Base - Millions
©2007 IDC
The new reality for marketersThe new reality for marketers
“Today, marketers are in a ‘high accountability’ environment where they are being called to the table — and asked to bring hard numbers with them when they come. Most of us aren't prepared for this.
“The lack of [marketing] accountability makes it very difficult to track the financial impact of marketing investments. And so marketing becomes abstract to the CEO ... .”
– Harvard Business Review ("Bringing Customers into the Boardroom," November 2004)
“We’re struggling with how to respond to our executives asking us: ‘What value is marketing adding to the company?..’”
– IDC Client
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Copyright 2007 IDC. Reproduction is forbidden unless authorized. All rights reserved.
Making use of market research
©2007 IDC © Frank Lynn & Associates
Hit Rate MarketShare
PresenceProduct
×××× ==××
Preference
Estimating market share
To estimate Revenue from market share, simply multiply by the total revenue in the market in question. This information is available from market research firms!
©2007 IDC © Frank Lynn & Associates
Product line coverage: How much of the market our product
targets Form/fit/function/price point equivalency
Hit Rate MarketShare
PresenceProduct
×××× ==××
Preference
50%50%
Estimating market share
©2007 IDC
For what percentage of the available market do we get to propose our product?
What percentage of the time can our product be sold to the end user?Geographic presenceCustomer segment presenceSolution presence
© Frank Lynn & Associates
Hit Rate MarketShare
PresenceProduct
×××× ==××
Preference
50%50% 50%50%
Estimating market share
©2007 IDC
How often is our product offered for sale?What is our share of market within our own partners?
© IDC
50%50%
MarketShare
Hit RatePresenceProduct
×××× ==××
Preference
50%50% 50%50%
Estimating market share
©2007 IDC © Frank Lynn & Associates
How often do we win the sale?
50%50%
MarketShare
Hit RatePresenceProduct
×××× ==××
Preference
50%50% 50%50% 50%50%50%50%
Estimating market share
©2007 IDC
6.25%
© Frank Lynn & Associates
50%50%
MarketShare
Hit RatePresenceProduct
×××× ==××
Preference
50%50% 50%50% 50%50%
Estimating market share
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Copyright 2007 IDC. Reproduction is forbidden unless authorized. All rights reserved.
Thank You
Chris [email protected]
©2007 IDC