lecture 8: market research techniques - part 2
Post on 17-Oct-2014
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DESCRIPTION
In this lecture, Poornima digs into lifestyle marketing and certain market forces to consider when launching a new product. You can watch the lecture here: http://youtu.be/uYEdAvJchT4TRANSCRIPT
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Duke ECE 490L: How to Start New Ventures in Electrical and Computer Engineering
Poornima [email protected]
Jeff Glass [email protected]
Akshay [email protected]
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Review
Duke ECE 490L
• Risk
• Positioning
• Competitive Analysis
• Differentiation Techniques
• Goal: Identify and Attract Early Adopters
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Announcements
• Lab 2 is up!
• http://femgineer.com/duke-ece-490l-labs
• Get started early!
• There are 3 assignments that need to be completed by lab period on week 7.
• Durham Startup Scene
Duke ECE 490L3
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Idea Summary
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Agenda
• More on positioning!
• Digging into the Competitor
• Horizontal vs. Vertical Market
• Substitutes
• Secondary Markets
• Point Tool vs. Integrated Solutions
• Customer Discovery
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Duke ECE 490L
Still no building...
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Duke ECE 490L
Know thy enemy.
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Duke ECE 490L
To thy own self be true.
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Dig Deeper into Competitor
• Product Line• What are the various product lines and which customers does it appeal to?
• Do they have the entire spectrum? Loss leader, mid-range, and high-end
• All-in-One product that isn’t well suited to a particular segment?
• Do they have a process in place for upselling?
• Anticipate areas of growth• If they are strong, where do they appear to be heading?
• If they are weak, where do they appear to be heading?
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Case Study: Mint v. Quicken
• Who they chose to neglect? • Mac Users
• What didn’t they get? • Packaging
• Market is moving away from shrink-wrapped software
• Ease-of-Use
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Case Study: Mint v. MS Money
• Who they chose to neglect? • Mac Users
• What didn’t they get? • Packaging
• Market is moving away from shrink-wrapped software
• Ease-of-Use
• Sunset in June 2009
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Takeaways
• Understand market trends• Packaging
• Ease-of Use
• Adoption based on other factors e.g. web, mobile
• Understand neglected or up-and-coming user base and their needs
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Duke ECE 490L
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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Duke ECE 490L
Re-positioning: changing identity of a product, relative to competitor. e.g. luxury line.
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Duke ECE 490L
vs
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Lifestyle marketing.
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Lifestyle marketing: a brand attempts to embody the values and aspirations of a group or culture for the purposes of marketing.
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Early adopters embrace change.
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Open to a new way of life.
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Horizontal vs. Vertical Markets
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Horizontal Market
• Solves a BIG problem
• Large base of customers whose needs are the same
• Usually a strategy for a larger company that can spend a lot of money marketing
• Create a single product or have upselling opportunities
• May neglect nuanced needs of subgroups
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Vertical Market
• Niche market
• Product that appeals to a particular group, and has a specialized use case
• Avoids product from becoming commoditized
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Benefits of Vertical Market
• Clear value proposition
• Build a loyal following
• Product maybe specialized but hard to replicate
• Product can be subsystem for a larger product
• Product can be later “re-skinned” for other verticals
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Case Study: AeroVironment
• Two technologies: unmanned aircraft and charging systems for electric vehicles
• Seems like a niche market
• Products used in subsystems for larger mainstream and horizontal market products
• Mainstream is also starting to adopt technologies
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Substitutes.
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Substitutes
• Are they part of the target market? And by how much?
• Do they reflect a particular behavior?
• Can you transition people from using substitutes into using your product?
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Secondary markets.
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Competitors Own Reselling Market
• e.g. “Apple authorized reseller”
• Does this capture another position? e.g. lower end or higher end
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Competitors Integrating into Larger Systems
• Do they supply other vendors?
• Are the vendors happy with them?
• Are the vendors open to trying out a new product?
• Are the vendors locked into a contract or have exclusive limitations?
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Competitors Pricing and Distribution Schemes
• One-time use vs. contracts vs. upgrades
• Is there lock-in?
• Competition in product placement
• Your product is too similar?
• Your product is unknown and there is risk involved with selling it.
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Point Tool v. Integrated Solution
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Point Tool v. Integrated Solution
• Can you begin by partnering with a competitor?
• What are the limitations for building on their platform?
• e.g. Facebook Apps
• What will it take to then displace their product?
• What will it take to transition to your own platform?
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Case Study: Mint.com
• Initially integrated with third party solution: Yodlee for data
• Quality of data limited potential
• Eventually began build in-house data solution
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Market research is one part in leading to customer discovery.
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What if you’re in a new market?
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Duke ECE 490L
Customers Market Product Features Competitors Risk
Existing Market Known Known Critical Many
Cost of entry; Product
Development; distribution
New Market Unknown Unknown, definition critical Irrelevant at first None at first (other
startups)
Long evangelism and education
cycle
Resegment Existing Market Possibly known Unknown,
definition criticalCritical; tied to existing market
Critical, tied to existing market
Market redefinition; product definition
*Table 5.4 from The Four Steps to the Epiphany - Steve Blank
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Other market forces to consider?
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Market Forces
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• Policies: these can be non-governmental
• e.g. franchise have to buy from a certain vendor
• Regulations: this is government based
• high barrier to entry, but once you’re in you have more protection
• permits, licenses
• Infrastructure: need to build additional support
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Duke ECE 490L
Customer Discovery Validation Customer CreationBusiness/Company
Formation
Early AdopterPricing Product
Distribution
Mainstream AdoptersMoney for Marketing
Market Research
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Duke ECE 490L
Customer Discovery Validation Customer CreationBusiness/Company
Formation
Early AdopterPricing Product
Distribution
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Customer Discovery
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• Not stage of tell me what you want
• Not stage of here’s what I’ve built, will you buy it for $X
• Interview to understand pain points
• Focus on needs
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Goals of Customer Discovery
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• Goal is to valid user segments from market research to identify viable early adopters
• Identify neglected segments
• Verify demand
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Early Adopter Characteristics to Look For
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• Has or can acquire a budget.
• Has put together a solution out of piece parts (substitutes)
• Has been actively looking for a solution
• Is aware of having a problem
• Has a problem
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Other “Customers”
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• Decision Maker
• Economic Buyer
• Recommender
• Influencers
• Customers
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Put a price on pain.
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Level of need is an indicator for adoption.
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Characteristics of Needs
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• Latent Need: have a problem and know they have a problem
• Active Need: they are actively searching for a solution
• Vision: have an idea for a solution, might have cobbled together a solution but are prepared for a better one
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Level of loyalty to an existing solution is an indicator you cannot convert immediately.
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Characteristics of Loyalty
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• Need more features.
• Verifying credibility.
• Risk averse.
• Long decision time frame.
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Test across various user segments.
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Review
Duke ECE 490L
• More on positioning!
• Digging into the Competitor
• Horizontal vs. Vertical Market
• Substitutes
• Secondary Markets
• Point Tool vs. Integrated Solutions
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