lecture 7: market research techniques - part 1

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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