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With the pace of innovation today, ideas have become cheaper than ever. Everybody has them. Your big idea in a crowded market is worth nothing... until you figure out how to competitively differentiate your product and connect with a market that cares.MaRS Advisor Peter Evans discusses marketing, focusing on the unique marketing challenges faced by early stage technology companies. It also provides you with proven and practical principles for visioning new products, breaking into a market and building a sustainable business venture.In this session you learn:• Why marketing effectiveness often matters as much today as pure product innovation• How to identify key market trends and better connect with the real needs of potential customers• How to use “value innovation” methods to competitively design a product as faster, cheaper and better• Pragmatic ways to position your product and quickly build market acceptance• How effective marketing must connect to focused business development and sales channel effortsWhether you are just starting out or fine tuning your marketing strategy, learn how marketing plays a key role in your venture.Part of the CIBC Presents Entrepreneurship 101 lecture series. Read more: http://www.marsdd.com/ent101
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History of the GarageToday, the garage stands behind a two-story ShingleStyle home built for Dr. John C. Spencer about 1905. The exact construction date of the garage is unknown,but while there is no evidence of its presence oninsurance maps dated 1908, by1924 it is clearly denoted on updated documents as a private garage.
In 1938, Bill Hewlett and Dave Packard decided to “make a run for it” in business. Dave left his job atGeneral Electric in Schenectady, New York, and returned to Palo Alto while Bill scouted rentals. He found one perfect for their needs on Addison Avenue.Chosen specifically because of a garage he and Davecould use as their workshop, the property also offered athree-room, ground-floor flat for Dave and his new wifeLucile and an 8x18-foot shed for Bill. They shared the$45 per month rent.
The garage served as research lab, developmentworkshop, and manufacturing facility for early products,including the Model 200A audio oscillator. The company,founded in 1939, was named with a coin toss. Thegarage was soon outgrown, and in 1940 HP moved into larger quarters on Page Mill Road.
The garage was dedicated as the Birthplace of SiliconValley in 1989, and the property was acquired by HP in2000. HP is proud to have worked closely with the Cityof Palo Alto to return the house, garage, and shed toconditions much as they were in 1939. The legacy projectwas completed in 2005. In 2007, the property was listedon the National Register of Historic Places.
While the HP Garage is not open for public tours,individual visitors and small groups may view andphotograph the property and landmark from thesidewalk. Addison Avenue remains a quiet residentialneighborhood, and HP urges you to respect the privacyof our neighbors.
Tucked away on a quiet, tree-lined residential street nearStanford University, the HP Garage stands today as theenduring symbol of innovation and the entrepreneurial spirit. It was in this humble 12x18-foot building that college friendsBill Hewlett and Dave Packard pursued the dream of acompany of their own. Guided by an unwavering desire todevelop innovative and useful products, the two men blazed a trail at the forefront of the electronics revolution.
The garage is California HistoricalLandmark No.976—Birthplace ofSilicon Valley. (1939 photo)
HP Garage367 Addison Avenue, Palo Alto, California
The restored HP Garage in 2006.
HP Garage, Silicon Valley
Ideas to Income An Introduction to Marketing (Lecture 2)
MaRS Entrepreneurship 101 January 20, 2010
Peter EvansAdvisor, MaRS Venture [email protected] T: @Techmarketer
Why Marketing Matters Definition and fit with strategy
© 2010 Peter M. Evans Slide 1
The Innovator’s Paradox The problem with Ideas, Capabilities & Opportunities
© 2010 Peter M. Evans Slide 2
Trendspotting
© 2010 Peter M. Evans Slide 3
Market Opportunity Size
Interactions
Landscape
Scope
Size
© 2010 Peter M. Evans Slide 4
Innovation Types
© 2010 Peter M. Evans Slide 5
Customer Value/Utility
© 2010 Peter M. Evans Slide 6
On-Trend
Relevant
Differentiated
Synchronized
Engaged
Sustainable
The Market Actualized StartupWhat’s required for market success?
© 2010 Peter M. Evans Slide 7
TREND IS YOUR FRIEND WHEN YOU LOOK AT THE MARKET IS THERE A WIND AT YOUR BACK ?
BE CAREFUL…EVEN TURKEYS CAN FLY IN A TORNADO… © 2009 PETER EVANS
LESS COWBELL IT’S TIME TO STOP ADDING “UNRECOVERABLE COSTS” TO MAKE PRODUCT
PERFORMANCE IMPROVEMENTS THAT CUSTOMERS WON’T PAY FOR… © 2009 PETER EVANS
Homework Assignment
© 2010 Peter M. Evans Slide 10
Developing a Value Driven Strategy
The Most Important Equation You Should Remember
© 2010 Peter M. Evans Slide 11
Creating Buyer UtilityStages & Utility Levers
Enterprise Server
Stages of the Buyer Experience Cycle (2)
Purchase (3)
Delivery (4)
Use (6)
Maintenance (7)
Disposal
Customer Productivity
Simplicity
Convenience
Safety/Risk
Fun and Image
Environmental Friendliness
Util
ity L
ever
s
(5) Supplements
(1) Eval./Trial/Reco.
*
Social* Responsibility
Source: Blue Ocean Strategy – Kim & Maubourgne * Indicates revision to model
© 2010 Peter M. Evans Slide 12
Developing a Value Driven Strategy
The Most Important Equation You Should Remember
© 2010 Peter M. Evans Slide 13
Pricing Think before you set your price
What’s your fundamental strategic model? – Premium Price (Product Leadership) – Lowest Price (Operational Excellence) – Blended Model (Customer Intimacy)
What is the Method for Capturing Revenues – Product sales (Perpetual, Annual/Monthly Sub., One-Time Use) – Licensing – Advertising supported – Brokering Transactions – Cost per acquisition etc.
Some other Factors Need to be Considered – What are the total costs? - professional services, sales engineers etc. – Upfront payments or recurring revenues? (maintenance, upgrade revenue sources) – Do partners need to be paid? - Sales Channel – Direct, Distributors, VARS
© 2010 Peter M. Evans Slide 14
How do you Make Money
Revenue =
Users Queries
User Clicks
Ads Ads
Query Revenue
Click x x x x
Google Knows its Ratios
© 2010 Peter M. Evans Slide 15
Premium Price vs. Non. Consumption
$1,200 Free?
Functional Spec. = Get your Kid From A-B
$10
Start with Identifying the REAL Determinants of Value
© 2010 Peter M. Evans Slide 16
CONTRARIANS RULE MARKET LEADERS WOULD SOONER ZIG THAN ZAG. THE KEY TO THE KINGDOM IS
TO DELIVER DIFFERENTIATE YET “UNEXPECTED VALUE” TO CUSTOMERS © 2009 PETER EVANS
80/20 Rules
Asymmetric Warfare
Unexpected Value
Bradley Gale Vilfredo Pareto Sun Tzu Noriaki Kano
Customer Value Design
Notable Contrarians An asymmetric collection of warriors and economists
© 2010 Peter M. Evans Slide 18
Case Study: FAA Light Sport Aircraft Category
Weight • Maximum gross takeoff weight of not more
than 1,320 pounds (600 kg) or 1,430 pounds (650 kg) for operation on water
Airspeed • Max. in level flight of 120 knots (220 km/h;
140 mph); • Max. stall speed of 45 knots (83 km/h;
52 mph); Seating • Max. of 2 persons Equipment • Fixed undercarriage • Fixed-pitch or ground adjustable propeller • Single electric motor or reciprocating engine
© 2010 Peter M. Evans Slide 19
✔
✔ Economic
Political
Sociological
✔ Legal
Technology
Capital
✔
✔
Why Now? Are these favourable conditions for launching a new aviation venture?
© 2010 Peter M. Evans Slide 20
You have CompetitionIt comes in many forms
Direct Indirect Potential Entrants
Substitutes
Non-Consumption
© 2010 Peter M. Evans Slide 21
Pontiac Aztec
Apple Pipin Microsoft WebTV
RJ Reynolds’ Smokeless Cigarettes
Famous and Not So Famous Flops Did these crossover products do anything really well?
© 2010 Peter M. Evans Slide 23
Foldable
Floatable
Portable
Easy-to-Fly
Safer
A5 Test Flight 2008 Affordable
Lets go back to primary benefit?How do you best achieve what the customer (really) wants?
Portable Floatable Vertical Roadable
© 2010 Peter M. Evans Slide 32
What’s the Real Opportunity?And how do you best achieve what the customer (really) wants
Portable “Fits on a
Trailer”
Floatable “Amphibiou
s Hull”
Vertical “No
runway required”
Roadable “Drives on
Roads”
Degree of Relevance
Degree of Differentiation
Low
High Unique Elements Driving Choice
Necessary Requirements
Unique Elements but not Driving Choice
Not Relevant or Distinctive
© 2010 Peter M. Evans Slide 33
High
Low
Traditional Float Plane
Terrafugia Flying Car
Personal Aircraft The Market Today
ERRC Framework by Kim & Mauborgne (Blue Ocean Strategy) Data here is for illustration purposes only and has not been validated
© Peter M. Evans Slide 34
Which factors should be reduced well below the industry’s standard?
Which factors should be created that the industry has never offered?
Which factors should be raised well above the industry’s standard?
Eliminate Reduce
Create Raise
Facility Requirements
Performance (Maneuverability) Safety to Operate Accessibility to Remote Regions Design Aesthetic Ease of Purchase
Training (Certification) Time Operating Cost Payload Range
Driveway Storage Enhanced Ergonomics & Instrumentation Winch & Tow Transportability
A New Product CategoryIcon Aircraft: Sample ERRC Grid
ERRC Framework by Kim & Mauborgne (Blue Ocean Strategy) Data here is for illustration purposes only and has not been validated
© Peter M. Evans Slide 35
Icon A5
Boat
High
Low
Traditional Float Plane
Terrafugia Flying Car
Reduce Raise Create Eliminate
Personal AircraftStrategy Canvas
ERRC Framework by Kim & Mauborgne (Blue Ocean Strategy) Data here is for illustration purposes only and has not been validated
© 2010 Peter M. Evans Slide 36
Creating Buyer Utility Stages & Utility Levers
Stages of the Buyer Experience Cycle (2)
Purchase (3)
Delivery (4)
Use (6)
Maintenance (7)
Disposal
Customer Productivity
Simplicity
Convenience
Risk
Fun and Image
Environmental Friendliness
Util
ity L
ever
s
(5) Supplements
Social Responsibility
* Indicates revision to model
© 2010 Peter M. Evans Slide 37
(1) Eval./Trial/Reco.
*
Segmentation Model (Example)Customers cluster on key dimensions of value
© 2010 Peter M. Evans Slide 38
Customer SegmentationLearn this slide!
A Segment is a Sub-Set of Buyers: – Within a market who share similar needs – Demonstrate similar buyer behaviour
Emphasis is on identifying clusters of buyers who are: – Attractive – Unattractive – Non-addressable
Good Segmentation Reveals Clusters that satisfy the following criteria: 1. Identifiable - The differentiating attributes of the segments must be measurable so that
they can be identified 2. Accessible - The segments must be reachable through communication and distribution
channels. 3. Substantial - The segments should be sufficiently large in order to justify the resources required
to target them 4. Unique Needs - To justify separate offerings, the segments must respond differently to
the different elements of the marketing mix 5. Durable - The segments should be relatively stable to minimize the cost of frequent product
changes
© 2010 Peter M. Evans Slide 39
Seg
men
t A
Seg
men
t B
Seg
men
t C
Seg
men
t D
Seg
men
t E
Seg
men
t F
Seg
men
t G
Market Size [$] $.6 B $1.2B $5.0 B $.16 B $1.5B $0.3B $0.2B
Value Chain Ownership 1 5 8 6 3 2 1
Market Potential $ $0.2B $75M $10M $35M $80M $15M $10M
Time to Market [years] 4 2 1 3 2 4 7
Barriers to entry [#] 6 2 2 5 4 3 9
Differentiation [#] 7 4 5 4 3 5 9
Competitive Threats [#] 2 2 2 4 7 4 2
Investment required [#] 6 5 3 7 9 5 9
Segment Scoring (Sample Template) Developing a Objective Model to Find the Right Targets
© 2010 Peter M. Evans Slide 40
Marketing to B2B Buyers
Features Seymours
IT Manager
Marketing Manager
Director
VITO’s
CEO/President
Executive Director (Assoc.)
Executive VP (Industry)
COO/CFO/CMO
Functions Users
Salesperson
Clerical Staff
Database Admin.
Call Center Sales/Support
What to ask:
What are you using for a system now?
How are you using it?
Any serious problems?
Who’s who in the org.?
What to ask:
What are the technical criteria?
How much? How long?
How big?
How would you design the perfect solution to this problem?
What to ask:
What are the specific goals for your organization over the next (quarter, year?)
What new markets is your organization looking to grow in?
What are the criteria for establishing a business relationship?
Benefits
Parinelli’s Influence & Authority Network
© 2010 Peter M. Evans Slide 41
James Spangler Hoover (1908)
Sir. James Dyson (1986)
Dr. Helen Greiner (2002)
© 2010 Peter M. Evans Slide 42
Positioning Aligned with Primary Benefit
Performance =
Automation =
Portability =
New Growth in a Mature Category Requires Focus
Trade Off: Doesn’t clean the house automatically
Trade Off: May miss the tight corners
Trade Off: Performance
© 2010 Peter M. Evans Slide 43
Simplicity of Function & Design
"Google has the functionality of a really complicated Swiss Army knife, but the home page is our way of approaching it closed. It's simple, it's elegant, you can slip it in your pocket, but it's got the great doodad when you need it. A lot of our competitors are like a Swiss Army knife open--and that can be intimidating and occasionally harmful."
Marissa Mayer VP of Search Products & User Experience, Google
© 2010 Peter M. Evans Slide 44
Google: Simplicity SellsThe importance of a focused product
comScore Nov. 2009 Estimates
66% Google
Search Market Share vs. 17%
Yahoo!
Search Market Share
© 2010 Peter M. Evans Slide 45
On-Trend
Relevant
Differentiated
Synchronized
Engaged
Credible
Sustainable
© 2010 Peter M. Evans Slide 46
iSYNCHRONIZE WHAT RESEARCH, SUPPLY AND DISTRIBUTION PARTNERSHIPS GIVE
YOU AN UNFAIR ADVANTAGE IN THE MARKET? © 2009 PETER EVANS © 2010 Peter M. Evans Slide 47
Customers want Whole Products
ComplementaryServices
ComplementaryProducts
The Core
Product
Hardware Consulting
Post-salesService &Support
Software
Pre-salesServices Peripherals
Connectivity LegacyInterfaces
How will you build, buy, partner and connect to be a synchronizer?
Source: Chasm Group
© 2010 Peter M. Evans Slide 48
CONVERSUATION WHAT IS THE ONE KEY THING YOU ARE GOOD AT?
REMEMBER: CLEAR BENEFIT + DRAMATIC DIFFERENCE + REASONS TO BELIEVE & U Value © 2009 PETER EVANS
Reasons to Believe • Personification: “Hi it’s Vince” • Tone: Smooth talking condescension • Visuals: Product demos – see it in action • Authenticity: Association with German quality • No Financial Risk: Money-back guarantee • Exclusive Offer: Use of scarcity of supply (“call now” tactics)
Unexpected Value
Clear Benefits Utility Driver 1: Absorbency (Acts like a vacuum..works twice as hard) Utility Driver 2: More Uses (Doesn’t Disintegrate like paper towels) Utility Driver 3: Reusable (Can wash and reuse)
• Extra set of towels free (call within 20 min.) • Free ShamWow mop (supplies are limited)
Dramatic Difference • Functional: Holds 12x it’s weight in liquid = Get More Done • Financial: 10x Cheaper (Assumes Paper Towels $20/Mo.?) = Save Money
Key Lessons from ShamWow Can you can’t argue with success
© 2010 Peter M. Evans Slide 51
Engagement: A 360-Degree Exercise
PR & Investor Relations
Advertising
Behaviour
People
Products
Customer Service & Support
Identity/ Logos
Online Presence
Trade Shows & Events
Corporate & Investor Communications
Physical Environments
Promotional Materials
Brand
The way we were
© 2010 Peter M. Evans Slide 52
Source: Interbrand
© 2010 Peter M. Evans Slide 53
Think about Visual Thinking
Process Driven Visualization – Forces a disciplined approach to
mapping the value proposition in a sequential/parallel process-driven way (i.e. Diagram by XPLANE)
Benefits – Taps in to the high percentage of
visual thinkers – Mitigates the compressed
timeframes people have to learn – Great for VITO’s (many are big
picture people) – Creates a richer story for analysts
and media
It pays to “Disnify” your solution to engage visual thinkers
© 2010 Peter M. Evans Slide 54
What is your Product? Example of a Core Platform (Infrastructure) - “Disnified”
© 2010 Peter M. Evans Slide 55
What Does it do? Functionality - “Disnified”
© 2010 Peter M. Evans Slide 56
NASDAQ: F-1 Filing Prospectus
Visual Thinking Works Everywhere Even SEC filings ought to be in pictures
© 2010 Peter M. Evans Slide 57
On-Trend
Relevant
Differentiated
Synchronized
Engaged
Sustainable
© 2010 Peter M. Evans Slide 58
The Value Creation Cycle
1. Create
2. Capture
3. Sustain
Market Value
Search Technology
Category: Online Search/Advertising
© 2010 Peter M. Evans Slide 59
The Value Creation Cycle
1. Create
2. Capture
3. Sustain
Market Value
MP3 Standard
Category: Recorded Music
© 2010 Peter M. Evans Slide 60
The Value Creation Cycle
1. Create
2. Capture
3. Sustain
Market Value
CRM Platform (ASP)
Category: CRM Software (ASP Model)
© 2010 Peter M. Evans Slide 61
Fail Tales From blunders to boo-yas!
V2.0 = Boo-Ya! V1.0 = Fail
1993
1993 1983
2007
1995 2007
© 2010 Peter M. Evans Slide 62
Customer Goal: Competitive Advantage
Solve Problem Adopt Obvious Extend Paradigm
Customer Need: Potential of Technology
Complete Solution Safe Choice Better Value
Vendor Goal: Validate Technology Segment Share Market Share Profitability
Strategy: Demo the Technology Show ROI Gorilla Power! Segment Focus
Skills: Technology Proficiency Customer Intimacy Closing Deals Relationship Mgmt.
“The Chasm Companion” Paul Wiefels “Crossing the Chasm” by Geoffrey Moore
How Markets Adopt Technology How markets move and your position changes with it
© 2010 Peter M. Evans Slide 63
Sustaining your Market Position The Teeth Whitening Market: A Case Study in Value Migration
_____
Cost
Convenience Low
High
High
© 2010 Peter M. Evans Slide 64
Teeth Whitening Market: Channel Options
Retail Kiosk
Retail Store
Professional
Multi-Level
Connecting your Ideas to IncomeThink Big Picture ….But get out there and build something!*
Set a course for market success
Look to the edges for the best ideas
Build fewer, bolder concepts
Commit to implementing quickly
• Study customers & non-customers • Identify changing trends • Look for converging trends
• Go beyond products • Use multiple innovation types • Engage the whole org.
• Focus on massive shifts in buyer utility • Solve big problems vs. incremental improvements
• Focus on Prototypes (not just analysis) • Remember the importance of failure • Build with cross-functional teams • Identify quick victories • Celebrate collective success
* Inspired by Larry Keeley, Doblin Group (Division of Monitor)
© 2010 Peter M. Evans Slide 65
Thank You Peter Evans, Advisor, MaRS Venture Group E [email protected] T: @techmarketer