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In order to craft your value proposition, you need to make certain assumptions about your target market. It is important to validate these assumptions through market research techniques and analysis.In this lecture, market research experts introduce the principles of market research and analysis, including analytical frameworks such as the PEST analysis and Porter’s Five Forces.
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Usha Srinivasan, Director of Market Intelligence – MaRS Dan Colquhoun – VP Global Customer Research – Frost & Sullivan
InnovaCon Research Develop TesCng IntroducCon Analysis
Market & Industry Intelligence
Understand CompeCng Technologies/Patents/Companies; EsCmate Market size & share;
VerCcal/Industry market entry and potenCal
Customer Intelligence
Concept TesCng; Customer Profiling & SegmentaCon; Packaging research; Pricing;
Messaging and CommunicaCons development
Ques7ons to ask: -‐Is my technology really disrupCve? If so what is it replacing ? -‐Who is my direct compeCtor at my price point? -‐Does my compeCtor have a diversified porRolio?
How to find the answers:
1. Consider patent or prior art searches – Public databases like USPTO or WIPO, or paid databases like Thomson InnovaCon or Total Patents
2. Understand your posiCon in the “value chain” as that will determine your compeCtor
3. Compare product/technology capability/claims: use product brochures from trade shows or product claims from websites or even company annual reports
-‐What is my potenCal market vs addressable market? (i.e. What you wish it to be vs. what is realisCc ?) -‐What is my market share among compeCtors? -‐What is my market share in Canada/Ontario?
1. Consult market reports from mulCple vendors 2. Be clear about the “definiCon” used 3. Sizing the market in publicly traded space can be easier than
with privately held companies: a. Bo^om up method – aggregate revenues of all players
–Tier 1, 2 or 3 – You are likely in Tier 3 b. Use unit price and volume of sale as a means to
determine market share of the company and total market size; Sizing based on potenCal buyers – e.g., no. of hospitals, no. of people viewing a parCcular website, no. of uCliCes etc.
c. Look at annual reports, tax filings, press releases, Tech blogs, product brochures etc.
4. Market sizing at regional levels is more logical – NA, EU, Asia, Middle East
5. UlCmately make realisCc assumpCons!!
Should I be selling this to the DOD instead of healthcare? Are barriers to entry low in certain verCcals? Less regulaCons, price agnosCc ? Could one industry be my first entry point before I tackle another verCcal? Should I target government or the private sector?
1. Understand the verCcal markets of your compeCtors and
target least compeCCve verCcals
2. Are there any investments happening in a parCcular sector, government agency or country that could be an advantage? a. Afer 9/11 and other global incidences – increase in security technologies b. Cleantech -‐ Ontario’s Green Energy Act and FIT program in bringing in investors into the province; China invesCng $5 B in cleantech in next 3 years
Early stage development of a new product and is used to uncover reacCons to the basic idea. • Launching a new product or exisCng product variant • Changing the composiCon of a product Can be conducted using qualitaCve or quanCtaCve methodologies, or a mix of both. The choice of methodology is typically a funcCon of several variables including the stage of development, and the type of end-‐user.
Ideals • ReducCon of bias associated with halo effects • The sample should represent the audience for the product Efficient Approaches • Small scale focus group using advisory board members or other interested parCes (hint: make sure they are unbiased)
• On-‐line capabiliCes are inexpensive and accessible (hint: tap a researcher or body of knowledge for best pracCces)
SegmentaCon can be completed on almost any data that relates to the customer, but should answer: • Who are the best customers now? • Which groups or segments represent the greatest opportunity for growth?
• Are there pockets of customers out there wherein the product is more favorably perceived?
Ideals • The customer segments exist (i.e., not an arCficial or hoped for construct)
• The segments targeted can be efficiently reached Efficient Approaches • Secondary research or using exisCng data (e.g., SIC groups) • Use compeCtor profiles of their customers to construct your own segments
• On-‐line capabiliCes are inexpensive and accessible (hint: tap a researcher or body of knowledge for best pracCces)
Geography (Where)
Price/Channel (Where)
Behavior (What, when, how)
Needs (Why)
Attitudes (Why)
Simple
Complex
Level ofAnalysis
Tactical
Strategic
BusinessApplication
• OpCmized packaging should be based on an understanding of customer needs (e.g., a product that will be opened in a surgical theatre by end-‐users wearing gloves).
• Pricing reflects the relaCve compeCCve set, the margin required and the decision as to whether to price for share or price for margin.
Ideals • Pricing data reflects actual purchasing condiCons • Packaging research encompasses aestheCcs as well as usability Efficient Approaches • Focus groups with “volunteers” (hint: don’t run these yourself as you are biased)
• Produce inexpensive packaging schemaCcs using computer graphics tools
• On-‐line capabiliCes are inexpensive and accessible (hint: tap a researcher or body of knowledge for best pracCces)
• Determine the opCmal personality and posiConing for your brand
• Ensure that the value proposiCon is relevant, meaningful and differenCated
• Determine the opCmal way to express the proposiCon to the end customer
• Ensure that the brand and value proposiCon are perfectly aligned to perform well, and withstand challenges in the marketplace
Ideals • The posiConing strategy reflects key category purchase drivers and leverages the best properCes of the product
• The message can be efficiently and effecCvely delivered Efficient Approaches • Inventory the key product a^ributes (hint: keep it simple) • Collect and audit all data sources around the brand, category and customer to “leverage-‐able” insights
• The insights are combined to develop or inspire a range of potenCal brand Ideas
Is there really a market need here? Whether the answer is a “Go” or “No go” understanding your market / customer / industry dynamics will be key.
Tips to be on top of your industry : 1. A^end industry events/trade shows 2. Subscribe to relevant industry journals/newsle^ers and even contribute arCcles
3. Track industry analysts – through research publicaCons, blogs etc.
4. ParCcipate in research industry events such as MRIA (Market Research and Intelligence AssociaCon), ESOMAR (European Society of MarkeCng and Research); MRA (Market Research AssociaCon).
pg 15
Usha Srinivasan PhD Program Director Business Acceleration Program MaRS Discovery District T 416-673-8144 E [email protected] W www.marsdd.com