Management of Technology & Innovation MKTG5603 ... · Analysis of the external market •Customer...
Transcript of Management of Technology & Innovation MKTG5603 ... · Analysis of the external market •Customer...
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Management of Technology & Innovation MKTG5603 &
Biotechnology Commercialisation MKTG5604
Workshop 2 Part A: Assessing
the Market & Customer Needs Professor Tim Mazzarol – UWA Business School
UWA Business School MBA Program
M Biotech Program
[email protected] MOTI MKTG5603
BC MKTG5604
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Ref. G. Moore (1996) Rogers (1995)
MAINSTREAM
MARKET
EARLY
MARKET The
Chasm
Early Stage
Commercialisation
Mainstream Production
Crossing the Chasm
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Bowling Alley The
Chasm *
Deal-Driven
Marketing
Early Market
Tornado
Mass Marketing
Main Street
Mass Customisation
Source: Phillip Lay, Making Partnering Work Along the Technology Adoption Life Cycle, Software Developer & Publisher,
July/August, 1997)
Niche Marketing End of Life
A Marketing Perspective
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Result
Demonstrability
Job
Relevance Perceived
Ease of Use
Output
Quantity
Intention to use Usage
Behaviour
Technology Acceptance Model 2
Image
Subjective
Norm
Perceived
Usefulness
Voluntariness Experience
Sources: Legris, Ingham & Robinson, (2003)
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Supplier
Marketing Efforts
-Targeting
- communication
- risk reduction
Social Network
-Interconnectedness
- Network participation
Environmental
Influences
- Network externalities
- Competitive pressures
Perceived
Innovation
Characteristics
-Relative advantage
-Compatibility
-Complexity
-Trial ability
-Observability
-Uncertainty
Adopter
Characteristics
-Size
-Structure
-Org innovativeness or
Strategic posture
Awareness
Consideration
Intention
Adoption
Decision
Continued Use
Individual
Acceptance
Source: Frambach & Schillewart, 2002
Framework of organisational
innovation adoption
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Organizational
Facilitators / internal
marketing
-Training
-Social persuasion
-Organizational support
Personal
Characteristics
-Demographics
-Tenure
-Product experience
-Personal values
Attitude towards
innovation
-Beliefs
-affects
Organizational
Adoption decision
Source: Frambach & Schillewart, 2002
Personal dispositional
innovativeness
Social Usage
-network externalities
-peer usage
Individual Acceptance
Framework of individual innovation
acceptance in organisations
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The Customer Development Manifesto
• Rule 1: There are no facts inside your building, so get outside.
• Rule 2: Pair customer development with agile development.
• Rule 3: Failure is an integral part of the search.
• Rule 4: Make continuous iterations and Pivots.
• Rule 5: No business plan survives first contact with the customers so
use a Business Model Canvas.
• Rule 6: Design experiments and test to validate your hypotheses.
• Rule 7: Agree on market type – it changes everything.
• Rule 8: Start-up metrics differ from those in existing companies.
• Rule 9: Fast decision-making, cycle time, speed and tempo.
• Rule 10: It’s all about passion.
• Rule 11: Start-up jobs are very different from a large company’s.
• Rule 12: Preserve all cash until needed then spend.
• Rule 13: Communicate and share learning.
• Rule 14: Customer development success begins with buy-in.
Source: Blank & Dorf (2012)
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Customer Development Process
Source: Blank & Dorf (2012)
Customer Discovery
Customer Validation
Customer Creation
Company Building
Pivot
SEARCH EXECUTION Minimum
Viable
Product
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Customer Discovery Process
Source: Blank & Dorf (2012)
Phase 1: Develop Theory
•State hypotheses
•Draw business model canvas
•Prepare one page briefs of each hypothesis with tests or experiments required to prove/disprove each one
Phase 2: Test Theory
•Test the problem hypotheses
•Test most elements of business model (e.g. CVP, pricing, channels)
•Get facts and develop new hypotheses
Phase 3: Go to market
•Test the solution
•Present MVP to customers
•Use “pass-fail” goals to measure progress
Phase 4: Validate/Refute Theory
•Verify or Pivot
•Get full understanding of customers’ problems, passions or needs
•Confirm the value proposition solves problems, passions or needs
•Ensure market size is viable & pricing works
•Ensure that revenue will generate profits
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The Customer Discovery Process
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Customer Validation Process
Source: Blank & Dorf (2012)
Phase 1:Get Ready to Sell
•Determine the product positioning strategy
•Prepare the sales/marketing message strategy
•Hire a “sales closer”
•Create a distribution channel plan
•Prepare a sales roadmap
•Create an advisory board
Phase 2: Sell to EarlyVangelists
•Target early adopters
•Seek feedback and critical assessments
•Use prototypes, models, brochures or presentations
•Validate the sales road map
•Prove predictability of the sales funnel
•Validate the business model via real world tests
Phase 3: Develop Positioning
•Take customer feedback and refine product
•Position the company and its product offer
Phase 4: Pivot or Proceed
•Undertake detailed “Pivot or Proceed” analysis
•Verify that customer validation is complete
•Can the company scale up?
•Is the business model worth pursuing?
•Will it generate sufficient revenues & profits?
•Can the company implement it?
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The Customer Validation Process
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Developing a Customer Archetype
Source: Blank & Dorf (2012)
The Customer Archetype combines everything you know about your
“most typical” customers or end-users into one or more profiles.
• Develop a hypothesis of who the target
customer(s) are and what problems/needs
they have that would make them attracted
to your product/service.
• Key steps:
– Segment the target market.
– Define the customer problem.
– Define the customer type.
– What are the customer’s wants & needs?
– How will the customer benefit from the
product?
– If an organisational buyer prepare
organisational and customer influence
maps.
– Review the Business Model Canvas.
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Customer Analysis Process
Source: Blank & Dorf (2012)
Customer Problem, Need or Passion
•Latent Problem: customer has problem but they don’t know it.
•Passive Problem: customer knows the problem but aren’t motivated or aware of the opportunity to change.
•Active Problem: customer recognises problem or passion and is seeking solution but not found one.
•Vision: Customer has idea for solving problem and will pay for better solution.
Customer Types
•End users: the day-to-day users of a product or service who have a deep understanding of what it can do for them.
• Influencers: key sources of influence who can shape the buyer towards the product or service.
• Recommenders: influencers that have the ability to shape whether or not the product/service is bought.
• Economic buyers: key decision makers who may control the funding for the purchase decision.
• Decision makers: those who make the final decision to buy or not.
• Saboteurs: those who can veto a purchase decision.
Day in the Life of a Customer
•How does the customer behave in their normal day to day activity that can help you understand more about their needs and purchasing behaviour?
•How do they spend their day?
•What products/services do they use?
•How does the new product/service affect them?
•What value or benefits can it offer?
•How willing are they to switch and why?
Organisational & Customer Influence Map
• If selling into an organisational customer market draw up a diagram of the business buying structure.
•How are decisions to buy made?
•Who are the key decision makers?
•What attitudes to the adoption of new products/service do they have?
•What are the measures of performance or benefits they may be attracted to?
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Analysis of the external market
• Customer Value Proposition (CVP) • The innovation must bring a significant benefit to the
customer.
• This benefit must be noticeable and useful.
• The CPV is a trade-off between benefits offered and
cost/risk of adoption:
• Erosion Effects • Caused by external environmental influences that
remove the innovation’s advantage.
CVP = perceived benefits – perceived sacrifices
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NPD and CVP Analysis
Source: Miller & Swaddling (2012)
The Customer Perceived Value (CPV) is the result of the customer’s evaluation of all the benefits and all the costs of an offering as compared to that customer’s perceived alternatives. It’s the basis on which customers decide to buy things.
Ideation/Fuzzy Front End
Launch/Release
Development & Testing
Business Case
Preliminary Investigation
Understand wants &
needs
Understand Perceived
Relative Importance
Understand Perceived
Importance
Understand Market
Factors
Identify Value Attributes
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CVP Balance Scale
Source: Miller & Swaddling (2012)
Costs Benefits
Increased revenue
Reduced costs
Time savings
Prestige
Purchase price
Switching costs
Training costs
Process changes
Customer value is:
• Market-perceived
• Complicated
• Relative
What can tip the CVP
benefits towards a
future sale?
1. Attributes
2. Benefits
3. Costs
CVP and erosion effects on volume of sales
Perceived
sacrifices
STRONG
“No Way” Very big erosion,
no catchable volume
Worthwhile going there?
“Fall in love” Big erosion,
uncertain volume
Work the innovation again to
diminish the sacrifice
Danger for a SME
LOW
“Wet firecracker” Big erosion,
low catchable volume
Work the innovation again to
increase performance or let it be
“Maximum” Allow to catch quickly a
maximum volume of rent
Favourable
LOW STRONG
Perceived benefits
!
z
Residual rent
Source: Santi and Reboud 2003
Value chain and erosion effects on rate of profit
The
bargaining
power
suppliers /
business is
in favour of
…
Suppliers
+/– Strong dependence from suppliers
Medium - strong erosion : the
suppliers catch the profit
Association is recommended
with a SUPPLIER
– – The business is pressured from
both sides
Maximum erosion on rate of
profit
Abandon this use of innovation
or think about another place in
the value chain
Business
++ Favourable situation :
Low erosion on rate of profit
Strategic autonomy is possible,
the margin is kept
+/– Strong dependence from
customers
Medium - strong erosion : the
customers catch the profit
Association is recommended
with a CUSTOMER
Business Customers
The bargaining power customers / business is in favour of …
Residual rent
Source: Santi and Reboud 2003
Substitutes and erosion effects on length
Substitution risk and
erosion effects
Technological risk: width and maturity of technological
alternatives
LOW HIGH
Commercial risk:
customers
propensity
towards adoption
of innovations
HIGH
Low technological risk but
high market adoption risk
+
Very high risks and erosion
effects
– –
LOW
Very low
risks and erosion effects ++
High technological risk but
low market adoption risk
–
STOP
Residual rent
Source: Santi and Reboud 2003
Requires strong marketing effort difficult for SME
Requires strong technical effort difficult for SME
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Kano Model Analysis
Hi Performance
Source: Tan & Shen (2000)
Hi
Satisfaction
Must-be (Basic) Attributes • Customer take for granted when fulfilled
• If absent customer will get very
dissatisfied
Attractive Attributes • Absence does not cause
dissatisfaction
• Not expected by customer
Lo
Satisfaction
Lo Performance
One-dimensional
Attributes • Satisfy when fulfilled
• Dissatisfy when not-fulfilled
• Better attributes more satisfaction
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Kano Analysis Explained
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Kano Performance Requirements
• You must start by offering the “must have” attributes in your product or
service.
• Focus on the “one-dimensional” attributes to offer superior performance but
ensure that you keep these at or above best practice.
• Look for ways to offer “attractive attributes” that the customer has not
expected (customer delight) but remember that once offered the customer
will begin to expect these and no longer see them as attractive.
• Any new “attractive attributes” will also risk being copied or imitated by your
competitors unless “isolating mechanisms” can be put in place.
• Look for the “zone of indifference” where the customer is not interested in
an attribute.
• Look for “reverse requirements” that decrease satisfaction when present
and increase satisfaction when missing.
Source: Kano et al. (1984)
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Group Discussion
Working in teams
• Review the firm’s marketing
strategy.
• Prepare a preliminary
“Customer Archetype”.
• Look for what is known and
what is not.
• Identify with Kano Analysis the
product attributes.
• Highlight major areas for future
action and focus.
End of Presentation