Market Information training

8.3.2011 at Innopoli, EspooJuhani Polkko | San Francisco Oy

Objectives

• Define market and industry• Understand positioning and differentiation• Know about basics of Blue Ocean Strategy• Learn about methods for market validation• See 10 free tools for market intelligence• Create market monitoring plan & process• Discuss about challenges and solutions

Instructor background

• 8 years in consumer electronics/games• 2004-2006 in Silicon Valley• 2006-2007 U.S. startup• 2008-2009 Nokia Interactive• 2009-2011 Offerium• 2009- Freespee AB• MBA (intl. finance) Aalto/HSE EE

Participant introductions (1 min)

• What does your company do?• In what industry you operate in?• Who are your customers at the moment? • Are they in Finland or international?• Do you have a product/service in the market?• What kind of market research have you done?

DEFINE MARKET AND INDUSTRYWhat market should we be in? How does it fit different industries?

Team Business ModelTechnologyFinance

Market segments

Industry sectors

Customers

Prospects

Competitors

Partners

Barriers ???

??

?

The ultimate solution for a well-

defined, painful problem

Best entertainment in the market, following the latest consumer

trends

Market or Marketplace

• Market = potential customers (prospects)• Whose problems does your innovation solve?• Segment your market into different types of

customers (by common characteristics)– Makes sales and marketing easier– e.g. in B2B: company size, industry sector, maturity– e.g. in B2C: consumer behavior, demographics

• Define in which industries your market belong to

Industry boundaries

Telecom

MediaMarketing

Our market

What industry you believe you are in?

What industry you should be in?

UNDERSTAND POSITIONING AND DIFFERENTIATIONWhat’s our place in the value chain? How do we differentiate from competitors?

STP model• Group the potential customers by common

characteristics• Behavior, position in the value chain, etc.Segmenting• Select the most potential segments (next slide)• Focus on one segment only, or limited number of

segments, depending on resourcesTargeting• Position the offering to become a winner in a market

segment (“red ocean”)• Define a new market space (“blue ocean”)Positioning

Value chain example

Content creation Content packaging

Content distribution

User interface End user

User Value

Money

• Should I focus on one part or several (vertical integration)?• Where are my competitors? Should I be in the same place?• Who is the driver in the value chain (demand creator)?• Select Push or Pull sales strategy?

How prioritize market segmentsPriority How strong is … Weight

1 Customer’s compelling reason (pain) to buy 30%

2 Customer’s knowledge 20%

3 Potential for market dominance 15%

4 Potential for follow-on markets 10%

5 Product/service maturity 10%

6 Need for intermediaries 5%

7 Pricing 5%

8 Credibility 5%

Source: Chasm Institute / Embrase

Positioning = Perceived Value

Simple positioning matrix

Closed network Open network

Verti

cal

Hor

izont

al

Facebook

Habbo Hotel

Flickr

YouTube

Yammer

Windows Live

Messenger

Differentiation variablesPhysical product Services Personnel Features Production quality Conformance Performance Durability Reliability Reparability Style Design

Ordering ease Delivery Installation Customer training Customer consulting Add-on services

Competence Courtesy Credibility Reliability Responsiveness Communication Experience

Differentiation is accomplished through product/service development

and/or marketing.

Source: Marketing Management: Kotler, Philip

KNOW ABOUT BASICS OF BLUE OCEAN STRATEGYHow to make competition irrelevant?

Making competition irrelevantRed Ocean Strategy Blue Ocean Strategy

Market Space Compete in existing market space.

Create uncontested market space

Competition Beat the competition. Make the competition irrelevant

Demand Exploit existing demand. Create and capture new demand.

Price vs. value Make the value-cost trade-off.

Break the value-cost trade-off.

Overall strategy Alight the whole system of a firm’s activities with its strategic choice of differentiation or low cost.

Alight the whole system of firm’s activities in pursuit of differentiation and low cost.

Source: Adapted from Blue Ocean Strategy, page 18

Value InnovationLower Costs

Higher Value

Value Innovation!

Source: Blue Ocean Strategy, page 16

The Four Actions Framework

New Value Curve

Reduce

Create

Raise

Eliminate

Source: Blue Ocean Strategy, page 29

Eliminate factors that are no longer relevant.

Reduce features and simplify offering

Create factors the competition does not offer

Raise the demand by discovering the value sources

Examples of Blue Ocean strategies

Why most still choose Red Ocean

• Red Ocean is proven market.• Marketing/sales can be hard in Blue Ocean.• Blue Ocean often requires more capital.• Differentiation is usually relatively simple.• Red Ocean strategy is easier to plan and predict.• Competition is never perfect.• No strategy is black or white.

LEARN ABOUT METHODS FOR MARKET VALIDATIONProcess to learn about market demand and customer aspirations

1. Create the positioning pitchCompany A is a <what do we do, what do we offer, what problem are we

solving and how>

To <what is our primary target market segment>

Who <what do our customers need and why>

Compared to others

<how to we differentiate – what makes us unique>

Our background is <who are we, where do we come from, how do we establish credibility>

Source: Embrase Business Consulting

2. Find the pain

• Find 3-5 decision makers within your target segment• Agree on short interviews (ask for opinion, do not sell)

• Interviews should be done by company founders– If possible; Only exception is language issues

• Make sure the person understands product/market• Most important questions

– “What keeps you up at night?”– Test your positioning pitch– Plans for investing in the space (short or long term)– Operational contacts within the organization

Source: Infrasystems (adapted)

3. Test assumptions/hypotheses

• Market/customer problem• Positioning• Value proposition• Differentiation• Target market segment• Core product features• Distribution• Pricing

4. Analyze the results

• Were the questions open-ended enough to create a dialog?• Is this the right target market segment?• Did we ask the right questions?• Were the answers aligned?• How did the answers compare to our assumptions?• Do we need to make changes to our product strategy?

Continue until confident you are on right track.If results are negative, try adjusting the pitch or change segment.

Source: Infrasystems (adapted)

Discussion points

• What about consumer products/services?• When should I buy external research services?• How to deal with foreign markets?• Should I sell first or develop first?• Who should talk to the customers/prospects?

• How much is enough validation?

SEE 10 FREE TOOLS FOR MARKET INTELLIGENCEI can’t afford to buy research reports – what can I do myself?

Tool #1: Google Advanced

• Results filtering• http://www.google.com/search?hl=en&q=spinno&aq=f&aqi=p-p2g8&aql=&oq=

Tool #2: Google Reader & RSS

• RSS subscriptions • http://www.google.com/reader/

Tool #3: Google Alerts

• Automatic keyword alerts by email or RSS• http://www.google.com/alerts

Tool #4: Efficient email

• Email filtering and data mining• https://mail.google.com/

Tool #5: Google Trends

• Keyword comparison and trends• http://www.google.com/trends

Tool #6: Ad Preview Tool

• Find AdWords ads in other countries• https://adwords.google.com/select/AdTargetingPreviewTool

Tool #7: Keyword Spy

• Find out which keyword competitors use• http://www.keywordspy.com

Tool #8: Vertical search• Not everything can be found with Google• Example (SEC): http://www.sec.gov/edgar/searchedgar/companysearch.html• Others listed at www.spinno.fi (companies, trademarks, patents, etc)

Tool #9: ChangeDetection.com

• Get alerts for any website changes• http://www.changedetection.com

Tool #10: Google Apps (bonus)

• Free email and collaboration suite• http://www.google.com/apps/intl/en/group/index.html

CREATE MARKET MONITORING PLAN & PROCESSHow do we do continuous market intelligence efficiently?

Pitfalls and warnings

• Monitoring can easily steal a lot of time• Set up rules how much employees can use work time• More important to decide what not to follow• Always decide what you want to get from the process• Usually the only good reason for market intelligence is

to create foresight and make shift changes• Don’t worry too much about the competitors.

Simple implementation plan (1/2)

1. Decide on the resources and tools– Preferably only founders should follow the market

2. Select keywords– Influencers, competitors, prospects, industry terms

3. Select followed channels– RSS feeds, newsletters, websites

4. Setup tools and stick with it– Make a decision how often you change them

Simple implementation plan (2/2)

5. Create a schedule for monitoring (max. once/day)– Preferably outside office hours

6. Save new resources but add them to the used tools for example once a week

7. If you have open marketing strategy, actively engage in online discussions or appoint a person to do so

8. Analyze and discuss findings once a month and decide on action plans for marketing/sales/develop.

REMEMBER!

• The amount of information is unlimited.• 98% of information cannot be found online.• Most valuable source is your personal network.

DISCUSS ABOUT CHALLENGES AND SOLUTIONSWhat challenges have others faced and how to overcome them?

Top lessons learned

1) Find the customer pain.2) Simplify your pitch.3) Reiterate fast enough.4) Prepare for long sales cycles.5) Focus on yourself, not others.

Contact infoSan Francisco OyFredrikinkatu 61, 6th FloorFI-00100 Helsinki

Juhani Polkko, CEO+358 40 543 0825 / Skype: jpolkkojuhani@sanfrancisco.fi

www.twitter.com/juhaniwww.linkedin.com/in/juhani