3-20-07 Adhva

Finding Customers and Forecasting Markets for New and Disruptive

Technologies

James F. Fee, Adhva

Adhva.com

3-20-07 Adhva

Basic Concepts

• Where do products come from?

• What do I mean by competition?

• How groups of customers become markets

• Finding parallel universes

• Modeling markets that don’t exist

• Disruptive vs. new products/markets

3-20-07 Adhva

Where do products come from?

• Knock-off – copy an existing product or service –sell at a lower price to existing customers

• Incrementally improve an existing product – this is what engineers are hired to do

• Develop a product to address your own need – how many of you are there?

• Develop or utilize a new material, compound or service that has unique characteristics – find a market & develop a product

3-20-07 Adhva

New Corp

Customers

Customers

Customers

Competitors

New Product or Service (A) Existing Product or Service (B)

MoneyMoney

The World of your New Product

3-20-07 Adhva

Comparing A with B

• A and B could be equivalent – Laptop Dell or HP

• A and B are different but with same function– Transportation to work Car or Bicycle

• A and B could be totally different– Entertainment Trip to Europe or Home Theater

• However money is money– Competition is not for the product – it’s for the money

3-20-07 Adhva

Key Takeaway

• Your product and it’s benefits may be unique but there is always competition for the money

• Please never say that there is no competition

3-20-07 Adhva

New Corp

Customers

Customers

Customers

Competitors

Product or Service A Product or Service B

MoneyMoney

The World of your New Product

Market

3-20-07 Adhva

Customers and markets

• Customers purchase products and services

• Markets are collections of customers that have similar purchasing patterns

• The same product may serve several very different markets

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Markets are societies / cultures

• Made up of companies and individuals– There are leaders, followers and experts– They have their own dress and jargon– Annual gathering rituals

• Detroit Auto Show – NY Toy Fair• American Heart Association – CES @ Las Vegas

– Distribution channels– Business practices (typical business models)– Trade associations

3-20-07 Adhva

Simple example

• As part of a project for a local company they wanted to know how big was the commercial market for their SNO PRO product

• Main customers were new car dealerships

3-20-07 Adhva

National Auto Dealers Association

3-20-07 Adhva

Modeling the market

• Days supply of vehicles- 60

• Average time to clean a vehicle* 5 to 6 / hr

• Average time to clean all of the vehicles* 3hr

* My guess

3-20-07 Adhva

What do we need to know

• How many SNO PROs customers?

• How many are in snow areas?

• How many SNO PROs per customer?– How many cars are on the lot– How long does it take to clean a car– How quick are all of the cars cleaned

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NOAA Snowfall Map

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Most important stepTEST your Model

• I went to several dealerships

• Talked to sales people – Who cleans the cars – they do– How long does it take them to do it– Estimate cars on the lot -etc.

• Refine the model

• Random data points improve your model

3-20-07 Adhva

Conclusion

• Model was reasonably close to the actual sales data.

• Current channels were reaching the available market

3-20-07 Adhva

Find the best fit customer / market / product

• A business idea is like a jigsaw puzzle

• You don’t know what you have until you put all of the pieces together– Customers– Markets– Competition

3-20-07 Adhva

Where do products come from?

• Knock-off – copy an existing product or service –sell at a lower price to existing customers

• Incrementally improve an existing product – this is what engineers are hired to do

• Develop a product to address your own need – how many of you are there?

• Develop or utilize a new material, compound or service that has unique characteristics – find a market & develop a product

3-20-07 Adhva

Do Your Homework

• Learn about your– Customer– Market– Competition

• Google is important but you must talk to people

• The hardest part is not to sell but to listen

3-20-07 Adhva

Which comes first?The customer or the market

• You need both

• If you have customers talk to them– Ask them what related products do the buy?– From whom?– What publications, trade shows etc.?

• If you don’t have customers then learn about the market

• Create a customer profile

3-20-07 Adhva

Creating a customer profile for your new product

• Who needs it?

• Why do they need it?

• Who purchases it?

• What does it take to close the sale?

• Where do customers buy it?

3-20-07 Adhva

Who needs it?

• Everybody is not an answer

• Bottoms up profile– You need to know your target customers

better than your best friend.– Where do they live, how do they spend their

money, what do they like and not like

• Top down demographic info– X , Y generation – Dr., Lawyer, Banker – what kind of Dr.

3-20-07 Adhva

What does it take to close the first sale?

• A laptop, cell phone and internet connection

• Or $1M for product development and a $100K to launch a commercial product

• Or $10M for product development, $10M for inventory and $10M national media launch of a consumer product

3-20-07 Adhva

Another Takeaway

• Ideas are cheap and easy

• The secret is to develop a mental screening process to quickly sort through ideas to find the good ones

• The danger is that once you become emotionally involved in an idea, it is very hard to be rational

3-20-07 Adhva

Disruptive vs. new markets

Mainframe Computers

$100Ks60% marginsDirect sales

Mini Computers

$10K - $20K40% margins

OEM

PCs$1K-$5K

20% marginsRetail

CRTs

$100-$500Computer Channel

LCD Displays

$200-$1000ComputerChannel

3-20-07 Adhva

Let’s talk about some of your ideas

3-20-07 Adhva

Finding Customers and Forecasting Markets for New and Disruptive

Technologies

James F. Fee, Adhva

Adhva.com