42629 lecture 5 pt 3
DESCRIPTION
ForecastingTRANSCRIPT
Integrated Product Development
ForecastingJakob A. Bejbro [email protected]
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“Original material by Jakob A. Bejbro Andersen for course 42629 – Innovation and Product Development Department of Mechanical Engineering, The Technical University of Denmark”
ForecastingRealizing the potential
2012Original material by Jakob A. Bejbro Andersen for course 42629 – Innovation and Product Development Department of Mechanical Engineering, The Technical University of Denmark
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Time
Financial Balance
Introducing the hockeystick- A market potential has no value to investors in itself.- There has to be a credible plan for realizing this potential.- The following questions need to be answered:
- When will you start selling?- When will ”break even” be reached?- When can the investor achieve an ”exit”?- How much can the shares be sold for?
2012Original material by Jakob A. Bejbro Andersen for course 42629 – Innovation and Product Development Department of Mechanical Engineering, The Technical University of Denmark
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Requisites for the hockeystick (exponential growth)
• A solid execution strategy.– Segment 1, then 2, then 3 ... (remember the bowling pins)
• A good knowledge of the customer / market.• A credible sales approach.
2012Original material by Jakob A. Bejbro Andersen for course 42629 – Innovation and Product Development Department of Mechanical Engineering, The Technical University of Denmark
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Time
Sales rate Market saturation
The lifecycle of a market (segment)• Unexploited markets tend to have the following
characteristics:– Early stage sales; driven by enthusiasts, lack of track record.– Breakthrough; track record established, sales increasing drastically.– Business as usual; Market saturated, few new customers.
Breakthrough Business as usual
Early stage sales
2012Original material by Jakob A. Bejbro Andersen for course 42629 – Innovation and Product Development Department of Mechanical Engineering, The Technical University of Denmark
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Planning for continued growth • As capital (liquidity) and track record is established…• … the basis is formed for going into new segments.• The specific strategy for entering into new
segments is a key parameter for investors.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Seg 1
Seg 2
Seg 3
Seg 4
Seg 5
2012Original material by Jakob A. Bejbro Andersen for course 42629 – Innovation and Product Development Department of Mechanical Engineering, The Technical University of Denmark
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Projecting sales• Sales are key as they validate the market for the offering.• Investors rate sales over any other dimension.• As with market estimates, there is a top down and a
bottom up approach. – Again, it is beneficial to use both approaches.
SALES
2012Original material by Jakob A. Bejbro Andersen for course 42629 – Innovation and Product Development Department of Mechanical Engineering, The Technical University of Denmark
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Choosing a sales approach• Business to Business sales (B2B)
– The same product can be sold to different levels of an organisation.– As a general rule:
• Higher in organisation you find more purchase power, but longer sales cycles.
• Lower in the organisation you find smaller budgets, but shorter time from introduction to actual purchase.
– Exceptions are however many:• Strategic level can be used to push through sales• The operational level can be to hung up on formal requirements.
• Business to Customer (B2C)– Through distributor/partner.– Direct sales.– Web portal.
• Composite models (B2B/B2C) – Facebook, adwords etc.
2012Original material by Jakob A. Bejbro Andersen for course 42629 – Innovation and Product Development Department of Mechanical Engineering, The Technical University of Denmark
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Exercise 5a:(You are still with the brewery)
For one of the identified segments:
Identify two or more sales approaches:
1. _________________________2. _________________________3. _________________________4. _________________________
• How will you sell your own idea?
2012Original material by Jakob A. Bejbro Andersen for course 42629 – Innovation and Product Development Department of Mechanical Engineering, The Technical University of Denmark
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Projecting sales (bottom up)
• Describe sales going from day to day • What steps need to be taken for each sale to be made?
• Which resources does it require?• How can the resources required be minimised?
Establish contact
Create materials
Specify solution
Formulate quotation
Negotiate terms
Sale!
Wk 1 Wk 2 Wk 3 Wk 4 Wk 5 Wk 6
2012Original material by Jakob A. Bejbro Andersen for course 42629 – Innovation and Product Development Department of Mechanical Engineering, The Technical University of Denmark
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C?
The sales funnel (bottom up II)
First meeting
Qualification
Purchaseorder
C5C2C1 C6C4
C7
First meetingsT1 hours per meeting
T2 hours per lead
T3 hours per lead
Time usageNumber of candidates
N
N/10 (?)
To be reduced
2012Original material by Jakob A. Bejbro Andersen for course 42629 – Innovation and Product Development Department of Mechanical Engineering, The Technical University of Denmark
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Exercise 5b:
For one of the identified sales approaches,list important tasks:
Task 1: _________________________Task 2: _________________________Task 3: _________________________Task 4: _________________________Task 5: _________________________
• What tasks will be important for yourown product?
2012Original material by Jakob A. Bejbro Andersen for course 42629 – Innovation and Product Development Department of Mechanical Engineering, The Technical University of Denmark
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Projecting sales (top down)
• To get a reality check on sales figures, a number of approaches can be used:
– Check media for sales intel (companies like to boast).– Look adoption rates in for similar products/services.
• As a venture company, you should be ambitious:– ”We expect to match or even beat on the sales figures of Company X”– If you are no better than your competitor – why enter the market?
ED
GE
FL
OW
EDGEFLOWSales forecasting (slides courtesy of EdgeFlow Aps)
ED
GE
FL
OWSales forecast - bottom up
Based on sales to strategic level in large companies.
Motivation for sales approach (to strategic level):• Selling to as high a level as possible
• Enables us to add CSR arguments to sales pitch
• Requires limited sales force (favourable at an early stage)
Procedure- Proces validated with sales experts.
- Milestones and target sales # validated
with customers (where possible)
- Projected hit rate (8-12%)
Sales forecast excel sheet
ED
GE
FL
OWSales forecast – top down
Based on sales to strategic level in large companies.
Procedure- Identify competitors Comp 1, Comp 2 and Comp 3 (wind turbine
manufacturers)
- Look for mentioning of sales figures in media (Comp 1 shown as example).
- Build sales history and projection from data obtained.
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6
”…40 units sold in first 8 months of operation…”
”…Large order with local utility – 10 turbines sold” ”Comp 1 enters
DE market – 15 units already sold”
Year in
market
”Comp 1 lands framework agreement w…”
”…ramps up production to 30 units per month”
2012Original material by Jakob A. Bejbro Andersen for course 42629 – Innovation and Product Development Department of Mechanical Engineering, The Technical University of Denmark
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Q?
2012Original material by Jakob A. Bejbro Andersen for course 42629 – Innovation and Product Development Department of Mechanical Engineering, The Technical University of Denmark
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Focus for Fridays Group Work (double diamond)
• Work on specifying and rating segments.• Knowledge of customer needs required– how will you obtain it?• Start formulating your value proposition.