articulating your concept: knowing your customers and competitors

Simon EntrepreneursPresents

Articulating Your Concept:Knowing your customers and competitors

“An opportunity has the qualities of being attractive, durable and timely, and is anchored in a product or a service which creates or

adds value for its buyer or the end user.”

Jeffry A. Timmons

Instructor: Gina Mangiamele ([email protected])

Teaching Assistant: Adam Bates ([email protected])

http://www.rochester.edu/entrepreneurship







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"Smart people (like smart lawyers) can come up with very good explanations for

mistaken points of view.“- Richard P. Feinman






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• Support ideas with research and clear assumptions, and demonstrate potential results through sound •Introduce a “Scientific” approach

• Identify an need/issue in a market• Make educated assumptions• Prove/disprove them in an objective manner

• Provide frameworks for:• Articulating your idea and validating market demand for it • Constructing your business model and validating its underlying assumptions

• Answer questions:• Is my idea a viable business opportunity? • Am I ready and able to play a role in its implementation? If so, what is that role?

Purpose of the Workshop – Working Agenda






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• Introduce concepts and questions you need to answer

• Provide practical guidance in doing so through examples and introduction of resources you can tap into

• 40 minutes long each, so a lot will be covered in short periods of time

• Will require independent research that you'll need to coordinate on your own

• Reach out to instructor and/or TA of workshops with questions

• Assistance with locating advisors – contact instructor and/or TA

Workshop Format






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Knowledge Base FirstThinking through the venture with using four knowledge groups

• General Business Knowledge - an understanding of conventional business functions: Marketing, finance, operations, people topics, business law and accounting.

• General Entrepreneurship Knowledge –Specialized information within each functional base.

• Opportunity-Specific Knowledge- Knowledge of existing industry gaps based on observations and research

• Venture-Specific Knowledge- Functional knowledge needed to understand key variables that influence outcomes. (Food & Beverage, Broadcasting, Thixo)

Learning curves are costly and may result in venture failure






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D.I.V.E. Model

• Discover an industry gap that is not being delivered or is delivered poorly

• Innovate a venture solution that may respond to the gap

• Validate your hypothesis through research and make clear, defined assumptions

• Evaluate the findings and engage in planning






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Iterative Ideation

Brilliant Idea

Research

Brick Wall

Eventually Leads to…

Breakthrough!!






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• Is there a known or accepted problem? For example:

“it’s hard to stay up-to-date with all the groups of people and organizations you’re connected to, and existing online groupware is not well-packaged for the mainstream Internet user”

or

“there are no classy nightclubs in Rochester and locals are forced to go out of town for a good nightclub experience”

What is the gap?


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• What do you think will satisfy the need or solve the problem? For example:

“By packaging groupware technology (blogging/discussion forums) in a friendly, familiar, non-techie manner, the mainstream Internet user will use them to stay connected with friends and family.”

or

“By establishing a classy, ‘big city’ night club experience in Rochester, locals will go out more and leave town less”

What is your hypothesis?


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• Now bring it all together:

“The Friendly Briefs makes it simple and intuitive to use the Internet to stay connected with friends, family, co-workers, or any group by creating one’s own collaborative, online newspaper to share news…because staying connected should be as easy as checking the daily headlines.”

or

“# 41 Nightclub brings the stylish night-life of NYC to Rochester and gives residents a means to stay local and party big.”

Articulation of the business idea (1): Say it simply


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Why you? Why now?

• Who needs it?• Why do they want it?• What’s better?• Who gives it to them now?• How do they get it?• What could change?• When could I deliver?• How could I deliver?


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Deliver the Vision

• Write an industry profile

• Write a customer profile

• Write assumptions about your idea

• Describe the solution

• Draw the answer- Graph, pictures, etc..

• Assemble notes to prepare the narrative

• Retain resources used


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• If you can’t draw it, you can’t sell it. a few examples…

Articulation of the business idea (2): Draw it.

Product Sketch

Service Diagram

Web page mockup

Nightclub Promotional Flyer


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Who, specifically, is your customer?

• To whom will you market to?

Geographically dispersed families and friends Kids grown up and out of the house Friends in areas you moved away fromAlumni groups of friends, companies, schools

Businesses needing to maintain newsletters

or

Young adults between 25-35 years of age, living in or visiting the Rochester metro area

• Pick an initial focus segment• “Biggest bang for your buck”• Particularly accessible for market testing/validation


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Quantifying your target market

• How many customers are in your target market?• What is the growth trend in your target market?

• Where do these numbers come from? See the slide, “Resources: Know your industry” at the end of the presentation.

Year

Potential Customers (millions) 10 12 15 20 28

Growth Rate 20% 25% 33% 40%

2007 (est.)2003 2004 2005 2006 (est.)


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Who is your competition?

• How is the need being fulfilled today?• Totally unserved market you say?...not likely. What substitute products are being used?..for example:

Email, discussion forums, blogs, Yahoo Groups

or

Upscale restaurant bars, “kinda classy” bars, big city clubs

• List at least four competitive or potentially competitive solutions


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Where do you fit in?

• What are your competitive advantages and how do they compare with the competition?

• Choose right words, go beyond “better, faster, cheaper, cooler”Competing Solutions

Competitive Advantages

Familiarity of Interface 10 10 5 5 6

Simple and intuitive to use 10 8 7 6 6

Provides a fun experience 10 5 5 5 5

Pricing free free free free free

Total Points 28 23 17 16 17

Yahoo-style groups

Me Email BlogsDiscussion

forums

Use subjective rating, arbitrary scale (1-10), or actual data (objective)


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Further investigation of your competitors:

• What pricing models do competitive solutions offer?

• How do these solutions get from supplier to consumer?

• Where do consumers learn about these solutions? (ads, etc.)

• If a consumer is already using a competitor’s solution, what is the cost (time, money, etc.) of switching to your solution?


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Strategies

Strengths

Weakness

Opportunity

Threats

Porter’s

Model to

Evaluate

competition

Product

Price

Place

Promotion

Divergent Thinking

S.C.A.M.P.E.R.

Model


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S.C.A.M.P.E.R.

• S Substitute• C Combine• A Adapt• M Modify/ Magnify• P Put to other uses• E Eliminate• R Rearrange

Isolate the challenge or subject you want to think about.

Ask SCAMPER questions about each step of challenges and see what new ideas emerge.


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SCAMPER Questions

• What procedures can I substitute?• How can I combine prospecting with another procedure?• What can I adapt to the website to make it user friendly?

• How can modify existing hair salons to improve the experience?

• What can I magnify to impress consumers about Eastman?• What other uses can be applied to the widget?• Should we eliminate packaging from deodorant?• Could we rearrange schedules to accommodate more part-time

students.• One manufacturer substituted plastic for metal, added color and

produced multi-colored paper clips so that papers could be color-coded, applying another use!


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Resources to build the knowledge base

• Where do you learn about your industry?• http://www.library.rochester.edu

• click “Databases”, then “Business”• Many to choose from depending on industry, but “NetAdvantage Industry Surveys” and “Marketline” provide good overviews• “Lexis Nexis” is a good source for trends

• Do some Googling• http://finance.yahoo.com -> provides company and industry information• Look at competitors websites and annual reports

• Where do you learn about consumers?• Encyclopedia of Associations• American Demographics: http://adage.com/americandemographics• More Googling and above-mentioned databases• Direct contact, surveying, and prototyping -> this is the topic of the next workshop





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Resources

• www.SBA.gov• Standard ad Poors Industry Outlook• Industry Associations• American Demographic Magazine• SBDC National Clearinghouse http://sbdcnet.org• National Institute of Standards and Technology

http://www.nist.gov/ For research, info and more





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Summary of Assignments• Answer the questions:

• What is the industry gap?• What is my hypothesis for resolving the gap/ need?

• Articulate your business idea clearly so a 4th grader can understand it.•Draw/depict your product or service.• Answer the question:

• Who, specifically, is my customer?• Quantify the number of customers in your target segment and the growth trend.• Answer the questions:

• Who is my competition? -> list at least 6• Where do I fit in? -> complete the competitive matrix• What pricing models do competitive solutions offer? • How do these solutions get from supplier to consumer? • Where do consumers learn about these solutions? (ads, etc.) • If a consumer is already using a competitor’s solution, what is the cost (time, money, etc.) of switching to your solution?

• Know your industry and be able to summarize it with an overview statement and current trends.


articulating your concept: knowing your customers and competitors

Documents

mainstream internet user

competitive solutions offer

pricing models

specific knowledge

target market

stay connected

growth trend

business idea