entrepreneurship 101 - market intelligence and analysis
DESCRIPTION
In order to craft your value proposition, you need to make certain assumptions about your target market. It is important to validate these assumptions through market research techniques and analysis. In this lecture, market research experts will introduce the principles of market research and analysis, including analytical frameworks such as the PEST analysis and Porter's Five Forces. Part of Entrepreneurship 101TRANSCRIPT
Where – Am I going to
sell ? Geography, individuals etc.
Who – Am I compe4ng
with ? Other technologies/subs9tutes etc.
How – Am I going to sell – Price point and business model
What – Is the size of my
market ? How much money am I going to make ? Is it worth to
solve ?
Compe9tors – local & global EcoWater, Cuno, Brita, GE/Zenon Al9cor (Amway) Culligan, Woojin
Coway
Highly compe99ve pricing &
business models -‐ Rental & direct sales
or MLM
Customers – local & global Their needs are different & water quality is different
Distribu9on channel is extremely complex –
Online, through distributors, water
depots, new property developers
What is the size of my
market?
Where am I going to sell (geography)?
How am I going to sell (business and
pricing models)?
Which industry am I selling into?
Successful Launch
Who am I compe9ng with (technology/
company)?
Secondary research sources • Websites • Books • Industry Journals and Research Publica9ons • NewsleZers • Third Party Analyst Reports • Company Brochures
Primary research sources • “Informa9on specialists” at libraries • Surveys (online – more quan9ta9ve) • Focus groups (online or in person more qualita9ve), • Trade shows • Third Party Industry Analysts • Through Social Media (facebook, twiZer, Quora)
Ques4ons to ask:
-‐Is my technology really disrup9ve? If so what is it replacing ?
-‐Who is my direct compe9tor at my price point?
-‐Does my compe9tor have a diversified por`olio?
How to find the answers:
1. Consider patent or prior art searches – Public databases like USPTO or WIPO, or paid databases like Delphion or Total Patents
2. Understand your posi9on in the “value chain” 3. Compare product/technology capability/claims: use
product brochures from trade shows or product claims from websites
4. Conduct a SWOT analysis and Industry analysis (Porters Five Forces) to determine your compe99ve edge in the industry
Strengths Capabili9es? Compe99ve advantage? USP’s? Price, value, quality? Experience,
knowledge, data? Resources, assets and people? Loca9on and
geographical?
Weaknesses Gaps in capabili9es? Lack of compe99ve strengths?
Financials? Cashflow, start-‐up cash drain?Accredita9ons?
Processes and systems etc.?
Opportuni9es Compe9tors vulnerabili9es? Industry or lifestyle trends?
Global influences?
Niche target markets? Partnerships, agencies,
distribu9on? Tac9cs – major contacts?
Threats Legisla9ve effects?
Environmental effects? Compe9tor inten9ons? Vital contracts and
partners? Loss of key staff? Sustainable financial
backing?
Internal
External
Favorable Unfavorable
-‐What is my poten9al market vs addressable market? (i.e. What you wish it to be vs. what is realis9c ?) -‐What is my market share among compe9tors? -‐What is my market share in Canada/Ontario?
1. Consult market reports from mul9ple vendors 2. Be clear about the “defini9on” used 3. Sizing the market in publicly traded space can be easier than
with privately held companies: a. BoZom up method – aggregate revenues of all players
–Tier 1, 2 or 3 – You are likely in Tier 3 b. Use unit price and volume of sale as a means to
determine market share of the company and total market size
b. Look at annual reports, tax filings, press releases, Tech blogs, product brochures etc.
4. Market sizing at regional levels is more logical – NA, EU, Asia, Middle East
5. Ul9mately make realis9c assump9ons!!
-‐Should I be selling my products outside of North America?
-‐What are the cultural & gender preferences or differences in that market?
-‐What are the regula9ons? Are they favorable or not ?
-‐What partnerships do I need?
1. Consult reports on customer preference and behavioral changes – Frost & Sullivan, Datamonitor, Forrester, Industry Associa9ons, GLG healthcare
2. Use social media to your advantage – E.g.. P&G’s teenage feedback on feminine hygiene products through social media sites; Consider focus groups or expert advisory panel discussions before developing a product
3. Tap into Canadian Trade Commissioners office (DFAIT) in other countries – as simple as local news clippings
4. Complete a P.E.S.T analysis for that par9cular geography to understand the Poli9cal, Environmental, Social and Technological market forces
Poli9cal Government Type
Government Stability
Freedom of Press, Rule of Law, Bureaucracy, Corrup9on
Regula9on/De-‐regula9on trends
Social/Employment Legisla9on
Likely Poli9cal Change
Economic Business Cycle Stage
Growth, Infla9on & Interest Rates
Unemployment, Labor Supply, Labor Costs
Disposable income/Distribu9on
Globaliza9on
Likely Economic Change
Socio-‐Cultural Popula9on Growth/Age Profile
Health. Educa9on, Social Mobility
Employment PaZerns, Aotudes to work
Press, Public Opinion, Aotudes and Taboos
Lifestyle Choices
Likely Socio-‐Cultural Change
Technological Impact of Emerging Technologies
Impact of Internet and Reduced Communica9on Costs
R&D Ac9vity
Impact of Technology Transfer
Likely Technological Change
PEST Analysis Framework
-‐Who has the most innova9ve business model out there? i.e. Can I apply those best prac9ces?
-‐What is my pricing structure?
-‐What is my revenue model?
-‐Should I white label or license?
1. Use focus groups to determine price points – B2B or B2C
2. Give considera9on to geographic loca9on before pricing your product
3. Consider manufacturing yourself and sell directly or “white label” to tap into a exis9ng company/manufacturers with name recogni9on in your market place
4. Don’t want to manufacture it yourself but license it out to others – Need a provisional patent before pitching your idea
Should I be selling this to the DOD instead of healthcare?
Are barriers to entry low in certain ver9cals? Less regula9ons, price agnos9c ?
Could one industry be my first entry point before I tackle another ver9cal?
Should I target government or the private sector?
1. Understand the ver9cal markets of your compe9tors and target least compe99ve ver9cals
2. Are there any investments happening in a par9cular sector, government agency or country that could be an advantage? a. Aper 9/11 and other global incidences – increase in security technologies b. Cleantech -‐ Ontario’s Green Energy Act and FIT program in bringing in investors into the province; China inves9ng $5 B in cleantech in next 3 years
Is there really a market need here?
Whether the answer is a “Go” or “No go” understanding your market / customer / industry dynamics will be key.
pg 24
Usha Srinivasan PhD Director of Market Intelligence MaRS Discovery District T 416-673-8144 E [email protected] W www.marsdd.com