entrepreneurship 101 - the market research business

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The Market Research Business

Presented by: Chris SullivanVice-President, Finance & OperationsIDC (Canada) Ltd.

16 January 2008

©2007 IDC

My backgroundMy background

After a year at the University of Western Ontario Computing Centre, 8 years with a small Canadian company, mostly managing software development

Started as a timesharing operation in mid-70’s Developed communications gear for own use in 1977 Marketed it as a product in 1978, the year I joined (now 22 employees) Won huge contract with Ford Motor Credit in 1982 Went public in about 1983 at $7 Minority interest taken by Rogers Cable Opened offices worldwide, then closed them (around 140 employees) Stock fell to $1.50 Developed technology for Home Shopping, major investment by JC Penney I left the company (July 1986) Stock rose to $100 Sold off the communications division Home Shopping Pilot failed Stock fell to $1.50 Sold off its technology Delisted from TSE (now TSX)

©2007 IDC

My background, cont’dMy background, cont’d

Went to Digital Equipment Corporation in 1986

Stock at $100, business growing fast, huge margins, hot products and hiring boom

Chased IBM into the enterprise while Sun Microsystems chipped away at the low end

Raised VMS prices exploiting demand inelasticity of proprietary operating system making excellent short term profits.

Demand turned out to be elastic in long term as more and more customers adopted UNIX

Shrank from 140,000 employees to 50,000

Recovered slightly in late 90’s, then bought by Compaq in 1998

©2007 IDC

My background, cont’dMy background, cont’d

Compaq Canada Bought Extreme Networks, Tandem, Digital Product lines had nice architectural fit, but sales approach was

totally different I left for IDC Growth slowed, bought by HP

IDC Canada Started in Global partnering and alliances practice, based in

Toronto, mostly doing workshops in various parts of the world Moved to manage marketing and sales operations Moved to manage Finance, HR, IT, Research Operations,

Research & Analysis, and the small vendor program called the “Market Acceleration Program (MAP)”

©2007 IDC

About my companyAbout my company

IDC analysts in 50 countries around the world Over 850 analysts providing a global information

network

©2007 IDC

Researching the researchersTop 6 companies in IT Market ResearchResearching the researchersTop 6 companies in IT Market Research

Est. 2005 Revenue ($M)

Est. 2005 Growth

Est. 2001 – 2005 CAGR

Est. 2005 Market Share

Gartner 989 10.6% 0.7% 42.3%

IDC 266 14.2% 8.8% 11.4%

Forrester 153 10.7% -0.9% 6.6%

AMR 44 10.0% -2.7% 1.9%

Ovum 33 22.8% NA 1.4%

Yankee 29 0.0% -6.5% 1.2%

*Source: Outsell’s Publishers and Information Providers Database, 2006

©2007 IDC

Key Trends in Emerging Markets – Central Europe, Middle East, AfricaKey Trends in Emerging Markets – Central Europe, Middle East, Africa

EU Enlargement The 2004 enlargement is still impacting IT markets in new

member states; 2007 saw new additions to the union.

Russian JuggernautHigh oil prices, manufacturing, and other extraction industries have

turned Russia into an economic powerhouse.

Transition in the Middle East Economic liberalization, development, and modernization are opening IT and telecom markets and driving investment as oil revenue floods the region.

Africa Enters the Information Age IT and communications are key to economic development. Low installed bases and a move toward mobility are creating significant opportunities.

©2007 IDC

Emerging Asia* Approaches BRIC-Like Performance

A US$15.6-billion IT market containing almost 800 million people, with IT spending growing 80% over its market size in 2005. (*comprising Pakistan, Sri Lanka, Bangladesh, Thailand, Malaysia, Vietnam,

Indonesia, and the Philippines)

Unstoppable Growth in China & India Benefits Surrounding EconomiesIncreased investments in China and India have sent costs spiraling in these markets, which benefits economies like Pakistan and the Philippines, as companies realize greater cost benefits there.

China Goes Online Over 150 million Internet users will drive rapid developments in the Internet market and create new IT and telecom opportunities.

Key Trends in Emerging Markets – Asia-PacificKey Trends in Emerging Markets – Asia-Pacific

©2007 IDC

Key Trends in Emerging Markets – Latin AmericaKey Trends in Emerging Markets – Latin America

Stable Economic Environment With historically low interest rates, a weak U.S. dollar, more financing options available, and low inflation, Latin American

consumers have high confidence leading to an explosion in the consumer electronics markets.

Brazil: Growth Acceleration ProgramMeasures to stimulate investment in infrastructure and tax

breaks for targeted sectors will help accelerate GDP growth beyond the country’s sluggish long-term average, increasing

IT spending in the country.

Mexico: New rules for Government IT SpendingThrough the Austerity Decree the federal government declared its preference to contract IT services instead of purchasing hardware or software that eventually goes out of date.

©2007 IDC

Analyze The FutureSupply-SideShipments

WW

Industry/Pop Demographics

WW

Standard Definitions & Taxonomies

WW

Forecast Methodologies

WW

MarketModels

WW

Customer Behavior

(Global Surveys)WW

Technology Adoption

(Panels/SurveysWW)

Analyst Insight(50 Countries

WW)

How We Analyze The Future

©2007 IDC

What is marketing?What is marketing?

Brand image

Qualified leads

Media Relations

CollateralPricing

Events

©2007 IDC

Which is the more appropriate measurement?Which is the more appropriate measurement?

Time

First time buyers

Revenue

InnovatorsEarly

MajorityLate

Majority LaggardsEarly

Adopters

11 22 33 44

“early market”

1 S.D.1 S.D.

©2007 IDC

Key Life-Cycle QuestionsKey Life-Cycle Questions

1 “Will this work for me? in my environment?”

“Can you make my life easy when I buy your product?”

3

4“Can you reduce my buying costs?”

“Can you solve my problem?”2

Voice of the customer asks…

© Frank Lynn & Associates, IDC

©2007 IDC

Buyer motivationBuyer motivation

11 “I will work with vendors of bleeding edge technologies, to fundamentally reshape my business or my competitive environment”

“I will use stable but not yet common technology to develop a competitive advantage

22

“I will deploy proven technology to deliver services expected by my customers”

33

44“I will buy commodity technology to cut costs”

© IDC

©2007 IDC

For ExampleFor Example

©2007 IDC

Co-Specialization Alliance ObjectivesCo-Specialization Alliance Objectives

Time

Product capability (technology alliances)

Endorsements, embedded OEM, access channels & integrators, availability of resources

Endorsement, global support and financial resources, OEM agreements

Endorsement, global support and financial resources, MDF

Differentiation Pipeline sharing, access to new markets (vertical, solutions, etc.)

MDF, product support, regional coverage

Support, MDF

Technology revitalization, protection from obsolescence

Access to large & complex deals

Packaging and bundling


protection from obsolescence; marketing cachet

Access to large & complex deals



1 2 3 4

1

2

3

4

Vendor A

Vendor B

© IDC

©2007 IDC

Why does the world need market intelligence?Why does the world need market intelligence?

You can’t manage what you can’t measure– G. Edwards Deming

Everything that can be counted does not necessarily count; everything that counts cannot necessarily be counted.

– Albert Einstein

©2007 IDC

Why is this important?Why is this important?

WW Installed Base - Millions

©2007 IDC

The new reality for marketersThe new reality for marketers

“Today, marketers are in a ‘high accountability’ environment where they are being called to the table — and asked to bring hard numbers with them when they come. Most of us aren't prepared for this.

“The lack of [marketing] accountability makes it very difficult to track the financial impact of marketing investments. And so marketing becomes abstract to the CEO ... .”

– Harvard Business Review ("Bringing Customers into the Boardroom," November 2004)

“We’re struggling with how to respond to our executives asking us: ‘What value is marketing adding to the company?..’”

– IDC Client

©2007 IDC © Frank Lynn & Associates

Hit Rate MarketShare

PresenceProduct

×××× ==××

Preference

Estimating market share

To estimate Revenue from market share, simply multiply by the total revenue in the market in question. This information is available from market research firms!


Product line coverage: How much of the market our product

targets Form/fit/function/price point equivalency


PresenceProduct

×××× ==××

Preference

50%50%


©2007 IDC

For what percentage of the available market do we get to propose our product?

What percentage of the time can our product be sold to the end user?Geographic presenceCustomer segment presenceSolution presence

© Frank Lynn & Associates


PresenceProduct

×××× ==××

Preference

50%50% 50%50%


©2007 IDC

How often is our product offered for sale?What is our share of market within our own partners?

© IDC

50%50%

MarketShare

Hit RatePresenceProduct

×××× ==××

Preference

50%50% 50%50%



How often do we win the sale?

50%50%

MarketShare


×××× ==××

Preference

50%50% 50%50% 50%50%50%50%
