minimizing market risk in the oilfield
TRANSCRIPT
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Three Steps to Minimize Market Risk
Understanding Customer Needs
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Overview
Customer needs are the source of economic value
Product commercialization is the most expensive activity
of the product development process
Successful launches not only have clear financialbenefits, but also support delivery of value to customers
To minimize risk, there are three necessary steps: Define strategic intent
Elicit market feedback
Assess market potential
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STRATEGICINTENT
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Questions to Answer
What needs does it satisfy?
How will it be createdand delivered?
Who do we expect will be willing buyers/users/recommenders?
What is our strategic intent in delivering this product/service? Maximize early revenues for early exit Maximize profits for investment into other new technologies
Maximize market share to establish market familiarity
Grow revenues gradually to focus on service delivery
Improve internal efficiencies
What is this offers importance to the overall business strategy? Product defines the company
Product is a significant new offering
Offer enhancement (e.g., Total Cost of Ownership)
Reduces internal costs
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Market Information is Critical
80% of the new product successes gathered and usedmore market information
75% of the failures knew less than average about themarket at project inception and gathered/used lessmarket information during the product developmentprocess.
-Ottum and Moore, Journal of Product Innovation Management
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UNDERSTAND
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In-depth Interviews
Good Better Best
How TelephoneTelephone with online
presentationOn-site
InterviewerConducted by company
representativeConducted by objective
third party aloneObjective third partyAND technical lead
AudienceIndividual with decision
influenceMultiple individuals withinfluence and authority
Multiple individualsincluding technical
champions
ScopeAreas currently served(i.e., people you know)
Areas currently served andareas of interest to the
company
Areas with the greatesttechnical need
Greater Insight
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Discussion Areas
Technical needs in the area of interest
Needs they perceive the offer to satisfy
Perceived strengths and weakness of the offer
Role/importance of your offer in their workflow
Key buying factors for purchasing similar products/services
Competitors who are currently satisfying similar needs
Perceived strengths and weaknesses of competitors
Willingness to change to new methods (e.g., barriers)
Recommendations for launch (I.e., critical success factors)
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16%
25%
30%
19%
11%
All decisions about tools and processes aremade at a corporate level.
The company corporate level givesguidance about tools and processes but
the final decision is made at a business unit
level.
The company gives guidance about toolsand processes but the final decision is
made at an asset level.
The decision about tools and processes is
made at the asset level without guidancefrom above.
Each individual can use the tools they thinkbest to solve their day-to-day problems.
Which of the following statements best describes how technology is brought into your company and used?
Decisions pushed down
Managementinvolvement
and approval needed
Source: 2008 Gulf Research: AcceleratingAdoption of New Technology
New technology decisions require approval atthe business unit or corporate level
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MARKETPOTENTIAL
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Trade-Offs
Univariate techniques fail to recognize how users make decisions
Choice-based Conjoint Analysis is the gold standard of marketingresearch techniques for measuring:
Price sensitivity Elasticity of demand
Tradeoffs buyers make between features and cost
Trade-offs are important to avoid product launch mistakes such as:
Over-engineering Under-pricing
Targeting the wrong segments
Failure to recognize competitors/alternatives
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Simulating Purchase Decisions
Option 1 Option 2 Option 3 None
Price per image $5,000 $70,000 $20,000
None of TheseOptions
Measurements provided
Absolute andRelativePermeability;
CapillaryPressure
Resistivity; Elastic
Properties;Absolute andRelative
Permeability;CapillaryPressure
Resistivity;Elastic
Properties
Turnaround time 24 hours 1 Week 48 hours
Location of imaging equipment In-country labHouston-based
labRig site lab
O O O O
If the solutions below were available today, which would you choose?
Click the option below.
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DecisionWeights: 45%
50%
DecisionWeights: 17%
16%
DecisionWeights: 25%
27%
DecisionWeights: 13%
8%
Values graphed represent relative utilities
Utilities
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Price Sensitivity Analysis
0%
20%
40%
60%
80%
100%
$5 per ft $12 per ft $15 per ft $17 per ft $20 per ft
%P
refere
nce
Config 1 Config 2
Config 3 Config 4
0%
20%
40%
60%
80%
100%
$5 per ft $12 per ft $15 per ft $17 per ft $20 per ft
%P
reference
Config 1 Config 2
Config 3 Config 4
Segment 2
Segment 1
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"The essence ofstrategy is choosing
what not to do."
Michael Porter
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Actionable Research
Use data resulting from market survey to guideyour team in making decisions to prioritizemarket segments
Review the strategic objectives, integrate
guidance from the interviews, and examinetrade-offs from the market survey
Simulations from your quantitative marketsurvey can guide decisions regarding:
Pricing Distribution
Priority in the product portfolio
Product feature optimization
Positioning and targeted marketing
Acquisitions/alliances
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John McKeever
President, Gelb Consulting Group
281-759-3600
1011 Highway 6 South, Suite 120
Houston, TX 77077
www.gelbconsulting.com