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Everybody in the world
Identifying the right markets How do we go from . . .
Potential Market/Community
1
4
3
2
5
6
Market/community Likely to Purchase product x
this this
to
1 Priority/attractiveness
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Sections:
Overarching Frameworks
Section 1
How do you identify the right
markets?
Section 2
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Sections:
Overarching Frameworks
Section 1
How do you identify the right
markets?
Section 2
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Value Proposition
Market Need
+
How does a company generate cash flow?
= Potential
Cash Flow
Market + + Product
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Exploring the Market Need It’s all about value
Value Element =
Value = The overall additional benefit the customer perceives they will gain from purchasing a product, both direct and non-direct.
The individual elements of a product that a customer will evaluate when making considering making a purchase.
Someone will part with cash for a product if the perceived value is greater than the cost of the product
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Exploring the Market Need It’s all about value
Value Element =
Value = The overall additional benefit the customer perceives they will gain from purchasing a product, both direct and non-direct.
The individual elements of a product that a customer will evaluate when making considering making a purchase.
Someone will part with cash for a product if the perceived value is greater than the cost of the product
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Exploring the Market Need It’s all about value
Value Element =
Value = The overall additional benefit the customer perceives they will gain from purchasing a product, both direct and non-direct.
The individual elements of a product that a customer will evaluate when making considering making a purchase.
Someone will part with cash for a product if the perceived value is greater than the cost of the product
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Exploring Markets
Everybody in the world
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Everybody in the world
Exploring Markets A Product will have multiple Value Elements
Product Value
Value element 1
Value element 2
Value element 3
Value element 4
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Product Value
Everybody in the world
Exploring Markets which different people will respond positively to
Value element 1
Value element 2
Value element 3
Value element 4
Individual
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Everybody in the world
Exploring Markets we can try out different markets for size
Community 1
Community 2
Community 3
Product Value
Value element 1
Value element 2
Value element 3
Value element 4
Potential Communities
Individual
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Sections:
Overarching Frameworks
Section 1
How do you identify the right
markets?
Section 2
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What strategy could we follow?
Build it and they will come
Option 1
Make educated guesses & target
the promising markets
Option 3
Crowd source it
Option 2
Engage with various markets
to see which show most
interest
Option 4
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Option 1
Build it and they will come
Option 1
Make educated guesses & target
the promising markets
Option 3
Crowdsource it
Option 2
Engage with various markets
to see which show most
interest
Option 4
Risks • They may never come if they don’t know about it • Relies on people engaging and spreading the word to their peers
Benefits • Cheap • Very hard to second guess the market so why
bother?
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Option 1
Build it and they will come
Option 1
Make educated guesses & target
the promising markets
Option 3
Crowdsource it
Option 2
Engage with various markets
to see which show most
interest
Option 4
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Option 2
Build it and they will come
Option 1
Make educated guesses & target
the promising markets
Option 3
Crowdsource it
Option 2
Engage with various markets
to see which show most
interest
Option 4
Risks • It is difficult for a community to imagine another's world, particular
issue if community smaller and homogenous
Benefits • Individuals in a wide community will have links to
many other communities
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Option 2
Build it and they will come
Option 1
Make educated guesses & target
the promising markets
Option 3
Crowdsource it
Option 2
Engage with various markets
to see which show most
interest
Option 4
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Option 3
Build it and they will come
Option 1
Make educated guesses & target
the promising markets
Option 3
Crowdsource it
Option 2
Engage with various markets
to see which show most
interest
Option 4
Risks • May tend to lean to well known markets as they are easier to find data for • Relying on other peoples assumptions
Benefits • Cheaper than engaging directly (although Mintel
Reports can be very pricey)
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Option 4
Build it and they will come
Option 1
Make educated guesses & target
the promising markets
Option 3
Crowdsource it
Option 2
Engage with various markets
to see which show most
interest
Option 4
Risks • Focus groups tend be enthusiastic about new products and this does
not always translate into actual buyer behaviour • People don’t always realise what they want
Benefits • Not reliant on assumption, prejudice and
stereotypes • Generate your own product specific data
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Down Selection
Build it and they will come
Option 1
Make educated guesses & target
the promising markets
Option 3
Crowdsource it
Option 2
Engage with various markets
to see which show most
interest
Option 4
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Value Element Analysis
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Value Element Iterative Cycle
Hypothesise types of individuals who
would find the Value Elements appealing
Identify communities or markets that these type of people would
fall into
Perform Attractiveness
Analysis on these markets
Engage with these groups to test the
hypothesis
Update assumptions
Identify key elements of product aka Value Elements
1
2
3
4
5
6
Target Markets
1
3 2
4
Crowdsourced Suggstions
Gut feel
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1 Identify key elements of product aka Value Elements
• Value elements are the attributes of a product that make it attractive to the customer
• This may be physical attributes size, weight, speed and cost but also includes the more emotional attributes such as how it makes you feel, connection to the brand, status symbol
Techniques for identifying new value elements • Identifying other products that share value elements with the target
concept. Look at existing value elements for this new product and see if they are in common with the original.
• Imagine that there are two similar concepts, imagine what elements the customer would look write in a list when deciding which one to buy
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2
• . . .
• . . .
• . . .
Value Element 1
Hypothesise types of individuals who would find the Value Elements appealing People who have or who are or who want . . .
• . . .
• . . .
• . . .
Value Element 2
• . . .
• . . .
• . . .
Value Element 3
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3 Identify communities or markets that these type of people would fall into
• . . .
• . . .
• . . .
Individual 1
• . . .
• . . .
• . . .
Individual 2
• . . .
• . . .
• . .
Individual 3
• . . .
• . . .
• . .
Individual 4
• . . .
• . . .
• . .
Individual 5
• . . .
• . . .
• . .
Individual 6
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3
Individual 1 Individual 2 Individual 3
Co
mm
un
ity
1
Identify communities or markets that these type of people would fall into
Co
mm
un
ity
2
Co
mm
un
ity
3
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4 Perform Attractiveness Analysis on these markets (SMART) Go with your gut • Gut Feel is an important tool but be careful • Attractive analysis tools should be used • SMART is a great such tool
Simple Multi-Attribute Rating Technique (SMART) First must define unique attributes of a market you want to analyse, these are normally: • Total Perceived Value • Size • Price sensitivity of individuals in market • Ease of access • Ability to influence their peers
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4 Perform Attractiveness Analysis on these markets (SMART) Go with your gut • Gut Feel is an important tool but be careful • Attractive analysis tools should be used • SMART is a great such tool
Simple Multi-Attribute Rating Technique (SMART) First must define unique attributes of a market you want to analyse, these are normally: • Total Perceived Value • Size • Price sensitivity of individuals in market • Ease of access • Ability to influence their peers
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4 Perform Attractiveness Analysis on these markets (SMART) • Once you have the individual attributes agreed take each in turn
• Draw a line and at one end mark 0 and the other mark 100
• Place the market which has the worst rating for the attribute in question at end 0 and place the one with the best at end 100
Market 0 100 Market
• Now place the rest of the markets on the line depending on how well you feel each of them rate with respect to each other and note the number that each market is assigned
• Repeat this process for all markets
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4 Perform Attractiveness Analysis on these markets (SMART) • In an ideal world some markets will fall at the top for every attribute. If
this happens then these are the markets to target.
• In the real world markets will get different ratings depending. You can just add up the values but some attributes may be more important to you
• You can use the same system for prioritising the attributes. This will be subjective so it’s important to get a good mix of people in the room whilst doing this
Attrib-ute 0 100
Attrib-ute
• Each attribute will now have a number assigned to it
• If you multiply the markets values for each attribute by the attribute value and sum the numbers, the markets with highest total will be the ones you should target
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5 Engage with these groups to test the hypothesis
6
Update you assumptions and repeat as needed
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Confidence increases with iterations
Hypothesise types of individuals who
would find the Value Elements appealing
Identify communities or markets that these type of people would
fall into
Perform Attractiveness
Analysis on these markets
Engage with these groups to test the
hypothesis
Update assumptions
Identify key elements of product aka Value Elements
1
2
3
4
5
6
Target Markets
1
3 2
4
Crowdsourced Suggstions
Gut feel
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Worked example
The see through toaster
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1 Identify key elements of product aka Value Elements
See through Toaster • You can see the toast as it . . . toasts • Is a novel piece of technology • Good looking design • Etc.
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2
• Tend to burn there toast
• Are interested in the science of cooking
• Want fine control over the colour of their toast
You can see the toast as it . . . toasts
Hypothesise types of individuals who would find the Value Elements appealing People who have or who are or who want . . .
• Like new technology
• . . .
Is a novel piece of technology
• Like good looking design
• . . .
Good looking design
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3 Identify communities or markets that these type of people would fall into
• Students
• Elderly
• . . .
Tend to burn there toast
• Chemists
• Foodies
• . . .
Are interested in the science of cooking
• Foodies
• OCD
• Perfectionists
• . . .
Want fine control over the colour of their toast
• Gadget lovers
• Students
• . . .
Like new technology
• Modern home owners
• Single affluent men
• Japanese
Good looking design
• . . .
• . . .
• . .
etc.
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3
Tend to burn there toast
Are interested in the science of cooking
Good looking design
Foo
die
s Identify communities or markets that these type of people would fall into
Stu
de
nts
Si
ngl
e
affl
ue
nt
me
n
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4 Perform Attractiveness Analysis on these markets (SMART)
Student 0 100 Foodies
Market Size
0 100
Ease of access to market
0 100
Likelihood to pay a premium
Single affluent
men
75
Student Foodies
Single affluent
men
75
65
Foodies Student
Single affluent
men
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4 Perform Attractiveness Analysis on the attirbutes (SMART)
0 100 Market
Size
Attributes
Ease of access
60
Likelihood to pay a
premium
Market Size Ease of access
Likelihood to pay a premium
Total
Single Affluent Males
75 x 60 = 45,000 75 x 0 = 0 100 x 100 = 100,000 145,000
Foodies 0 x 60 = 0 0 x 0 = 0 65 x 100 = 65,000 65,000
Student 100 x 60 = 60,000 100 x 0 = 0 0 x 100 = 0 60,000
Markets in order of attractiveness
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5 Engage with these groups to test the hypothesis
6
Update you assumptions and repeat as needed
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So Remember
1. The best space to operate is:
• Un-Identified Market Needs • Met by new applications of existing technology
2. It is all about value
3. Crowdsource the market identification question
4. Follow an iterative approach
1. Identify value elements 2. Hypothesise individuals 3. Hypothesise communities 4. Analyse 5. Engage 6. Update Assumptions and Repeat