ideas to income: an introduction to marketing (part 1)

History of the GarageToday, the garage stands behind a two-story ShingleStyle home built for Dr. John C. Spencer about 1905. The exact construction date of the garage is unknown,but while there is no evidence of its presence oninsurance maps dated 1908, by1924 it is clearly denoted on updated documents as a private garage.

In 1938, Bill Hewlett and Dave Packard decided to “make a run for it” in business. Dave left his job atGeneral Electric in Schenectady, New York, and returned to Palo Alto while Bill scouted rentals. He found one perfect for their needs on Addison Avenue.Chosen specifically because of a garage he and Davecould use as their workshop, the property also offered athree-room, ground-floor flat for Dave and his new wifeLucile and an 8x18-foot shed for Bill. They shared the$45 per month rent.

The garage served as research lab, developmentworkshop, and manufacturing facility for early products,including the Model 200A audio oscillator. The company,founded in 1939, was named with a coin toss. Thegarage was soon outgrown, and in 1940 HP moved into larger quarters on Page Mill Road.

The garage was dedicated as the Birthplace of SiliconValley in 1989, and the property was acquired by HP in2000. HP is proud to have worked closely with the Cityof Palo Alto to return the house, garage, and shed toconditions much as they were in 1939. The legacy projectwas completed in 2005. In 2007, the property was listedon the National Register of Historic Places.

While the HP Garage is not open for public tours,individual visitors and small groups may view andphotograph the property and landmark from thesidewalk. Addison Avenue remains a quiet residentialneighborhood, and HP urges you to respect the privacyof our neighbors.

Tucked away on a quiet, tree-lined residential street nearStanford University, the HP Garage stands today as theenduring symbol of innovation and the entrepreneurial spirit. It was in this humble 12x18-foot building that college friendsBill Hewlett and Dave Packard pursued the dream of acompany of their own. Guided by an unwavering desire todevelop innovative and useful products, the two men blazed a trail at the forefront of the electronics revolution.

The garage is California HistoricalLandmark No.976—Birthplace ofSilicon Valley. (1939 photo)

HP Garage367 Addison Avenue, Palo Alto, California

The restored HP Garage in 2006.

HP Garage, Silicon Valley

Ideas to IncomeAn Introduction to Marketing (Lecture 1)

MaRS Entrepreneurship 101 January 13, 2010

Peter EvansAdvisor, MaRS Venture [email protected]

What We’ll Cover

  What is Marketing?

  Why it Matters

  Technology is Just One Aspect of how the Game is Played

  The Innovators Paradox: Ideas are your first problem

  Connecting Ideas to Income (Levels)

  Best Practices to Build into your plan

Learning objectives for this session

Goals  Learn some key marketing and strategy concepts   Be able to apply them to an invention or idea   Have an appreciation for marketing as a discipline that builds value for customers   Have Fun

© 2010 Peter M. Evans Slide 1











matters why


What is Marketing?

American Marketing Association

“ The process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.”

Prof. Phil Kotler (Northwestern U.)

“Activities directed at satisfying needs and wants [in a market].”

A general definition


Benefits of Marketing

Customers   Establishes your relevance/credibility with the right first customers

Product   Clearly identifies problems and critical transition points and guides the

development of the right prototype and product

Markets   Creates a more predictable and scalable go-to-market process and alignment

with the right segments

Investors

  Provide a common framework for understanding key areas of the business that affect success. Shows how a company can grow and make money on a sustainable basis

What’s in it for start-ups?

✔

✔

✔

✔


KW-057

CUSTOMERS Who BUYS What, Where,

When, How and Why

Determine Basis of Market Segmentation/Relevance

COMPETITORS Who OFFERS What, Where,

When, How and Why

Determine Basis of Product Differentiation

COMPANY Given your objectives and resources...what can you do, for whom, where and

when?

DEVELOP PRODUCT-MARKET FIT

Does a market exist for your intended price/quality level?

How Marketing FitsThe 50,000 View of How your Product & Market Fit Together

ASSESS PRODUCT-COMPANY FIT

Evaluate Relative Quality and Identify Competitors You Can

Beat

ASSESS MARKET-COMPANY FIT Define Quality and Identify Segments You

Can Serve


Our Organization Today

Corporate Assessment

•  Why do we exist? •  What do we want to be? •  How do we operate? •  What state is our business in today? •  What is the state of our industry?

Customers Markets

Definition & Direction

Our Business Potential

Competitors Partners & Suppliers

Our Desired State

Optimizing Market Position

Reconstructing Market Boundaries

Executing the Plan

Drafting the Plan

How we will Get There

Maintaining Momentum

Industry Assessment

•  What do current/potential customers value? •  How competitive are we? •  What forces have the potential to change

our business? •  How well are we synchronized with partners

across the supply/distribution chain?

•  How do we optimize our current business?

•  Can we reshape our business along key dimensions of customer value?

1

2

3

4

•  How can we get there? •  How will we move the plan

to action? •  How will we know what we

have achieved? •  How will we create an

environment that rewards performance?

Pla

nnin

g

Exe

cutio

n


A Simpler View Superior Marketing Focuses on the Top Quadrant

_____

Degree of Market

Relevance

Degree of Competitive

Differentiation

Low

High

Who Cares?

Why You?


Why Marketing Matters Its in the numbers…

If there are Slides 14 in an Investor Pitch Deck

50% More than

are marketing related


1.  Company Overview & Vision 2.  Management & Advisors 3.  Customer Problem 4.  Market Opportunity/Size 5.  Solution 6.  Benefits/Value Proposition 7.  Success to Date (Customers/

Partners/Patents)

8.  Competitive Advantage/ Intellectual Property

9.  Category Map - Where our Solution Fits

10.  Competitive Advantage (Value Matrix/Value Curve)

11.  Business Model

12.  Marketing & Sales (Customer Acquisition/Sales Cycle)

13.  Financial Projections (3-5 Yr.)

14.  Financing Requirements

How an Investor Sees Marketing Investor Presentation: Table of Contents


1.  Company Overview & Vision 2.  Management & Advisors 3.  Customer Problem 4.  Market Opportunity/Size 5.  Solution 6.  Benefits/Value Proposition 7.  Success to Date

(Customers/Partners/Patents)

8.  Competitive Advantage/ Intellectual Property

9.  Category Map Where our Solution Fits

10.  Competitive Advantage (Value Matrix/Value Curve)

11.  Business Model

12.  Marketing & Sales (Customer Acquisition/Sales Cycle)

13.  Financial Projections (3-5 Yr.)

14.  Financing Requirements

How an Investor Sees Marketing Marketing is threaded across the venture


paradox

the

Ideas Don’t Have Market Context

idea (n.) i·de·a*

 a form, look or appearance of a thing as opposed to its reality.

 a conception existing in the mind

 a thought, a mental image, a notion

 an opinion, view, or belief

 a groundless supposition; a fantasy

 a hazy perception

 a vague impression, fanciful notion, inkling

Source: Random House Webster's Unabridged Dictionary

Even Webster is pessimistic


The Innovator’s Paradox

Product Company Business Technology

Source: Neoset Ventures

Not all technologies can spark the creation of a business

Market Problem Buyer Budget

The Market is Not your Customer


People or organizations with needs and budgets are…

Connecting Ideas to Income

Opportunity Value Proposition Distribution

Strategy Financial Model

Technology Company Business Product

Market Problem Buyer Budget

1 2

3 4

Capability

Opportunity

Aligning Capability with Opportunity












startup

the

Physiological

Safety

Love/Belonging

Esteem

Self- Actualization

Maslow’s Hierarchy of Needs

Physiological

Safety

Love/Belonging

Esteem

Self-Actualization

breathing, food, water, sex, sleep, homeostasis, excretion

security of body, of employment, of resources, of morality, of the family, of health, of property

friendship, family, sexual intimacy

self-esteem, confidence, achievement, respect of others,

respect by others

morality, creativity,

spontaneity, problem solving, lack of prejudice,

acceptance of facts

Maslow’s Hierarchy of Needs

On-Trend

Relevant

Differentiated

Synchronized

Engaged

Sustainable

The Startup Hierarchy of NeedsWhat’s required for market success?


Market: “On-Trend”

Relevant

Differentiated

Synchronized

Engaged

Sustainable

The Startup Hierarchy of NeedsWhat’s required for market success?


TREND IS YOUR FRIEND WHEN YOU LOOK AT THE MARKET IS THERE A WIND AT YOUR BACK ?

BE CAREFUL…EVEN TURKEYS CAN FLY IN A TORNADO… © 2009 PETER EVANS

CESDigital eReaders


CES PictureDigital Health


CES Picture3D TV


CESCut the Clutter


$0.01 $0.10 $1.00

$10.00 $100

$1,000 $10,000

$100,000 $1,000,000

$10,000,000 $100,000,000

$1,000,000,000

1959 1969 1979 1989 1999 2009 Source: Hans P. Moravec 1998-2003]

Dol

lars

per

MIP 10x reduction every

4.25 years

10x reduction every 7.5 years

Social

Enviornmental

LEGAL

  LEGAL

  PATENTS

SOURCE: NVCA / Thompson Reuters Exit Poll SOURCE: NVCA / Thompson Reuters VC Fundraising Q3

Total economic value created by VCs.

Total amount of money raised

by VCs.

Trendspotting TechniquesP-E-S-T-L-E-C 1.  Political: Identify key developments including areas such as tax policy, employment laws,

environmental regulations, trade restrictions and reform, tariffs and political stability.

2.  Economic: Economic growth/ decline; interest rates; exchange rates and inflation rates; wage rates; minimum wage; working hours; unemployment (local and national); credit availability; cost of living.

3.  Sociological: Cultural norms and expectations; health consciousness; population growth rate; age distribution; career attitudes; attitudes and habits regarding family, career, entertainment; emphasis on safety and global warming.

4.  Technological: What new technologies affecting the rate of change in your market and also impact changes to barriers to entry in given markets, and changes to buyers financial decisions.

5.  Legal: What is happening with respect to cases being settled in the courts and the overall business climate in the context of how companies are interacting? Do these developments have a bearing on areas such as intellectual property rights?

6.  Environmental: What is happening with respect to ecological and environmental aspects? Many of these factors will be economic or social in nature.

7.  Capital: Attitude and actions of investors (Venture Capitalists, Angels) and their propensity to invest in certain sectors (as measured by deals done)


✔

✔ Economic

Political

Sociological

✔ Legal

Technology

Capital


✔ Economic

Political

Sociological

✔

✔ Legal

Technology

Capital


Technological

Still

the Framing

Size

The Advertising Industry (U.S.)

Can the market category support another entrant?

Source: Universal/McCann


Landscape

Source: Greentech Media (2007)

Example: Who’s who in cleantech


Landscape Example: Who’s who in personal digital health

Physiological Measurement

& Tracking

Wellness/ Fitness

Education

Web Care Corporate Wellness

Chronic Care Management

BodyBugg/ Nike+iPod

Calorie Intake/ Weight Control

Pedometer/ Vital-Sign Monitor

Fitness Club/ Personal Trainer

Worksite Exercise/ Coaching

Senior Fitness Programs

Online Engagement

Health Risk Assessment

Nurse Coaching

Personal Health Innovations (Care Enhancement Coordination)


Interactions Do you know how key sub-categories interact within the market?

Source: IBM Institute for Business Value


ScopeHow do competitors service the category?

Source: Booze Allen Hamilton

Apache

Alyeska

Lyondell

Koch

Union Pacific

Common carriers

QuickTrip

GATX

Tosco

Integrated major

Petroleum Industry Value Chain


ShareIs there a payoff associated with the area you serve?

UPSTREAM

1965

1995 11.0¢ 10.8¢ 13.0¢ 6.2¢ 13.0¢ 18.3¢ 40.4¢

32.5¢ 56.6¢ 45,2¢

3.0¢ 1.8¢ 2.0¢

DOWNSTREAM TAXES

ExplorationDevelopment & Production

Refining & Marketing

Petroleum Industry Value Chain Source: Booze Allen Hamilton


Visual Recognition Systems

What we Can Learn from Hollywood The power of convergent categories

Digital Signage

GPS Location-Based Services Technologies

Pay as You Drive Insurance

Social media (blogger) performance monitoring) Reputation Management

for UGC

Mobile Smart Phone Applications

Personalized Digital Health Programs

Gesture Based User Interfaces “Edutainment Software”

Who Cares? Emerging Category Emerging Technology


On-Trend

Customers: “Relevant”

Differentiated

Synchronized

Engaged

Credible

Sustainable


LESS COWBELL IT’S TIME TO STOP ADDING “UNRECOVERABLE COSTS” TO MAKE PRODUCT

PERFORMANCE IMPROVEMENTS THAT CUSTOMERS WON’T PAY FOR… © 2009 PETER EVANS

Innovation: Thinking Strategically10 ways to break from the herd

Source: Doblin Analysis (Division of Monitor Group)

Core competence planning: A lot of the competition at the center

Offering & process

Innovation planning: Many big breakthroughs found at the edges

Business model

Customer experience

Core process

Process. Enabling process

Business model

Finance Networking Product

performance

Offering

Product system

Service Channel

Delivery Brand Customer

experience

Hi

Lo

Core process


Business model


performance

Offering Product system

Service Channel


experience


Innovation Payoff A herd of companies clustered in the centre

Volume of innovation efforts Last 10 years

Hi

Lo

Core process


Business model


performance

Offering Product system

Service Channel


experience

Relative Value Created last 10 years

Less than 2% of projects produce

More than 90% of value…

There is a fundamental shift in value creation as a result of innovation at the edges


Innovation Payoff Value Creation opportunities are found at the edges

10 Types of InnovationExamples Mapped to the Doblin Framework

Business model

Finance Networking

2. Networking enterprise’s structure/ value chain

1. Business model how the enterprise makes money

Channel


experience

10. Customer experience how you create an overall experience for customers

8. Channel how you connect your offerings to your customers

9. Brand how you express your offering’s benefit to customers

Core process


3. Enabling process assembled capabilities

4. Core process proprietary processes that add value

6. Product system extended system that surrounds an offering

Product performance

Offering

Product system

Service

7. Service how you service your customers

5. Product performance basic features, performance and functionality


Developing a Value Driven Strategy

The Most Important Equation You Should Remember


Average Value for

Quality Buyers

Average Value - “Stuck in the

Middle”

Superior Value via

Higher Quality

Average Value for

Price Buyers

Superior Value via

Lower Prices

Maximum Buyer Value

Inferior Customer Value (Over-priced or Over-specified)

Higher

Parity

Lower

Lower Parity Higher

Relative Quality

Relative Price

Minding your P’s & Q’s What’s YOUR Strategy for Adding Value for Customers?


Creating Buyer Utility Stages & Utility Levers

Stages of the Buyer Experience Cycle (2)

Purchase (3)

Delivery (4)

Use (6)

Maintenance (7)

Disposal

Customer Productivity

Simplicity

Convenience

Safety/Risk

Fun and Image

Environmental Friendliness

Util

ity L

ever

s

(5) Supplements

(1) Eval./Trial/Reco.*

Social Responsibility*


Source: Blue Ocean Strategy – Kim & Maubourgne * Indicates revision to model

The Buyer Experience Step by StepAre We Creating Barriers for Customers?

Does the product require training or expert assistance?

Is the product easy to store when not in use?

How effective are the product’s features and functions?

Does the product or service deliver far more power or options than required by the average user? Is it overcharged with bells and whistles?

(2) Purchase (3) Delivery (4) Use (5) Supplements (6) Maintenance (7) Disposal

How long does it take to find the product you need?

Is the place of purchase attractive and accessible?

How secure is the transaction environment?

How rapidly can you make a purchase?

How long does it take to get the product delivered?

How difficult is it to unpack and install the new product?

Do buyers have to arrange delivery themselves? If yes, how costly and difficult is this?

Do you need other products and services to make this product work?

If so, how costly are they?

How much time do they take?

How much pain do they cause?

How easy are they to obtain?

Does use of the product create waste items?

How easy is it to dispose of the product?

Are there legal or environmental issues in disposing of the product safely?

How costly is disposal?

Does the product require external maintenance?

How easy is it to maintain and upgrade the product?

How costly is maintenance?

(1) Eval/Trial/Reco *

Can you experience the product/service before purchase?

What are the perceived risks associated with purchase?

Are the evaluation criteria clearly understood by buyers?



Creating Buyer UtilityStages & Utility Levers

Enterprise Server

Stages of the Buyer Experience Cycle (2)

Purchase (3)

Delivery (4)

Use (6)

Maintenance (7)

Disposal

Customer Productivity

Simplicity

Convenience

Safety/Risk

Fun and Image

Environmental Friendliness

Util

ity L

ever

s

(5) Supplements

(1) Eval./Trial/Reco.

*

Social* Responsibility



Homework Assignment

Thank You

Peter Evans, Advisor, MaRS Venture Group

Email: [email protected] Twitter: @TechMarketer

ideas to income: an introduction to marketing (part 1)

Business

marketing marketing

marketing lecture

marketing mattersits

marketing fitsthe

key marketing andstrategy

peter evans advisor

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income levels marketing