Jaine Lucas Executive Director, IEI. MARKET vs. INDUSTRY MARKET The organized exchange of goods,...

Jaine LucasExecutive Director, IEI

MARKET vs. INDUSTRY

• MARKET The organized exchange of goods, services, or resources between buyers and sellers within a specific geographic area and during a given period of time. • A buyer gives up money and gets a good, while a

seller gives up a good and gets money

• INDUSTRY One or more business firms that produce similar products

MARKET vs. INDUSTRY

• Examples of industries– Automotive– Cosmetics– Appliances– Baking

• Examples of markets– 2014 Philadelphia hospitality market– May 2013 global smart phone market– 2013 Canadian soft drinks market

MATCHING PRODUCTS & SERVICES WITH CUSTOMERS

REMEMBER WHO PAYS!

• The key to success is falling in love with your customers

You must know them, study them, honor them, serve them…

• The single most crucial step towards starting a successful business is discovering and articulating what you can provide that your customers want enough to pay for

KNOW YOUR CUSTOMERS!

1. Why do your customers want your product or service?• What do you provide?• What are your customers really buying?• How much will they pay?

2. Who, exactly, are your customers?3. How do your customers buy?

• When do they buy?• Where do they buy?• What rules or expectations govern their buying?

REMEMBERING THAT…

• There can be many that influence purchasing decisions

• The people who use or consume the product may not be the one who actually makes the purchase

• Especially true in business and in families

EXERCISE

WHY PEOPLE AND BUSINESSes BUY…

• DESIGNER HANDBAGS

• PUBLIC RELATIONS SERVICES

WHY CUSTOMERS BUY

• People and businesses have different requirements

• Both people and businesses buy benefits

• They buy solutions to their problems and satisfaction of their needs and wants

• People and businesses do not buy features

• Like torque or braking power or acceleration

• Products or services are a means to an end

• People or businesses may not buy what you think you sell

WHY CONSUMERS BUY

• Meet biological needs• Increase security• Gain status or recognition – to belong• Live out fantasies• Reduce anxiety or other strong emotions• Save time or money• Solve problems• Can be irrational, more emotional

WHY BUSINESSES BUY

• Provide their own goods or services more cost effectively

• Save money

• Cement relationships

• Position themselves strategically

• Improve public relations

• Solve problems

• More rational, logical

WHAT DO BUSINESSES CARE ABOUT?

• Quality • Dependability• Cost • Customization• Market exclusivity• Delivery schedules• Guarantees• Strategic relationships

FORCES THAT AFFECT BUYING BEHAVIOR

BUYERS BUY BENEFITS

• A benefit is the value a customer places on a function and/or feeling the product produces through its features

• Identify - through testing - the few, crucial benefits that will affect customers’ buying decisions...• Use these to drive marketing strategy,

packaging, pricing, branding, and sales plans

FEATURES SUPPORT BENEFITS

• Features are what make up the product’s or service’s ability to perform functions for customers

• Some features are more equal than others:• Of the dozens of features an iPad

may have, perhaps only two or three – such as a high res camera or downloadable apps – might be important to customers

• Which differentiate you from the competition?• Are they protected or protectable by

copyrights, patents or trademarks?

EXERCISE

BENEFIT

1.2.3.

FEATURES THATSUPPORT BENEFIT1.2.3.

METHOD TO COMMUNICATE BENEFIT1.2.3.

COMMUNICATE BENEFITS

KNOW YOUR CUSTOMERS!

1. Why do your customers want your product or service?• What do you provide?• What are your customers really buying?• How much will they pay?

2. Who, exactly, are your customers?3. How do your customers buy?

• When do they buy?• Where do they buy?• What rules or expectations govern their buying?

WHO WANTS YOUR PRODUCT OR SERVICE?

• Develop an intimate knowledge of who buys• Customers’ behavior• Personal and institutional motivations• The key words, concepts, associations

that trigger behavior• Segment who buys

• Identifiable, organized, or organize-able & reachable subgroups of customers

• Marked by demographics, behaviors, location, interests

CONSUMER CUSTUMER PROFILE

Describe your ideal customer or client by answering the questions below. The questions take you from specific characteristics to a definition of a market or market segment:• How will they use your product or service?• Why might they buy it?• What will they pay for it?• Are they men, women, or both?• What is their age group?• What is their approximate average income?• What is their employment type (blue-collar, white-collar, managerial,

professional, homemaker, etc.)?• What is their lifestyle (personality, self-image, etc.)?

CONSUMER CUSTUMER PROFILE

• Where are they (local, state, national and globally)?• How many of them are there?• How many do you expect to get as customers?• What percentage of the market do you expect to get?• What’s the growth trend of your target market?• What are their buying habits?• What magazines do they read?• What organizations do they belong to?• What conventions or events do they attend?• Is there a directory that lists them?• Are there mailing lists of them available?• What is the best way to reach them?

BUSINESS CUSTOMER PROFILE

Describe your ideal customer or client by answering the questions below. The questions take you from specific characteristics to a definition of a market or market segment:• How will the firm benefit from buying your product or service?• How much are the benefits worth to them – in savings, increased

market share, profile, etc.• Who buys? Who influences? Who facilitates? Who decides? What

buying procedures are in place? What controls?• What level of service to they expect?• How are they used to buying? Salesperson? Directly? Other?

BUSINESS CUSTOMER PROFILE• How is the transaction started, facilitated, completed?• What industry norms govern the transaction? Discounts, payment

terms, warranties, types of contracts.• Where are they located ?• What piece of the market are you aiming for? • How many of target firms are there?• How many do you expect to get as customers?• What’s the growth trend of your target market?• What are their buying habits?• What organizations do they belong to?• What conventions or events do they attend?• Is there a directory that lists them?• Are there mailing lists of them available?• What is the best way to reach them?

WHAT IS MARKET SEGMENTATION?

Process of dividing a market into subsets of consumers with common needs or characteristics

SEGMENT ANALYSIS

• Talk to customers!• Interviews & surveys

• Observe customers using/buying similar items• Read what they read, go where

they go• Talk to others who serve the same customers• How do they segment,

communicate, etc?• Examine how competitors segment• Define segments and estimate size

TARGET SEGMENTS[ CONSUMERS ]

TARGET SEGMENTS[ CONSUMERS ]

TARGET SEGMENTS[ CONSUMERS ]

MORE MARKET SEGMENTATION

• Use-Situation• Time, objective, location & person

• Benefit Segmentation• Convenience, social acceptance,

value, economy

• Hybrid Segmentation• Demographic/psychographic• Geodemographics www. claritas.com, PRIZM• SRI VALS – Innovators, thinkers, believer,

achievers, strivers, experiencers, makers survivors

TARGET SEGMENTS[ BUSINESSES ]

EXERCISE

CUSTOMER PROFILE• Define your customer• Define his/her segment• What channels would you

use to reach your customer?

KNOW YOUR CUSTOMERS!

1. Why do your customers want your product or service?• What do you provide?• What are your customers really buying?• How much will they pay?

2. Who, exactly, are your customers?3. How do your customers buy?

• When do they buy?• Where do they buy?• What rules or expectations govern their buying?

EXCHANGE ANALYSIS

• What changes hands?• Why? What is the value proposition to the buyer?

What dimensions of value matter?• Who sells? Who buys? Who influences? Who

facilitates? Who holds the most power?• When does the exchange happen? How long is the

sales cycle?• How are transactions started, facilitated, completed?• What rules, regulations, norms shape the exchange?• What norms govern the exchanges?

• Discounts & payment terms, warranties, types of contracts, style & culture

PERCEPTUAL SPACE

• How does your product or service stack up against competitors?

• What mind space do you occupy?• What unique value can you offer?• What will be your unique selling proposition?

PRODUCT COMPARISON CHART

• List competitive products/services – the from customers’ point of view

• Note crucial dimensions of value

Price Quality Segment ChannelProduct1 $$$ H A SalesProduct2 $ L B WebProduct3 $$ M C DirectSubstitute1 $ L D Sales

Substitute2 $ M E Shows

Notes

PRODUCT COMPETITIVE ANALYSIS: COMPETITIVE OFFERINGS MATRIX

Differentiation

Att

racti

ven

ess

L

HH

Product Y

Product X

Product Z

Product B

Product A

Product C

L

PRODUCT COMPETITIVE ANALYSIS: PERCEPTUAL MAP

Quality

Cost

Map key products or services along dimensions most important to buyers & influencers

WHAT IS A VALUE PROPOSITION?

• Or “unique selling proposition”• One of two essential elements for effective

positioning (communicating benefits is the other)• Distinct benefit or point of difference for the

product or service• Consequences of poor/ineffective value

proposition?• Little or no market uptake = failure• Perception of product or service as “me too”

“WHAT’S IN IT FOR ME?”- CUSTOMER

SEGMENTATION

TARGET SEGMENT

MARKET

POSITION

PSYCHOLOGICAL

VALUEPROPOSITION

VALUE PROPOSITION

• Define what you provide/will provide• As simply and concretely as possible, emphasizing

function, not form• Describe your customer

• As precisely as possible, emphasizing why they care, i.e., the type and magnitude of the problem they have that you solve

• Define precisely the value you provide to your customer in terms of benefits they will receive• Quantifying you claim when possible, especially for

businesses, and supporting it with testimony

VALUE PROPOSITION[ EXAMPLES ]

• iPod: “best digital jukebox”• Lexus: “quality, zero defects”• Dell: “customized PCs made quickly and

sold economically”• Southwest: “friendly, fun customer

service at economical prices”• Gap: “wearable, affordable, hip American

style”

WHAT’S THE VALUE PROPOSITION?

• Dove Soap

• V-8 Juice

• McDonald’s Happy Meal

EXERCISE

WRITE YOUR VALUE PROPOSITION“Our company provides x that does y

(solves y problem) for z in a way that. . . .”

“Automsoft’s RapidPharma provides 100% accurate and reproducible data at the finest level to help pharmaceutical firms bring new production

processes to scale, while providing batch assurance and full compliance with CFR Chapter 21 Part 11.”

SOURCES OF CONSUMER DATA

• www.fedstats.gov – economy, business and all demographics of US population

• www.census.gov – data on age, education, income and occupation of US residents by state and region

• World Fact Book – key stats on any country worldwide www.cia.gov.publications.factbook

• Claritas – demographic and lifestyle profiles• Yankelovich – consumer lifestyles and consumption

patterns• Mediamark Research – segmentation studies of consumers’

leisure activities and buying cycles

BIBLIOGRAPHY

Matching Products & Services with Markets• Tony diBennedetto lectures• Jaine Lucas lectures • Jeffrey Dobkin, How to Market a Product for under $500!, (Danielle

Adeams Publishing Company, 1995).• Craig Fleisher & Babette Bensoussan, Strategic and Competitive

Analysis (Prentice-Hall, 2003).• TL Hill lectures• Jill Kapron, BizPlan Express, (South-Western College Publishing

Company, 1998).• Philip Kotler, Marketing Management, 9th Edition, (Prentice-Hall,

1997).• Small Business Development Center business planning program –

2000.• Barbara Wright presentations