#3 in the BCIC-New Ventures Seminar Series was tonight in Vancouver and a matching 6:00pm start time for game #1 between the Vancouver Canucks and the Nashville Predators didn’t seem to impact attendance.
Tonight’s topic was Market Research and Product Marketing and Rocket Builders‘s Dave Thomas was back to present but this time he welcomed guest presenter Claire Booth of Lux Insights, a local market research company. Booth spent 10 years with Ipsos – one of the world’s largest market research companies – and is an expert in both qualitative and quantitative research.
Thomas opened the two hour seminar by outlining the learning objectives for the evening:
- Taking the time for market research increases your chances for success
- Understand concepts of technology adoption cycles and whole product and how it impacts market entry
- Understand how product positioning influences all messages in marketing materials
- Understand how pricing is determined and what models can be employed
Referencing Geoffrey Moore’s Crossing the Chasm, Thomas argues that tech companies can cross the chasm by targeting a very specific niche market and by beginning with the end goal in mind.
When conducting your initial market research, the following key questions should be asked:
- What is your target market?
- How big is it?
- Who buys your product?
- Why do they need it? – Is there a significant problem you’re solving? People will pay a lot more for a painkiller than a vitamin
- Who pays for it? – Financial buyer and actual consumer are sometimes different people
- Who uses it?
- How does the customer fix the business problem you are addressing today?
- How much are they willing to pay?
- Why would they buy from you?
- What business problems are more important to them than this one?
Identify market opportunities by segmenting market
Revolutionary Products:
- Segment originates with technology or product
- Vendors can’t predict next innovation or its consequences
- Examples: lightbulbs, iPod, and the smartphone
Evolutionary Products:
- Segment exists but the challenge is to refine an existing offering.
Why Segment?
- Focuses scarce marketing and development resources on target customer group
- Narrows whole product definition
- Limits real competitors
- Leverages past successes into other segments
- Allows the benefits of market leadership to develop more quickly
Thomas calls on Claire Booth to expand on Market Research – in two slides:
Market research 101
Primary Research – Face to face, surveys. Targeted. Less fast and cost investment (time and money). For your eyes only.
Secondary Research – Cruising the Internet, books, articles and white papers. Broad strokes. Fast. Available to everyone online.
Market research 201
Primary research can be qualitative or quantitative
- Qualitative: A few people, in person or telephone, in-depth. Answers the why.
- Quantitative: Lots of people, surveys, stats, decisions. Answers the other Ws. This is what Eric Ries of the Lean Startup methodology refers to as “getting out of the building” to conduct real-world research.
Thomas returns to talk about the Technology Adoption Cycle
If you sell on the Internet, there’s almost invariably a couple of people who want to buy exactly what you sell. But they may be early adopters — there may not be hundreds of thousands like your first few customers.
- Early adopters – tech enthusiasts
- Early adopters – visionaries
- Early majority – pragmatists
- Late majority – followers
- Late adopters – laggards
How do you Cross the Chasm from early adopters to the majority?
- Segment – vertical applications/target customer
- Redefine & understand target customers whole problem and give them a compelling reason to buy
- Define & develop the whole product (and how can you do it better than the competition?)
- Develop marketing plan
The Whole Product Concept
- Determines which pieces the company intends to provide
- Remaining areas must be filled in by partners
- Provides focus on customer requirements
- Time to market acceptance accelerated
Product Positioning & The Positioning Statement
Positioning Criteria:
- Who is the target customer? Is this the decision maker?
- What is the compelling reason to buy?
- What is the product category?
- What is the key benefit of that product category?
- Who is the main competitor?
- What is the key differentiation of this product?
Positioning Statement:
- For target customer
- Who compelling reason to buy
- Our product is a product category
- That key benefit
- Unlike main competitor
- Our product key differentiation
Thomas uses the positioning statements of the Apple’s first iPod as well as Starbucks as examples. Be sure to reference Thomas’ powerpoint presentation when it is available online.
Pricing Strategies
- Cost-plus pricing – set the price at production cost plus a certain profit margin
- Target return pricing – set the price to achieve target return-on-investment
- Value-based pricing – base the price on the effective value to the customer relative to alternative products
- Psychological pricing – base the product on factors such as signals of product quality, popular price points and what the consumer perceives to be fair.
Thomas suggested that group-buying sites like Groupon are now influencing pricing decisions and referenced his sailing school’s recent Groupon offering. I suspect his presentation next year will include a full report on the success (or failure) of his Groupon discounting experience and advice is the group-buying trend continues.