Management of Technology & Innovation MKTG5603 ... · Analysis of the external market •Customer...

©Mazzarol 2015 all rights reserved

Management of Technology & Innovation MKTG5603 &

Biotechnology Commercialisation MKTG5604

Workshop 2 Part A: Assessing

the Market & Customer Needs Professor Tim Mazzarol – UWA Business School

UWA Business School MBA Program

M Biotech Program

[email protected] MOTI MKTG5603

BC MKTG5604



Ref. G. Moore (1996) Rogers (1995)

MAINSTREAM

MARKET

EARLY

MARKET The

Chasm

Early Stage

Commercialisation

Mainstream Production

Crossing the Chasm


Bowling Alley The

Chasm *

Deal-Driven

Marketing

Early Market

Tornado

Mass Marketing

Main Street

Mass Customisation

Source: Phillip Lay, Making Partnering Work Along the Technology Adoption Life Cycle, Software Developer & Publisher,

July/August, 1997)

Niche Marketing End of Life

A Marketing Perspective


Result

Demonstrability

Job

Relevance Perceived

Ease of Use

Output

Quantity

Intention to use Usage

Behaviour

Technology Acceptance Model 2

Image

Subjective

Norm

Perceived

Usefulness

Voluntariness Experience

Sources: Legris, Ingham & Robinson, (2003)


Supplier

Marketing Efforts

-Targeting

- communication

- risk reduction

Social Network

-Interconnectedness

- Network participation

Environmental

Influences

- Network externalities

- Competitive pressures

Perceived

Innovation

Characteristics

-Relative advantage

-Compatibility

-Complexity

-Trial ability

-Observability

-Uncertainty

Adopter

Characteristics

-Size

-Structure

-Org innovativeness or

Strategic posture

Awareness

Consideration

Intention

Adoption

Decision

Continued Use

Individual

Acceptance

Source: Frambach & Schillewart, 2002

Framework of organisational

innovation adoption


Organizational

Facilitators / internal

marketing

-Training

-Social persuasion

-Organizational support

Personal

Characteristics

-Demographics

-Tenure

-Product experience

-Personal values

Attitude towards

innovation

-Beliefs

-affects

Organizational

Adoption decision

Source: Frambach & Schillewart, 2002

Personal dispositional

innovativeness

Social Usage

-network externalities

-peer usage

Individual Acceptance

Framework of individual innovation

acceptance in organisations


The Customer Development Manifesto

• Rule 1: There are no facts inside your building, so get outside.

• Rule 2: Pair customer development with agile development.

• Rule 3: Failure is an integral part of the search.

• Rule 4: Make continuous iterations and Pivots.

• Rule 5: No business plan survives first contact with the customers so

use a Business Model Canvas.

• Rule 6: Design experiments and test to validate your hypotheses.

• Rule 7: Agree on market type – it changes everything.

• Rule 8: Start-up metrics differ from those in existing companies.

• Rule 9: Fast decision-making, cycle time, speed and tempo.

• Rule 10: It’s all about passion.

• Rule 11: Start-up jobs are very different from a large company’s.

• Rule 12: Preserve all cash until needed then spend.

• Rule 13: Communicate and share learning.

• Rule 14: Customer development success begins with buy-in.

Source: Blank & Dorf (2012)


Customer Development Process


Customer Discovery

Customer Validation

Customer Creation

Company Building

Pivot

SEARCH EXECUTION Minimum

Viable

Product


Customer Discovery Process


Phase 1: Develop Theory

•State hypotheses

•Draw business model canvas

•Prepare one page briefs of each hypothesis with tests or experiments required to prove/disprove each one

Phase 2: Test Theory

•Test the problem hypotheses

•Test most elements of business model (e.g. CVP, pricing, channels)

•Get facts and develop new hypotheses

Phase 3: Go to market

•Test the solution

•Present MVP to customers

•Use “pass-fail” goals to measure progress

Phase 4: Validate/Refute Theory

•Verify or Pivot

•Get full understanding of customers’ problems, passions or needs

•Confirm the value proposition solves problems, passions or needs

•Ensure market size is viable & pricing works

•Ensure that revenue will generate profits


The Customer Discovery Process


Customer Validation Process


Phase 1:Get Ready to Sell

•Determine the product positioning strategy

•Prepare the sales/marketing message strategy

•Hire a “sales closer”

•Create a distribution channel plan

•Prepare a sales roadmap

•Create an advisory board

Phase 2: Sell to EarlyVangelists

•Target early adopters

•Seek feedback and critical assessments

•Use prototypes, models, brochures or presentations

•Validate the sales road map

•Prove predictability of the sales funnel

•Validate the business model via real world tests

Phase 3: Develop Positioning

•Take customer feedback and refine product

•Position the company and its product offer

Phase 4: Pivot or Proceed

•Undertake detailed “Pivot or Proceed” analysis

•Verify that customer validation is complete

•Can the company scale up?

•Is the business model worth pursuing?

•Will it generate sufficient revenues & profits?

•Can the company implement it?


The Customer Validation Process


Developing a Customer Archetype


The Customer Archetype combines everything you know about your

“most typical” customers or end-users into one or more profiles.

• Develop a hypothesis of who the target

customer(s) are and what problems/needs

they have that would make them attracted

to your product/service.

• Key steps:

– Segment the target market.

– Define the customer problem.

– Define the customer type.

– What are the customer’s wants & needs?

– How will the customer benefit from the

product?

– If an organisational buyer prepare

organisational and customer influence

maps.

– Review the Business Model Canvas.


Customer Analysis Process


Customer Problem, Need or Passion

•Latent Problem: customer has problem but they don’t know it.

•Passive Problem: customer knows the problem but aren’t motivated or aware of the opportunity to change.

•Active Problem: customer recognises problem or passion and is seeking solution but not found one.

•Vision: Customer has idea for solving problem and will pay for better solution.

Customer Types

•End users: the day-to-day users of a product or service who have a deep understanding of what it can do for them.

• Influencers: key sources of influence who can shape the buyer towards the product or service.

• Recommenders: influencers that have the ability to shape whether or not the product/service is bought.

• Economic buyers: key decision makers who may control the funding for the purchase decision.

• Decision makers: those who make the final decision to buy or not.

• Saboteurs: those who can veto a purchase decision.

Day in the Life of a Customer

•How does the customer behave in their normal day to day activity that can help you understand more about their needs and purchasing behaviour?

•How do they spend their day?

•What products/services do they use?

•How does the new product/service affect them?

•What value or benefits can it offer?

•How willing are they to switch and why?

Organisational & Customer Influence Map

• If selling into an organisational customer market draw up a diagram of the business buying structure.

•How are decisions to buy made?

•Who are the key decision makers?

•What attitudes to the adoption of new products/service do they have?

•What are the measures of performance or benefits they may be attracted to?


Analysis of the external market

• Customer Value Proposition (CVP) • The innovation must bring a significant benefit to the

customer.

• This benefit must be noticeable and useful.

• The CPV is a trade-off between benefits offered and

cost/risk of adoption:

• Erosion Effects • Caused by external environmental influences that

remove the innovation’s advantage.

CVP = perceived benefits – perceived sacrifices


NPD and CVP Analysis

Source: Miller & Swaddling (2012)

The Customer Perceived Value (CPV) is the result of the customer’s evaluation of all the benefits and all the costs of an offering as compared to that customer’s perceived alternatives. It’s the basis on which customers decide to buy things.

Ideation/Fuzzy Front End

Launch/Release

Development & Testing

Business Case

Preliminary Investigation

Understand wants &

needs

Understand Perceived

Relative Importance

Understand Perceived

Importance

Understand Market

Factors

Identify Value Attributes


CVP Balance Scale

Source: Miller & Swaddling (2012)

Costs Benefits

Increased revenue

Reduced costs

Time savings

Prestige

Purchase price

Switching costs

Training costs

Process changes

Customer value is:

• Market-perceived

• Complicated

• Relative

What can tip the CVP

benefits towards a

future sale?

1. Attributes

2. Benefits

3. Costs

CVP and erosion effects on volume of sales

Perceived

sacrifices

STRONG

“No Way” Very big erosion,

no catchable volume

Worthwhile going there?

“Fall in love” Big erosion,

uncertain volume

Work the innovation again to

diminish the sacrifice

Danger for a SME

LOW

“Wet firecracker” Big erosion,

low catchable volume

Work the innovation again to

increase performance or let it be

“Maximum” Allow to catch quickly a

maximum volume of rent

Favourable

LOW STRONG

Perceived benefits

!

z

Residual rent

Source: Santi and Reboud 2003

Value chain and erosion effects on rate of profit

The

bargaining

power

suppliers /

business is

in favour of

…

Suppliers

+/– Strong dependence from suppliers

Medium - strong erosion : the

suppliers catch the profit

Association is recommended

with a SUPPLIER

– – The business is pressured from

both sides

Maximum erosion on rate of

profit

Abandon this use of innovation

or think about another place in

the value chain

Business

++ Favourable situation :

Low erosion on rate of profit

Strategic autonomy is possible,

the margin is kept

+/– Strong dependence from

customers

Medium - strong erosion : the

customers catch the profit

Association is recommended

with a CUSTOMER

Business Customers

The bargaining power customers / business is in favour of …

Residual rent


Substitutes and erosion effects on length

Substitution risk and

erosion effects

Technological risk: width and maturity of technological

alternatives

LOW HIGH

Commercial risk:

customers

propensity

towards adoption

of innovations

HIGH

Low technological risk but

high market adoption risk

+

Very high risks and erosion

effects

– –

LOW

Very low

risks and erosion effects ++

High technological risk but

low market adoption risk

–

STOP

Residual rent


Requires strong marketing effort difficult for SME

Requires strong technical effort difficult for SME


Kano Model Analysis

Hi Performance

Source: Tan & Shen (2000)

Hi

Satisfaction

Must-be (Basic) Attributes • Customer take for granted when fulfilled

• If absent customer will get very

dissatisfied

Attractive Attributes • Absence does not cause

dissatisfaction

• Not expected by customer

Lo

Satisfaction

Lo Performance

One-dimensional

Attributes • Satisfy when fulfilled

• Dissatisfy when not-fulfilled

• Better attributes more satisfaction


Kano Analysis Explained


Kano Performance Requirements

• You must start by offering the “must have” attributes in your product or

service.

• Focus on the “one-dimensional” attributes to offer superior performance but

ensure that you keep these at or above best practice.

• Look for ways to offer “attractive attributes” that the customer has not

expected (customer delight) but remember that once offered the customer

will begin to expect these and no longer see them as attractive.

• Any new “attractive attributes” will also risk being copied or imitated by your

competitors unless “isolating mechanisms” can be put in place.

• Look for the “zone of indifference” where the customer is not interested in

an attribute.

• Look for “reverse requirements” that decrease satisfaction when present

and increase satisfaction when missing.

Source: Kano et al. (1984)


Group Discussion

Working in teams

• Review the firm’s marketing

strategy.

• Prepare a preliminary

“Customer Archetype”.

• Look for what is known and

what is not.

• Identify with Kano Analysis the

product attributes.

• Highlight major areas for future

action and focus.

End of Presentation

Management of Technology & Innovation MKTG5603 ... · Analysis of the external market •Customer...

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