The Market

Contributed by: Ed Rubesch Lecturer, Thammasat Business School, Thammasat University, Thailand

Wedging Into a Market

New product or service Parallel competition Franchising

New product or service

Truly innovative products are rare Innovate with a modified product, service or technology Success comes from being first with the best Watch out for me-too competitors (next slide) => defendability

Parallel competition

Find a market which is not satisfied by current product or service offerings Provide an improved product (not merely copy an existing competitor) Seeking opportunities in parallel competition:

Competitors who only believe in their own products; slow to incorporate other innovations Too much emphasis on technology means a competitor may not be providing what the customer wants Competitors only service certain niches; other customers left out Current competitors provide mass services to everyone; opportunity to serve a niche

Franchises

Take a proven business formula and expand it Business advantage usually comes from geography and being able to deliver great service For the franchisor, franchising is a way of increasing distribution For the franchisee, franchising is a way to lower the risk of a new business

Innovation Adoption The Common Marketing View

Early Majority
Early 34% Adaptors 13.5% Innovators 2.5% Later Majority 34%

Laggards
16%

Cracks in the Adopters Curve...

(Geoffrey Moore)

Cracks

Early Majority

Later Majority

Early Adaptors

Laggards

Innovators

... And The Chasm

Early Majority
Early The Adaptors Chasm Later Majority

Laggards

ators

Market Size

Think Big, and try to find lots of applications to your product. Once you have thought big, make sure you segment properly A $200 million market? How does it break down?

Market segmentation is the process of dividing the total market for a good or service into several smaller, internally homogeneous groups.

Segmentation is necessary because customers in a market have: Differences in buying habits. Differences in the way the good or service is used. Different motives for buying. In short: different needs!

Markets are segmented by:

Intuition based on experience and judgment. Mimicking competitors and earlier market entrants. Performing a structured analysis that includes: Identifying the current and potential wants that exist within a market. Identifying the characteristics that distinguish segments. Finally, determining size of segment and how well it is being satisfied.

Ford vs. GM

Henry Ford: You can get the Model T in any color you likeas long as it is black. Alfred Sloan: GM will produce a car for every purpose and a car for every purse. Results of market research:

Chevrolet for entry-level buyers Pontiac for those moving up Oldsmobile for the growing middle class Buick for those who want a finer product Cadillac for status seekers

Positioning

Positioning is the act of designing the companys offer so that it occupies a distinct and valued place in the target customers minds. Usually the -est of something. Everyone remembers the first or best of any accomplishment.

Differentiation
Developing a number of meaningful and valued characteristics of the product offering that distinguish it from a competitors product.

Find A Valuable Niche

Ability to Provide a Unique Product or Service

Stupid?

!!!
Price competition

Dot.coms

Value to customers

Differentiation

Can anything be differentiated? Is there such thing as a commodity?

Differentiation Product

Form Features Performance Quality Conformance Durability Reliability Repairability Style

Dean Foods Milk Chug

Differentiation Service

Delivery Installation Customer Training Consultation Sales support Promotional tools Repair Other Services?

Loyalty programs Warranty/Extended maintenance

Differentiation Other

Image Symbols, brands Media Atmosphere Events Personnel Channel

Why Will Your Customers Buy From You?

Take a hard look at your product or service and ask yourself, Why would I need this thing? Ask the same question of several people who also use your (or a competing) product or service. If your product or service doesnt exist, what are the substitutes? Who will be your 1st customer? Your 100th? => Many times a question of timing