Market Research and Competitive Analysis for Start up Companies: Market Research and Competitive Analysis for Start up Companies Prepared by Tonée Picard for San Jose State University Presented on March 25, 2004


Agenda: Agenda Introduction Tonée Picard and Market Research Practical techniques vs. “by the book” Reiterative points about marketing Definitions and thought processes Examples of market research presentation Business plan outline sample Q&A


Your Presenter Today – Tonée Picard: Your Presenter Today – Tonée Picard Professional experience President, Lighthouse Venture Forum Education and mentoring organization for technology entrepreneurs and young businesses VP, Business Development, Thuridion Responsible for strategy, marketing, business development Strategist for small growing companies Organizational Development Marketing strategy Business processes Outsourcing strategies 2 start up companies (Dascom and CREW) Education BS/BA, Business and management, University of Phoenix MBA, Golden Gate University


What is market research: What is market research Just a set of activities? Focused on defined goals Refines the direction of the 5 P’s Product, promotion, place and price (and positioning) View into social processes? Who, what, when, where and why! Necessary? Strategy does not take place in a vacuum Valued by organizations? Successful organizations.. Market research supports every department The bridge to the customer!


Market Research Fallacies: Market Research Fallacies MR is boring MR is unnecessary MR is for analysis geeks MR is a waste of time and $$ MR is easy…ha!


Intent of market research: Intent of market research What results are you looking for? Define measurement of market potential Determination of market characteristics Market share analysis Sales analysis Business trends Refine opportunities to pursue and “how” Market segmentation and niche markets Features and benefits required for market success


Marketing 101: Marketing 101 Generic market definition Target Product Market Customer or user need (Niche) Customer type (segmentation) Demographics/ Market size Product or Service + + +


Why do Market Research: Why do Market Research Knowledge is King Learn from others…you will have plenty of your own lessons Find “strategic” competitive advantages What are your barriers of entry? What are the competitors? Develop competitive differential opportunities Why are you better? How can you be the best? Understanding of core competencies and core rigidities Develop pricing models Targeted alliances/partnerships that extend reach Create the product roadmap Features, benefits to fit customer/consumer need Support the creation of the company/product/service vision Feed the machine with information Identify unmet needs Product extension into current market Extension into new markets


Market Research is the Critical component to any business plan: Market Research is the Critical component to any business plan Know the self Know the customer Know the market Know the industry Know the government OBJECTIVE: To develop an informed business in a vibrant high growth market through strategic competitive advantages


Types of market research: Types of market research Exploratory research Review of literature (pubs, online, mags) Discussion with experts, officials, friends and family Study of competitors or case studies in similar industries Descriptive research Targeted at specific question or hypothesis Surveys/questionnaires random sample from a relevant population Focus groups Industry or product specific (usually expensive) Use your network! As a student…ask for help from a targeted CEO Experimental research Looking for cause and effect (i.e. pharma research) Watching a user group “use” the product Story boarding service offerings/product offerings to group of targeted consumers


Targeted research topics and why?: Targeted research topics and why? Advertising research Motivation research Ad effectiveness Business Economics and Corporate research Forecasting Business Trends Pricing studies Acquisition/merger research Product research Product acceptance or potential Competitive product studies Testing of existing products Packaging design, etc. Sales and Market research Market potential Market share analysis Market characteristics Sales Analysis Distribution sales channel studies Test marketing/focus groups Promotional research and studies Financial research Turnover and ratio analysis (public companies annual reports)


Competitive research: Competitive research Direct competition – important Indirect competition – critically important What to look for.. Map their strategy Differentiate your offering Find pricing advantages Develop barriers to entry How to fill the “whole” need for customer/consumer Financial stability Market share and focus on new markets where are they going Take the short and long term view


Short term advantages: Short term advantages Refined tactics for customer reach Measurement of market potential Market characteristics Market share New product acceptance Produce evaluation Improvements Extensions


Long range advantages: Long range advantages Planning, goal setting, developing strategies Understanding business trends Global market opportunities Forecasting growth Management uses MR to reduce errors in decision marketing, expand sales and locate new opportunities Uninformed decisions can be failures Market research is done so that all marketing efforts can be strategically integrated into the wants and needs of customers.


Gorilla market research: Gorilla market research School libraries and Internet Observation Customer visits Listening to tech support calls Opinions of sales personnel Networking Use your gut feelings (intuition)


More expensive options: More expensive options Scientific methods Systematic and accurate investigation with objective analysis of results Goal to reduce uncertainty and risk of error Research is reliable only if it can be repeated by another with the same results Surveys Mail, mall, telephone, focus groups High priced information 3rd party market analysis Gartner group, IDS, Industry specific ($5,000-$100,000)


Primary Market Research: Primary Market Research Surveys Telephone, mail, in-person, (email) Focus groups Random sampling of population Scientific approach for primary market research Define the problem Don’t confuse problems w/a symptom Analyze the situation What do you already have and what do you need Use secondary data Refine the “specific problem” Attain and interpret the data Solve the problem


Secondary Market research tools: Secondary Market research tools The internet Competitive research White papers Press releases (statistics” Industry tradeshows School databases Industry analysts Gartner Group IDS Internal records (sales, etc) Libraries Government SIC codes/Industry codes Demographics Commercial firms (competitors, partners, “like” companies) Press releases, conferences, tradeshows AC Nielsen, Dun and Bradstreet Trade, professional and business associations


Decisions driven by market research: Decisions driven by market research Overall company vision Product or service positioning Product or service innovations/extensions Investment in marketing at segments of market Understanding of potential distribution channels Branding Credibility Lock in or switching costs


What are you looking for…: What are you looking for… Basic understanding, knowledge, facts, trends Markets are uncertain – find your niche Technology is complicated – find your focus Competitors are moving targets – understand them Demographics – who, what, when and why Where you fit in the product/service life cycle Introduction of new idea, growth market, shakeout (M&A opportunity), mature market (commodity) or declining market Who are your target markets? The adoption process Innovators, early adopter, early majority, late majority or laggards (Crossing the chasm…Geoffrey Moore) Answers will effect your WHOLE marketing strategy…if you don’t understand these concepts and where you fit in…enter at your own risk


SWOT Analysis: SWOT Analysis Strengths Your competitive strengths (would include barriers to entry) Patents, management team, financial resources, market leader, etc. Weaknesses Your weaknesses (competitor strengths) Funding, branding, lack of partners, etc. Opportunities Market opportunities Logical product extensions, high growth market Threats Competitive threats Microsoft is a competitor Economic, demographic, etc. Baby boom retirement, interest rates, etc.


Competitive Grid: Competitive Grid


Presentation of Market Research: Presentation of Market Research filtering classification rules/signature based machine learning prioritization functionality technology Banter intelliMail Brightmail Vipul’s Razor Inbox Protector McAfee Spamkiller Mail Frontier Cloudmark SpamNet


Viewed as Situation Analysis: Viewed as Situation Analysis Know the operating environment!


Sample Business Plan Outline: Sample Business Plan Outline Executive summary Company description Organizational plan Outsourcing, in-sourcing Management Product Industry Analysis and Trends Target Market Segmentation Niche Competition Competitive Grid Summary of OT (part of SWOT) Strategic position and risks SWOT analysis Marketing strategy 5 P’s Financial projections Important: Market share will feed financial forecast Potential exhibits Management bios Product technology overview Product timeline (if applicable) Screen shots (if applicable) Organizational structure (org chart) Product pricing Detail of distribution channels Detail competitive threats and resolutions Competitive core competencies Barriers of entry and detail Other deals that are critical to your success


General starting points for market research: General starting points for market research Business magazines Business Week Business 2.0 Fast Company General business pubs Wall Street Journal Red Herring Economist Industry trade pubs PC Week Info Week Retail specific Government pubs SIC industry codes Online Ask Jeeves, Google, Yahoo! Finance Ratio analysis and competitive analysis SJSU libraries D&B reports


Questions to ask?: Questions to ask? Who are your biggest competitors? Who are your customers? What does it take to get to your customer? What does your product/service solve?


Sample of Local Organizations: Sample of Local Organizations SVAMA Silicon Valley American Marketing Association AMA American Marketing Association SVASE Silicon Valley Association of Start up Entrepreneurs WITI Women in Technology International Churchill Group Largest Silicon Valley networking organization SD Forum Software Developers Forum


Words of wisdom: Words of wisdom What counts most is not being right the first time, but how quickly a company can learn and modify its path. Jakki Morr, Marketing of High Technology Products and Innovations Grey markets are the most important…that area not fully understood must be respected. Prof. Charles White, Golden Gate University Knowledge is a weapon…use it to win. Unknown