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22. April to 24. April 2013 / G2 Market & competition
Business plan basic seminar
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Agenda G2
G2 2
Understand more
Market
Find your place in the market
» Basic vocabulary
» Target market – top down
» Target market – bottom up
Discussion BIONADE
» USP
» Positioning
» 4 P‘s (Product, Place, Promotion, Price)
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Understand more (1)
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2. An idea for the solution:
» reasonable,
» appropriate and
» effective
When you‘re talking about an idea, you actually talk about…
1. A customer problem:
» discover,
» watch and
» understand
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Understand more (2)
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Now your task is to understand more about:
Market:
Find out direct
and indirect
competitors
Market research
Customer:
Understand the
customer‘s
problem and
needs
Talk to
customers
Understood more about the problem.
Is chosen market still the best?
Found many competitors.
Switch to a different problem?
Top down Approach Bottom up Approach
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Agenda G2
G2 5
Understand more
Market
Find your place in the market
» Basic vocabulary
» Target market – top down
» Target market – bottom up
Discussion BIONADE
» USP
» Positioning
» 4 P‘s (Product, Place, Promotion, Price)
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Source
Method
Qualitative
» In-depth research
exploring back-
ground and context
Quantitative
» Statistical
analysis of huge
amount of data
Secondary
» Data already available
» Has been collected for different
purpose
» Cheap and quick, but potentially
untargeted or difficult to apply to
concrete situation
Interview surveys
Questionnaires
Online panel
Depth interviews
Focus groups/
expert panel
Mystery shopping
Diaries
… Internet research
Databases
Press/newspaper
Governments/trade associations
Public records or company accounts
Primary
» Data collected for first time
» In customized way
» For specific problem
» Very focused, but time-
consuming
Sample methods
Marketing vocabulary – Market research
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Step1: Collect secondary research data that gives you a rough overview of the market
Step 2: Derive hypotheses
Step 3: Collect primary research data regarding relevant market aspects to enhance your
understanding and reality-check your hypotheses
Note: Market research can never be 100% complete. The aim is to get a broad overview, AND
deepen your understanding about relevant aspects.
Market research is never finished. It is rather a continous process as long as you pursue your
business idea (e.g. to not miss relevant emerging trends or new technologies).
Market research
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Marketing vocabulary – Market analysis
Important terms:
» Number of customers, quantity, sales
» Market volume = current sales quantity of own or similar products throughout the market
» Market potential = possible sales quantity for a product in a specific market
» Sales volume = a company’s sales quantity regarding one specific product
» Market share = sales volume / market volume ratio
» Market growth= future development of market volume and market potential in percent
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Case study BIONADE
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Product:
» Non-alcoholic refreshment drink
» Produced from natural raw materials (organic) in
a fermentation process
Process:
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Increased market understanding through market research
Value
proposition
Number of
customers / end
users
Frequency of
purchase
Price (e.g., via
market price)
Segmen-
tation
Market size
per segment
Total market
size
Adoption
barriers
too high
Target market
size
Potential
iterations
Step 1: Estimate total market
Step 2: Segment market
Step 3: Estimate target market
1) Find your target market (top down)
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Segmen-
tation
High
competition
intensity
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Increased market understanding through market research
Non-alcoholic
beverages
Number of end
users
Frequency of
purchase
Price (e.g., via
market price)
Market size
per segment High compet.
intensity
(Coca Cola,
Pepsi etc.)
Total market
of non-
alcoholic
beverages
Target market
size
Potential
iterations
Step 1: Estimate total market
Step 2: Segment market
Step 3: Estimate target market
Top-down market estimation:
BIONADE – Target market
G2 11
Segmen-
tation
11,5
Mrd ltr
9,8
Mrd ltr
3,2
Mrd ltr 1,3
Mrd ltr
3,3
Mrd ltr
Adoption
barriers too
high (listing
fees)
Sources: Statistisches Bundesamt
www.khs.com Beverage Industry
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Value
proposition
Number of
customers /
end users
Frequency of
purchase
Price (e.g., via
market price)
Total
market
size
Estimated by top-down approach
with secondary market research
2 main questions.
»What is the size of today’s
overall market?
»What does tomorrow's market
look like?
1.1) Total market size
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BIONADE – Total market size
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Source: Stat. Bundesamt Germany
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Macroscopic trends: overarching
external forces, possibly affecting
multiple/all markets, e.g. regulatory
changes
Microscopic trends: market
internal/specific forces particularly
affecting considered market, e.g.
technology developments
2015 2010
+XX%p.a.
A simple press search (e.g., via
Google News) can provide useful
hints on statements to market trends
1.2) Find out trends
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Macroscopic trends: overarching external forces, possibly affecting multiple/all markets
Examples:
Regulatory changes (e.g. recycling regulations)
Population development (e.g. birth rates)
Infrastructure developments (e.g. smart grids)
Microscopic trends: market internal/specific forces particularly affecting considered market
Examples:
Technology developments (e.g. ebook reader)
Customer relationship/marketing (e.g. facebook fan page)
Key drivers of end customer demand (e.g. key buying factors)
1.2) Find out trends
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BIONADE - Trends
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Customer‘s openness towards new kinds of soda, new flavors
Take off organic food
Trend towards healthy living
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2) Market segmentation
Market size
per segment
Segmentation:
Who are our target customers?
» Which segmentation criteria make most sense?
» Which segment(s) do I choose as the target market?
Total market size
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Multiple dimensions are
often used in combination
Needs/problems
What value does the
customer require or
want? Profitability
How financially attractive is
the relationship with the
customer?
Activities/occasions
How does the customer
respond in different
situations?
Attitudes
What underlying beliefs
are shaping the
customer's mindset?
Perceptions
What does the customer
believe about the
marketplace?
Behaviors
What does the customer
actually do in the
marketplace? Firmographics
How is the customer's
organization characterized?
Geographic
Where is the customer's
organization located?
Relationship
Where in the 'relation-
ship life cycle' is the
customer?
Channel
Where does the
customer buy?
2.1) Segmentation criteria
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BIONADE – Market segmentation
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Adoption barriers:
» How high are (additional) costs?
» Are risks involved (e.g., quality or
brand risks)?
Competitors
» How does your product differ from
those of your competitors?
» Who are your direct, and indirect
competitors?
» How is business for the competitors
(stable, growing, declining)?
» What are the strengths /
weaknesses of your competitors?
2.2) Adoption barriers and competitors
Target market
size
Market size
per segment
High
competition
intensity
Identified by primary and
secondary market research
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Adoption
barriers
too high
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Costs:
Switching costs : What it costs to switch to another product or service (e.g. Windows vs. Mac)
Production costs: Increased costs because of new product (e.g. new production line)
Sales costs: Increased costs because you need to win new customers/ segments (e.g. Porsche
cars, then Porsche sunglasses)
Risks:
Product performance related risks (e.g. product features not fully understood or tested)
Reputation/brand risks (e.g. unforeseen side effects)
Market-related risks (e.g. end-consumer uptake smaller than anticipated)
2.2.) Adoption barriers
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BIONADE – Adoption barriers and competitors
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Market structure:
» Industry: Non-alcoholic beverages
» Barriers: Established distribution channels,
high listing fees
» Competitors: Global players like Coca Cola,
national and regional manufacturers
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Adoption Life Cycle
23 G2
Very Early Adopters
„Techies“
Early Adopters
„Visionaries“
Laggards
„Skeptics“ Early Majority
„Pragmatics“
Late Majority
„Conservatives“
Quelle: Geoffrey Moore (2002): Crossing the Chasm.
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3) Bottom Up Approach
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You can‘t do a bottom up sitting at your desk
„Get out of the building“
Talk to customers about their problem
therefore
that means
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Understand your customer
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Put yourself in their shoes.
Feel into and understand the customer’s problem
Look at the problem from the customer’s point of view
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Understand your customer
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Spend time with them.
Accompany the customer into their every day environment
Find out how the customer structures work, tasks, processes, etc.
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Understand your customer
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Watch and listen to them closely.
Ask precise questions and then listen closely
Keep your eyes open
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Understand your customer
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Find out what they actually mean.
Sometimes you need to interpret the feedback you get
Cross-check each of your interpretations with reality
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BIONADE – Market size bottom up
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Bottom up market estimation:
» First customer: beverage retailer Göttsche
Sells BIONADE to bars and clubs in Hamburg
» Following customers: Health food shops
» Crossing the chasm into mass market: Supermarket chain REWE, Deutsche Bahn, McDonalds
» Sales peak of 200 million bottles in 2007
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Agenda G2
G2 30
Understand more
Market
Find your place in the market
» Basic vocabulary
» Target market – top down
» Target market – bottom up
Discussion BIONADE
» USP
» Positioning
» 4 P‘s (Product, Place, Promotion, Price)
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From market segementation to positioning
31 G2
• Decide for segmentation
criteria and segment the
market
• Develop profiles for each
segment
• Rank segments
according to their
attractiveness
• Choose your target
segment
„Find the Gap“
• Develop, implement
and communicate
your positioning
concept
Market segmentation
Target market
Positioning
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Customer (core need)
Competitors Entrance barriers
Defendable USP
Can you solve a severe problem better than anyone else? It‘s the customer‘s decision!
Unique Selling Proposition (USP)
32 G2
Examples: Newness, quality, savings, usability, (price)
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Key Parts of the USP
33 G2
• Customers:
Who are your target customers for the USP?
What is the (core) customer need?
• Competitors:
What is the USP of your competition?
How can you differentiate your business?
• Entrance barriers:
How can you protect your USP from copycats?
For example: IP rights, customer contacts, process expertise, unique team
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• New Product Features
• New Combination of Product and Service
• Best Quality
• Longest Lifespan
• Acceleration of Processes
• Smallest Size
• Most Extensive Customer Service
• Intuitive, User-friendly User Interface
• Lowest Price
• Best value
Note: Combine two or three aspects if possible. For example, if the only difference is price then a
major competetitor could undercut your price, thereby eliminating your USP.
Example for a USP
G2 34
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BIONADE – Positioning (1)
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Red
Bull
Eco
Cool
Coca Cola Kombucha
Tea
BIONADE
Non-alcoholic beverages
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BIONADE – Positioning (2)
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Positioning:
» Healthy
» Cool
» Organic
» Criteria: ecology, taste, design
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Product
Variation
Differentiation
Innovation
Packaging
Derive the 4 P‘s from your positioning (1)
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Product
• Innovation
Is a marketable product, which is completely or relatively new to the market
• Variation
Denotes a conscious change of either technical or aesthetic product features for adapting a
product to changed customer expectations
Can also be done by adding services to a product or changing existing services
In contrast to product differentiation, variation does not change the depth of the product range
Derive the 4 P‘s from your positioning (1)
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Product
• Product Differentiation
Provides a new option that complements an already established product
Often an existing product can be specially altered to meet the diverse needs of individual
target customer groups or segments
• Packaging
Refers to the packing material for the product
Identifies, describes, protects and promotes the product
Often is the most relevant element for the establishment of a brand
Derive the 4 P‘s from your positioning (1)
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BIONADE – Product (1)
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Product innovation and later differentiation
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Distribution
Distribution channel
Direct sales
Indirect sales
E-Commerce
Derive the 4 P‘s from your positioning (2)
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Derive the 4 P‘s from your positioning (2)
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Distribution
• Distribution Channel
Includes company-owned and non-corporate organizational units that ensure the physical
sale and delivery of the goods
• Direct Sales
Selling a product directly to end users or consumers, without intermediaries
• Indirect Sales
Wholesale or retail as intermediaries to consumers
Critical in the consumer market for the distribution and presentation of large quantities of
goods
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Distribution
• E-Commerce
Electronic Commerce over the Internet with the help of online shops
High flexibility on the supply side
Reduction of transaction costs
Derive the 4 P‘s from your positioning (2)
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BIONADE – Distribution (2)
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Distribution via intermediaries and direct sales
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Promotion
Individual communication
Mass communication
Brand
Corporate Identity
Derive the 4 P‘s from your positioning (3)
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Promotion
• Individual communication
Form of communication in which selected individuals communicate with each other
Information flows in both directions, meaning each individual is a sender and a receiver
• Mass communication
Public communication, especially in the mass media
This method reaches many recipients, but the communication is not specific (high scattering
losses)
Derive the 4 P‘s from your positioning (3)
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Promotion
• Brand
Represents all the properties that differentiate a company‘s products or services from those of
the competition
Eases the process by which consumers orient themselves among the various options
• Corporate Identity
Specifies the identity of a company
Based on the assumption that businesses are a type of social system and can function in a
similar way
Includes:
oCorporate Design, Corporate Communication, Corporate Behavior
oCorporate Philosophy, Corporate Culture, Corporate Language
G2 47
Derive the 4 P‘s from your positioning (3)
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BIONADE – Promotion (3)
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Strong brand, emphasis on authenticity
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Price
Cost covering price
Penetration pricing
Absorption pricing
Derive the 4 P‘s from your positioning (4)
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Price
• Cost covering price
Prices are determined at high enough levels to sufficiently cover all costs incurred in
production and sales
• Penetration price
In the context of new product launches
Lowest possible price at beginning in order to quickly gain a large market share
Gradual price increases later on
Requires a large market and economy of scale (production and distribution costs per unit fall
as quantity sold increases)
Derive the 4 P‘s from your positioning (4)
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Price
• Absorption Pricing (also called Skimming Strategy)
In the context of new product launches
Product initially introduced with a high price, which is then gradually reduced
Initially low sales volumes rapidly grow as prices are decreased
Requires customers who are willing to pay a premium for new products
Derive the 4 P‘s from your positioning (4)
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BIONADE – Price (4)
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High price, emphasis on ecological friendliness
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Agenda G2
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Understand more
Market
Find your place in the market
» Basic vocabulary
» Target market – top down
» Target market – bottom up
Discussion BIONADE
» USP
» Positioning
» 4 P‘s (Product, Place, Promotion, Price)
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BIONADE – At a glance
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BIONADE development until today:
» Foundation 1995
» Annual growth rate of 300% per year
» Peak at 2007 with 200 million bottles sold
» 2008 rise in prices of 30% and selling BIONADE in PET
bottles
» 2009 Dr. Oetker (food company) takes over 70% of
BIONADE shares
» Sales volume decreases to only 60 million bottles today
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Next steps
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Investigate your market
Talk to customers
Send your idea as a poster
Find a team
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UnternehmerTUM GmbH
Lichtenbergstraße 8 Tel. +49 (0)89-32 46 24-0 [email protected]
85748 Garching Fax +49 (0)89-32 46 24-100 www.unternehmertum.de
UnternehmerTUM GmbH
Lichtenbergstraße 8 Tel. +49 (0)89-32 46 24-0 [email protected]
85748 Garching Fax +49 (0)89-32 46 24-100 www.unternehmertum.de
Contact
G2 56
Franziska Heyde
Chris Eberl