Customer-centric Market Entry of an Innovative Product/Service
Pia Kähärä 5.6.2013
© 2013 Sarus Oy / © 2013 facts & figures
Agenda
Innovations – Where to Start?
Productization – Value of Customer Centricity
Going International – Opportunity to Expand Your
Markets
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What prevents Finnish hi-tech companies from succeeding
Finnish Linked in group” Finnish High-Tech Start up –community” defines their main challenges as follows: 1. Lack of marketing thinking, too much emphasis on
engineering knowledge and technology2. Lack of financial capital (resources) to reach the marketing
targets3. Lack of knowledge on international markets: different
habits and cultures4. Finnish cultural deficiencies: cautiousness, unwillingness to
take risks, fear of failure
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© 2013 Sarus Oy / © 2013 facts & figures
“Startups need knowledge and networks often more than funding”
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© 2013 Sarus Oy / © 2013 facts & figures
What is innovation
”Development of new values through solutions
1. that meet new requirements, inarticulate needs or 2. old customer and market needs in value adding
new ways”. - Wikipedia
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Innovation vs. invention
Motivation is the differentiator:
• Innovation = Making money with ideas
• Invention = Making ideas against payment (R&D)
» by Fredrik Hacklin, ETH Corporate Innovation Lab, Zuerich, Switzerland
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Innovativeness and fast commercialization is possible when..
• all staff members work as entrepreneurs• the best effort is given by everyone for
developing an invention to an innovation• networking is extended outside the
organization: dare to take risks– cooperation between startups and large
corporations is enabled
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How to create a fertile environment for innovations?
1. Minimize hierarchies and bureaucracy.2. Dare to fail.3. Step outside your comfort zone.4. Let passion of your staff flourish.5. Be open-minded about who can have
creative ideas e.g.– Senior staff members– Ex-entrepreneurs…
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Involve customers at early development stage
Key Questions:
• Which problem of the customer does your innovation solve? • Do you understand, which factors would make your potential customers to
replace their existing solution to that problem with your solution?
Communicate the REAL VALUE for customer
The potential customer wants to understand, how your solution: 1. saves them money2. makes them money3. takes away their headache
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Ensure the business potential and competitiveness of your solution
Inventor:”I WANT TO
SELL MY INNOVATIVE PRODUCT”
Market Demand, Customer
Needs
Feedback about
technical/service ability of
your innovative product
Customer: ” I HAVE A PROBLEM”
© 2013 Sarus Oy / © 2013 facts & figures
Agile productization
Productization is the process of transitioning an R&D project into a product ready for volume manufacturing.
1. Use simple methods and tools2. Test and adapt to the market response3. Keep it fast & swift 4. Focus on functionality instead of extensive documentation5. Keep the customer involved in the R&D throughout the project6. Concentrate on simple milestones rather than mega long projects 7. Is completed by motivated individuals
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Customer 3
Customer 2
Customer 1
Productization and core product
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Productization
Core Product
PricingFinancing
DistributionPackaging
StoryEasiness to buy
Added value
Why test the market?
To gain…• understanding of your business potential in the
new target market• insight for competiveness of your offering by
direct feedback from potential customers and partners (e.g. your product/service concept and technical features)
• support for your business decisions
© 2013 Sarus Oy / © 2013 facts & figures
© 2013 Sarus Oy / © 2013 facts & figures
Study the market demand
You need to do:• Target market environment analysis• Competitor & partner information gathering• Qualitative interviews with key customer segments and potential
partners
You get important information to build your:• Product/service concept to meet the target market requirements• Positioning strategy• Go-to-market strategy • Service model plan
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Conduct pilot testing
… for analyzing the usability/functionality of an existing product/service You need to do:• Find a pilot testing partner for technical validity of your solution (e.g.
potential customer or unbiased testing authority)• Collect and analyze the results
You get important information to meet the customer needs and technical requirements of your product/service:• Required market entry data to support R&D and usability work• Tools and customer feedback to design/adapt the product/service to
target market
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Case: ERP as a SaaS service for small HVAC, electrician and plumbing companies
Terms:
• ERP = Enterprise Resource Planning System which collects all functions of the company into one operational system in real time: offers, billing, purchasing, customer and project management, book keeping, salaries, material handling, banking information, automated reporting for the management of the company etc.
• HVAC = heating, ventilation, air conditioning
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Case: ERP as a SaaS service for small HVAC, electrician and plumbing companies
• Background: – usually ERPs are available for large companies– conventional ERP usage requires experience users and technical
support inside the company – ERPs are too big investments for small companies– Small companies do not have resources either to implement or use
them effectively, but they have many separate systems which do not give them management reports in real time - in project business the profitability information of the projects is calculated afterwards
– Small companies do not have systems that give them good enough reports for making good business decisions
10.2.2013© 2013 Sarus Oy / © 2013 facts & figures
Case: ERP as a SaaS service for small HVAC, electrician and plumbing companies
• Solution: – To develop an lighter and modular service with simple and easy-to-use
user interface as SaaS service to meet the need of the targe group (using Microsoft Dynamics Nav as an engine)
– Features and holistic approach that bigger companies get available for even the smallest companies
– Maximum automation of functions, eg.billing, means less work– Access from everywhere, also by mobile phone
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Case: ERP as a SaaS service for small HVAC, electrician and plumbing companies
• Customer centric-approach for R&D:
Interviews of about 3000 end-customers from different groups by phone simultaneously when developing the features and modules
20 minutes interviews about their operations at the moment: • Different company sizes: from 1-5 people, 6-10, 11-20, 21-50, 50 -• How they operate now in billing, purchasing, project management, reports they get
for steering the business• What is their existing system /which different systems they use• What are their problems with existing systems: which functions does their basic
systems include (sales billing, purcase bills, offers, real time project management, salary management, bookkeeping reports etc.)
• When do they plan to change the system
Joint working: marketing + R&D
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Case: ERP as a SaaS service for small HVAC, electrician and plumbing companies
• Outcome: in-depth understanding of the customer problems and needs– Possibility to develop a system for the real needs of the end-customers– Possibility to segment the market to sub-groups– Understanding of the competitors– Possibility to concentrate in R&D work for the functions that provide
help for the customers’ most acute problems– Potential customers list for the future work– Possibility to create marketing messages that address the real needs of
the customers:
How we can help you to save money, make money, remove extra work from you…
10.2.2013© 2013 Sarus Oy / © 2013 facts & figures
Case: ERP as a SaaS service for small HVAC, electrician and plumbing companies
• Outcome:– Pilot testing companies found and involved in an early
stage od product/service development
Possibility to improve the already existing service better by getting early customer feedback
Faster development process, earlier commercial income
10.2.2013© 2013 Sarus Oy / © 2013 facts & figures
© 2013 Sarus Oy / © 2013 facts & figures
Market entry: Internationalization
Same basic rules apply as in domestic market entry
But, cultures and markets are different e.g.– Communication culture– Political environment– Geographics– Purchasing behaviour and habits
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Requirements for internationalization – general rules
Needed and Must in internationalization:• Product portfolio competitiveness at home territory• Marketing resources (physical, financial, knowledge)• Going abroad decision (strategy, commitment)
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It would be beneficial for exporting company to have had several years of experience in the domestic market. The Products, Systems or Services must be ready for export.
The typical export company has sufficient resources to carry out expanded sales activities in foreign markets and is committed to devoting resources towards the growth of their exports.
© 2013 Sarus Oy / © 2013 facts & figures
Six steps internationalization process (things to study -> decisions to make)
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1. Readiness analysis -> internationalization
2.Environment -> customer segmentation and target groups
3. Customer needs -> demand – supply, support and partner profiles
4. Distribution methods and partners applicability -> strategy, partnerships and logistics
5. Requirement for sales and marketing (demonstration, presentation, promotion) and proposal suggestions -> contract
6. Need for partner/customer support -> continuous support
BRANDING: Integrated marketing
communications
To whom?
With which products/services?
To which markets?
CUSTOMER: Purchasing decision
R&D
Production
Distribution
Marketing communication
Sales, customer service
Which goals?
Resellers/partnersAt which price?
Uni
que
cust
omer
pro
mis
e an
d co
ncep
t
Marketing decisions
© 2013 Sarus Oy / © 2013 facts & figures 10.2.2013
© 2013 Sarus Oy / © 2013 facts & figures
Market Entry: Study Target Market Factors
• Demand / potential• End-user behaviour, preferences • Competition• Sales/distribution channels • Stakeholders• Barriers of entry etc.
Communicate the right things!
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A good company presentation and communication include:
1. Description of a typical problem or the customer's situation, which the product or service is intended to solve
2. A brief description of your solution (what it does). 3. Benefits of your service/product (not only the features, technical
details)4. Proof and examples: why a customer should believe your claims 5. Your service/product price.6. Service/product delivery content. 7. How your service/product can be purchased? 8. Reference(- s) (clients, projects) of previous orders.‐ 9. Illustrative charts or diagrams to support your message.10. Pictures of your product/service.
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Success Factors for international, customer-centric market entry
1. Thoroughly completed market research to support decision making2. Clear goal setting for sales, marketing and distribution channels3. Customer-centric packaging/productization of product or service 4. Branding, which stands out of the mass: be different, be
interesting, be valuable for your customers5. Elevator pitch: crystallization of value-adds for customers6. Focused sales and customer service skills and attitude7. Language skills and culture sensitivity: appreciation and
acceptance of different business culture styles8. Proactivity and systematic end-customer and distributor
cooperation9. Sufficient resources and distribution of tasks and responsibilities
for own staff10. Perseverance no matter what!
Sarus Ltd
• offers sales, marketing and coaching/training services
• works with companies who want to begin exports/achieve growth in Finland and Europe, Kazakhstan, Russia and the other CIS countries.
• uses concrete actions to help companies to build an effective framework for profitable sales
10.2.2013© 2013 Sarus Oy / © 2013 facts & figures
© 2013 Sarus Oy / © 2013 facts & figures
Sarus services: consulting, operational work, coaching, training
• Market test drive (market potential testing)• Pilot test drive (pilot testing)• Partner (investors eg.) and potential customer search• Establishing business in Finland: gateway to Europe• Business culture trainings• Various sales and marketing services
10.2.2013
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Contact: Pia Kähärä mob. +358 400 193 333
www.sarus.fi