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Driving Top Line Growth

WCBF ConferenceSeptember 8, 2005

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Who We Are Breakthrough Marketing Technology is a

business consultancy focused on business growth We provide advice, training and coaching Our approach is

Strategic Seamless Customized

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Breakthrough Marketing Technology & Six Sigma

Developed and led Six Sigma training at AlliedSignal under Larry Bossidy Growth Green Belt -Addressed failure modes in

the growth process by improving marketing execution

Marketing for Black Belts Executed Six Sigma marketing projects

Led first business to be awarded Growth Green Belt

Winner of Specialty Chemicals business unit Quest for Excellence Six Sigma competition

Led Six Sigma marketing research and training in the U.S. and AsiaBreakthrough Has Extensive Experience with Breakthrough Has Extensive Experience with

Marketing and Six SigmaMarketing and Six Sigma

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Outline Strategic marketing and growth New product development Market validation foundation Voice of the customer and market research Market research to generate your demand

curve Segmentation based on valued benefits Agency briefings

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What Is Strategic Marketing? The development, design, and coordination of the

delivery of the entire offering (value proposition) to the targeted market

The task of creating, promoting, and delivering goods and services to consumers and businesses

Anticipating and meeting customer needs The process of planning and executing the

conception, pricing, promotion, and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational goals

Marketing Leads Go-to-market Activities to Marketing Leads Go-to-market Activities to Drive Top Line GrowthDrive Top Line Growth

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Go-to-market with New Products – New Markets

ProductsProducts

Mar

kets

Mar

kets

Exist

ing

New

Existing New

TargetedTargetedMarketingMarketing

NewNewProductProduct

DevelopmentDevelopment

New New BusinessBusiness

DevelopmentDevelopment

New New MarketMarket

DevelopmentDevelopment

TargetedMarketingProcess

GrowthProcess

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The New Product Development Process

ConceptConcept DevelopmentDevelopment

MarketMarket ValidationValidation

BusinessBusiness CaseCase

GenerationGeneration

CommercialCommercial LaunchLaunch

MeasureMeasure andand

ControlControl

CControlontrolIImprovemproveAAnalysisnalysisMMeasureeasureDDefineefine

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Why Market Validation Number one cause of New Product

Development failures Brings Voice of the Customer into the project

at the beginning Early sense of business viability More effective use of technical resources Kills concepts that objectively need killing

Rigorous Approach to Market Validation Rigorous Approach to Market Validation Enables Fact-based DecisionsEnables Fact-based Decisions

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Market ValidationThe work of market validation is to: Determine market size, growth, and

attractiveness Identify possible segments and their relative

value for your concept Begin process of defining product requirements Determine possible competitive alternatives Identify any external forces that may accelerate

or dampen prospects; look for outliers Test for expansion potential to other geographical

markets Generate the elements of your QFD

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Market Validation

• Project scope• Competitive alternatives• Project plan & timing• Concepts to test

• Market opportunity• Segments to target• Value chain• CTCs• Value proposition hypothesis• Business model alternatives

• Project go or defer decision• New project charter• Resourcing• Alternative business models

• Learnings• Recommendation basis• Sources of information• Project plan

• Develop initial value proposition• Build initial value chain• Generate interview guide• Conduct interviews• Collect market research

EstablishEstablish CharterCharter

Conduct Conduct Market Market

AssessmentAssessment Generate Generate

CTCsCTCs Measure Measure

and and ControlControl

EvaluateEvaluate LearningsLearnings

CControlontrolIInnovatennovateAAnalysisnalysisMMeasureeasureDDefineefine

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Market Back Approach to Growth

Engage the market to determine the concept’s viability

Understand how the value adding process (value chain) operates

Develop a value proposition to specifiers and end users

Obtain first estimate of the potential revenue opportunity

Determine what resources will be required to develop the opportunity for commercial sales and how to shorten the development cycle

Provide business management with facts from direct contact with the marketplace to decide which concepts merit moving forward with resourcing. Balance depth and speed in this disciplined approach using an organized set of activities.

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Research Approaches to Market Back Approach (VOC)

Subjective Questions - Open-ended questions and leading discussions directed at revealing specific understanding the range and scope of underlying practices, needs and wants

Analytical Surveys - Close-ended (multiple choice or ranking or ratings) on uses, values, and options

Experiments - Responses to proposed concepts which simulate buyer or customer behavior

Motivational or Inner Mind Probes - Open-ended questions, discussions and exercises designed to indirectly reveal underlying motivations

Voice of the Customer is an essential component of creating and delivering value with the growth process

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The Research Process

DefineDefine Research Research

and itsand itsElementsElements

DesignDesign thethe

StudyStudy

ExecuteExecute thethe

StudyStudy

AnalyzeAnalyze ResultsResults

andand ModelModel

ReportReport

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How Research is Done Ways to Conduct Interviews (Modality)

• Personal Interview Phone Surveys Mail Surveys Phone-Mail (Fax)-Phone Conference (Show) Intercepts On-Line (Panels)

Differences Applicable to Different Methods Different Completion Rates Varying Costs Varying Reliability Varying Workability (Foreign)

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Perceived Value Measurement Methods

Concept Testing Full Profile Conjoint Choice Analysis (Discrete Choice Modeling) Compositional Conjoint Profiling Rating Methods

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Measuring The Value of Product Features

Popular Conjoint Methods Complex, difficult, and fault sensitive Designed for consumer markets Based on trade-offs of hypothetical products

Compositional Conjoint Simple, short, easily executed, fault tolerant

method Ranking of features with price discounts For use with experienced buyers With well understood features and benefits

Conjoint methods focus on the relative value of features but give a poor estimate of total product value

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Example:Consumer Segmentation

•2 clear benefit segments emerge

•Timesavers•Protection seekers

•A third segment may exist, but there is not enough data to confirm it

•Loss of time is a stronger driver than battery damage

Average Values of Benefits by Segment

0%10%20%30%40%50%

Ave

rage

Val

ue

Mean Time Savings (56%) Protection (44%)

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VOC and Conjoint Analysis VOC is customer assessment (interviews, surveys, focus groups, etc.) in an effort to identify

customer needs and wants. Conjoint is a survey & analysis tool that allows the business to quantitatively understand

customer needs.

Growth, Share, and Lifecycle The growth/share analysis is one of the more traditional looks at a product’s market position.

The analysis typically takes the form of a 2X2 matrix.

Segmentation and Value Proposition Framework A framework used to rank the segments, develop value proposition for each segment, and

allocate resources

Value Mapping Value Mapping generates a graphical summary of the relationship between customers’ desired

product attributes, the competitive choice set, and the price the customers are willing to pay.

Competitor Analysis Data analysis technique used to compare competitors across the conjoint attributes and other

key criteria (i.e. new product development, price, sales force support, etc.)

Value Pricing Tools

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Example:What They Are Likely to Pay

Costs

Manual $13.20

Remote $18.00

   

Demand

90 Percentile $37.66

75 Percentile $42.54

Median $57.15

Average $59.20

   

   

Optimum Price Range at 90 % of Maximum Earnings

Maximum $60.00

Minimum $42.00

                   

                                                                     

Likelihood of Purchase 70%

                     

       Acceptable

Earnings 90%                                                                

Demand for Remote Battery Brain at 70% Likelihood of Purchase

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

$0 $25 $50 $75 $100 $125 $150

Price

-20%

0%

20%

40%

60%

80%

100%

Smoothed DemandSmoothed EarningsRangeManual PurchasersRemote PurchasersEarnings

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Analysis Drives the Agency Briefing

SegmentationSegmentationBased on consumer Based on consumer value of benefitsvalue of benefits

PricingPricingBased on likelihood to Based on likelihood to purchase and purchase and earningsearnings

PositioningPositioning

Motivating MessageMotivating Message

Fact Based Briefings are Inputs to Effective Fact Based Briefings are Inputs to Effective MarcomMarcom

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Marketing to Drive Top Line Growth

The process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational goals

Marketing with Six Sigma Leads the Way by Marketing with Six Sigma Leads the Way by Interpreting VOC SignpostsInterpreting VOC Signposts