Marketing for Entrepreneurs (Wed Dec 3, lecture 25)

Homework due for today

• Read: Rethinking Crossing the Chasm and Technology Adoption LifeCycle. Prepare for a discussion and cold calls.
• Read this interesting scenario: Company Founding Scenario. Deliverable: Post your response to the four questions.

The eRoom Story

• Story of eRoom’s entry into the market
  • Pito and Jeffrey in 1995: Home delivery of groceries
  • The importance of domain expertise
• The case we made to the VC about our competitive advantage: Internet + Desktop software + groupware
• How to position it? Groupware, Collaboration, Teamware: all were dirty words
  • Customers (early adopters) really liked our value proposition
  • “We are constantly reinventing the wheel”
  • “there’s too much email”
  • “we should be sharing better”
  • “we are inefficient”
• How to sell: Download vs. Corporate sales team
  • Direct sales: selling an alpha and beta test
  • At first it went well but then it didn’t
• We needed to get more specific
  • Go beyond “nice to have” to “must have”
  • Vitamin vs. Aspirin
• What happened next
  • Horizontal/Vertical/Horizontical
  • The importance of real domain expertise
  • Why vertical (IMHO) is easier place to start
• Exercise Look to your “extended” team: what do you know better than eanyone else?

Crossing the Chasm

• A concept that reminds us that the way we ‘approach’ a market changes depending on the maturity of the market
• From a a famous book: Crossing the Chasm, by Michael Moore, considered a seminal work.

• Key Lessons
  • Realize where you are in the adoption cycle. Each stage calls for a different approach
  • Realize that each stage gets information from fans in the previous stage so you need to really make sure
    • They are fans
    • They communicate with the next stage
  • Growth can easily stall when going from Early Adopters to Early Majority
• Innovators and Early adopters (Earlyvangelists)
  • Seek out new technology to solve their (or their companies’) problems, not just for the sake of owning the newest technology.
  • Don’t rely on references from others to make buying decisions. While they are in- fluenced by other early adopters, their main concern is solving a known problem.
  • Eric Ries and Steve Blank call Early Adopters “Earlyvangelists” to reflect that they are your biggest evangelists.

Earlyvangelist

Other reading

• Rethinking Crossing the Chasm
• Book Summary of Crossing the Chasm

What is a ‘market’ in this context?

• How do you think about the market size?
• Look at segments, value proposition and market entry
• Segments: For your market or customer hypothesis, you need to understand the market(s) and segment(s) you are serving.
• Notice that these are not black and white, they can be continuums or multi-faceted.
• Types
  • Mass Market: Huge and undifferentiated. Horizontal, e.g. consumers age 12 to 18.
  • Niche: Highly specific: Vertical, e.g. Bicyclists
  • Segmented: your product serves more than one segment. Apple serves the consumer and education market segments
  • Diversified: your product serves very different markets: Amazon serves consumers and software developer
  • Two or multi-sided markets: brings two or more segments together: dating services, newspapers
  • there are others…

Value Proposition:

• For each segment you need to express what value your product or service is creating.
• If you cannot express it than you probably should not be trying to address that market.
• It’s not just that you are offering something ‘new’ to that segment. It could also be:
  • cheaper (to buy or to use)
  • faster
  • more convenient
  • better designed
  • more customized
  • brand
  • safer/less risky
  • more available (segment couldn’t get it, use it, access it before)

Market Entry

• Existing market
  • Your customers (kind of) understand the problem and your solution
  • You have (kind of) competitors
  • Your customers will have to stop using another product
  • Sometimes your entry can grow the number of customers, sometimes you fight it out (e.g. Facebook for Seniors. Is that a new or existing market?)
  • So you can:
    • ENTER an existing market, e.g. Android joining iPhone and compete directly
    • RESEGMENT an existing market - with one of value propositions above, e.g. iPhone joining Blackberry
    • RESEGMENT a market - by going after a sub-component of it, e.g. Tesla entering automobile market
• New Market
  • Your customers may not know they have the problem
  • You have to teach/explain them why your product/service exists
  • They will have to find budget (money) to pay for it.
  • This is a very expensive process for you
  • So you can:
    • CREATE a totally new market, e.g. Palm, creating the PDA market
• Discussion: Let’s see what advantages and challenges each example has
• Exercise:
  • Company and market
    • Barnes and Nobel Nook
    • Tesla Motors
    • Olin College
    • Apple iTunes
    • Raspberry Pi
    • Nest Thermostat
    • Microsoft X-Box
    • Makerbot Replicator
    • Google Android
    • Pocket Hose (google it)
  • 5 minutes: Team up in by classroom table, pick a different product, and answer:
    • what market(s) is this company and/or product in
    • what segment and kind of segment does it compete in
    • what is it’s value proposition is it offering that market
    • how did it attack or enter the market
    • additional observations and/or insights?
• Report out by table