Questions??? How does the start-up estimate the market? Issues in - - PowerPoint PPT Presentation

Questions???

How does the start-up estimate the market?

Issues in Forecasting Demand

• Can’t estimate future demand solely
• n the basis of the current market

size

• Depends on the timing of customer

adoption

• Depends on the accuracy of

information about the factors that influence diffusion patterns

High-Tech Forecasting Hazards

• Lack of historical data
• Difficult for customers to

articulate preferences

• Inflated projections from over-

enthusiasm

• Competition from incumbent

technologies

Model of the “ Whole Product ”

Standards Procedures Installation Debugging Training Support Supplies Consumables Repairs Maintenance Additional Hardware Additional Software System Integration

Generic ( Core ) Product

Questions???

How does the market grow?

Individual Adoption Process

 Awareness  Knowledge  Linking  Preference  Purchase

Factors influencing rate of new product adoption by customer

Five Characteristics of an Innovation

• Relative Advantage over the current product or solution it would replace
• Can take the form of economic benefits to the adopter or better

performance

• Compatibility :the fit of an innovation with a potential adopter's existing

values, know how, experiences, and practices

• Complexity : the extent to which an innovation is perceived to be difficult to

understand or use

• The higher the degree of perceived complexity, the slower the rate of

adoption

• Trialability : the extent to which a potential adopter can experience or

experiment with the innovation before adopting it

• The greater the trialability, the higher the rate of adoption
• Observability : the extent to which the adoption and benefits of an

innovation are visible to others within the population of potential adopters

• The greater the visibility, the higher the rate of adoption by those that

follow

Rogers’ Diffusion of Innovation Model

 Individuals differ in their readiness to

adopt new products

 Five types of individuals

Innovators Early adopters Early majority Late majority Laggards

How innovations enter a Social System ?

Groups of Adopters

Innovators: adopt new technology immediately Early adopters: follow the innovators Early majority: adopt new technology just before the average for the market Late majority: adopt after other customers have adopted the technology successfully Laggards: prefer to avoid adoption as long as possible

S-Curves of Adoption

• The S-shaped pattern indicates that there is an

acceleration point at which a market takes off by:

• Pointing out that different groups of customers

adopt new products at different points in time for different reasons

• Providing information about the right promotional

strategy

• Indicating appropriate pricing strategy
• Providing estimated demand growth over time
• Providing information about the financial

attractiveness of a market at different points in time

The Adoption S-Curve

Innovators Early Adopters Early Majority Late Majority Laggards

Crossing the Chasm

Technology Adoption Life Cycle

Crossing the Chasm

• The need to sell to the mass market to

achieve an adequate return on investment

• For companies to segment the early majority
• f the market and
• Focus on the portion of the majority that is

underserved by existing products

Using the Technology Adoption Life Cycle

 The vendor of an innovation passes

through technophiles and visionaries before establishing a foothold among pragmatists

 Crossing the chasm (called the “market

development gap”) between visionaries and pragmatists is related to a change in the entire marketing mix

There are changes in type of customer

and what the customers perceives as being of value

The Landscape of the Technology Adoption Life Cycle (TALC)

Continuous Improvement vs Creative Destruction

Focus on existing

 Products  Processes  Suppliers  Customers  Shareholders

Focus on emerging

 Technologies  Markets  Partners  Customers  Stakeholders

Innovative entry by entrepreneurs is the disruptive force that sustains economic growth, even as it destroys the value of established companies and laborers that enjoyed some degree

• f

monopoly power derived from previous technological, organizational, regulatory, and economic

Forecasting Customer Demand for High-Tech Innovations

• “Who the hell wants to hear actors talk?”
• Harry M. Warner (1927) reacting to addition of

audio technology to silent movies

• “Television won’t be able to hold on to any market

it captures after the first six months. People will soon get tired of staring at a plywood box every night.”

• Darryl Zanuck, 20th Century Fox Films, 1946
• “There is little reason for any individual to have a

computer in their home.”

• Ken Olsen, president and founder of the DEC

Corporation,1977

Mobile Phones Projections

• Launched in 1973
• AT&T commissioned study in

1983 for

• Worldwide demand by 2000
• Forecast at
• 900,000
• Actual sales by 1994
• 17 million

Creative Destruction

Recorded Music Hand-held digital appliances Desktop computers Online shops Brick & mortar shops Quartz watches Mechanical watches Film photography

Disruptive Technology Established Technology

Digital photography i-Music

10 20 30 40 50 60 Subscriber base 2001 2002 2003 2004 2005 2006 2007 2008 Year

Trend of Subscriber Base in Fixed Line Phone

Nos in millions

Creative Destruction in Action: Telecom

50 100 150 200 250 300 Subscriber Base 2001 2002 2003 2004 2005 2006 2007 2008 Year

Trend of Subscriber Base in Mobile Phones

Nos in millions

Creative Destruction in Action: Telecom

Fixed Line Phones

• 8
• 6
• 4
• 2

2 4 6 Increase in Subscriber base 2001 2002 2003 2004 2005 2006 2007 2008 Year Nos in millions

Mobile Phones

20 40 60 80 100 Increase in Subscriber base 2001 2002 2003 2004 2005 2006 2007 2008 Year Nos in millions

Creative Destruction in Action: Music

Creative Destruction: Music

 Since the introduction the iTunes Music Store on April 28, 2003, music

sales have plummeted in the United States -- from $11.8 billion in 2003 to $7.1 billion last year

 Interestingly, during that same time, people have been buying more music

than ever. How is that possible? It's because the iTunes Music Store popularized the cheap digital single

 Steve Jobs was able to offer digital albums for $10 and any individual

track off that album for 99 cents.

 That changed the music industry forever. When music sales reached their

peak in 2000, Americans bought 943 million CD albums, and digital sales weren't even a blip on the radar. By 2007, those inexpensive digital singles

• vertook CDs -- by a wide margin -- generating 819 million sales to just 500

million for the CD.

 With 1.4 billion digital singles sold, CD sales were dwarfed by a factor of 7.

More than 80 % of all music-related transactions were digital singles.

 Apple's iTunes is behind that sea change and is currently responsible for

63% of all digital music sales even after the emergence of competition from Amazon and Google.

Schumpeter’s Entrepreneur

 An individual willing and able to convert a new

idea or invention into a successful innovation

 An individual who employs the “Gale of

Destruction” to replace in whole or in part inferior innovations across markets and industries, simultaneously creating new products including new business models

 This way, creative destruction is largely

responsible for the dynamism of industries and long run economic growth

 Size of ICT industry : $4 trillion [Global $ 70 trillion]

Questions???

How does the start-up differentiate itself?

Branding

Branding

1 of 4

• Establishing a Brand
• A brand is the set of attributes—positive
• r negative—that people associate with a

company

• These attributes can be positive, such as

trustworthy, dependable, or easy to deal with

• Or they can be negative, such as cheap,

unreliable, or difficult to deal with

• The customer loyalty a company creates

through its brand is one of its most valuable assets

Branding [2 of 4] What’s a Brand?

What do you want customers to see when they first research your company? What will last for years and withstand changing trends? Your brand is what people will remember about your business.

Branding [3 of 4]

• Establishing a Brand
• So how does a firm establish a brand?
• On a philosophical level, a firm must have

meaning in its customers’ lives. It must create value—something for which customers are willing to pay.

• On a more practical level, brands are built

through a number of techniques, including advertising, public relations, sponsorships, support of social causes, and good performance.

• A firm’s name, logo, Web site design,

Facebook page, and even its letterhead are part of its brand.

Brand Deliverables

• Excel at delivering the benefits

consumers truly desire

• Pricing strategy is based on

consumer perception of value

• Differentiation
• Relevance
• Knowledge
• Esteem

Fevicol Bond Branding

Branding for Small Business

• Resource constraints
• May enter market with no brand
• Develop relationships with one or

two large customers

• Improve quality, customer experience
• Creativity can compensate for low

budget

Ab sirf shopping nahin, Flipkart karo

“India Wants to Know”

Rotten Apples

• Apple III
• Apple Lisa
• Apple Newton
• Pippin
• Copland
• Apple USB

Mouse

• Power Mac G4 Cube
• iPod Hi Fi
• eWorld
• Macintosh Performa
• Macintosh Portable
• Apple TV

From Apple Computer to Apple Inc.

Year 2002 2003 2004 2005 2006 Sales 5 6 8 14 19 Profit 0.04 0.06 0.27 1.3 1.9 Year 2007 2008 2009 2010 2011 Sales 25 37 43 65 108 Profit 3 6 8 14 26

2014: Sales $182 b Profits $53 b

Questions???

Why do the products fail?

Factors Associated with Technological Product Failure

Pricing problems Distribution channel selection Poor communication of product benefits Poor selection of target market Unique attributes not seen Need for product is not seen Information about product is scarce, unclear or difficult No innovative advantage perceived Customer expectation not met

Questions???

Who made it?

Journey of a Home-grown Brand

• Started as an IT software company in the year 2000 working on

embedded platforms

• By 2008, entered mobile handset business
• This transformation was steered by four friends who divided

responsibilities on functional lines, which haven’t changed since:

• Rajesh Agarwal, 47, Managing Director, Rahul Sharma, 37, Executive

Director, Vikas Jain, 37, Business Director, and Sumeet Arora, 37, Chief Technology Officer

• Through its emphasis on adapting to the changing market dynamics,

introducing feature-rich phones and smart-phones that are innovative and unique, has today become a brand to reckon with

• Has presence across India and global presence in Bangladesh, Nepal,

Sri-Lanka, Maldives, UAE, Kingdom of Saudi Arabia, Kuwait, Qatar, Oman, Afghanistan and Brazil.

• Sells around 1.3 million mobiles handsets every month, with a presence

in more than 500 districts through 100,000 retail outlets in India.

• By 2010 became the largest Indian domestic mobile handsets company

Marketing

• Driven by growing aspirations of the Indian mobile users, Micromax has geared up to

bring about a paradigm shift in the way cell phones are used by introducing groundbreaking mobile solutions technology

• When Micromax entered the segment, it followed a simple strategy of bringing

innovative products for the consumers and coupled it with smart marketing

• The company’s success could be attributed to the ‘Out of the Box’ thinking and thus

providing Innovative & insightful products to the masses

• At Micromax, the target audience is youth who want innovative, stylish phones that are

affordable.

• Today the mobile phone category is driven by youth, with about 60% of the users under

the age group of 20-40 yrs and Micromax utilizes every opportunity to connect with the youth

• Micromax understands that building connect is all about being involved with the

customers and also giving them the value for money

• Through products and innovative campaigns, Micromax aims to provide value

additions to the users and have theminvolved by creating unique brand proposition

Questions???

Do you go to shop? Or does the shop come to you?

Distribution Network

• Micromax has a 3 tier distribution

network in India, which extends across

• 65 super distributers
• 1500 micro distributors and over
• 100,000 retailers
• To enhance brand cognizance and

retail strength, Micromax has a

• Chain of exclusive retail outlets, owned by

third party

Micromax: Today and Tomorrow

• One of the leading mobile companies in the World today
• 12th largest mobile brand in the World
• In-depth understanding of rapidly changing consumer

preferences coupled with the use of advanced technologies

• Able to differentiate from the competitors through

innovation and design

• Took on the leaders in the category with specific products

that addressed different customer needs

• Has focused efforts towards creating life-enhancing mobile

phone solutions and wireless technologies that cater to the increasingly evolving needs of mobile users in India

• Aims to be a billion dollar company by 2014
• Expanding aggressively in India and globally

Marketing Plan

Multiple Products Multiple Customer First Customer Niche Goals Distribution Branding Product Positioning Company Identity Pricing Strategies Logistics Packaging Promotion Advertising Tactics Purpose of the Plan