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 on 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 System Installation Integration Debugging Generic Additional Training ( Core ) Software Support Product Repairs Additional Maintenance Hardware Supplies Consumables

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 How innovations enter a Social System ?  Individuals differ in their readiness to adopt new products  Five types of individuals  Innovators  Early adopters  Early majority  Late majority  Laggards

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

Crossing the Chasm Technology Adoption Life Cycle Innovators Early Laggards Early Late Adopters Majority Majority

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 of 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 emerging Focus on existing  Technologies  Products  Markets  Processes  Partners  Suppliers  Customers  Customers  Stakeholders  Shareholders 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 of 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 Established Disruptive Technology Technology Digital photography Film photography Mechanical watches Quartz watches Brick & mortar shops Online shops Recorded Music i-Music Desktop computers Hand-held digital appliances

Creative Destruction in Action: Telecom Trend of Subscriber Base in Fixed Line Phone 60 50 40 Subscriber 30 base 20 10 0 2001 2002 2003 2004 2005 2006 2007 2008 Year Nos in millions

Creative Destruction in Action: Telecom Trend of Subscriber Base in Mobile Phones 300 250 200 Subscriber 150 Base 100 50 0 2001 2002 2003 2004 2005 2006 2007 2008 Year Nos in millions

Fixed Line Phones 6 4 2 Increase in 0 Subscriber -2 base -4 -6 -8 2001 2002 2003 2004 2005 2006 2007 2008 Year Nos in millions

Mobile Phones 100 80 Increase in 60 Subscriber 40 base 20 0 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 overtook 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 or 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