Part of the Steve Blank methodology of classifying markets as Existing, Resegmented and New.

1. This presentation is made possible by the support of the American People through the United States Agency
for International Development (USAID). The contents of this presentation are the sole responsibility of
Rasmussen International and do not necessarily reflect the views of USAID or the United States
Government.
Market Research
and
Competitive Positioning

2. Power of Information
• Strong market
research
• Allows you to make
plans with real data
• Attack big markets
• Minimize competitive
threats

3. Why does market size matter?
• Quantify and validate the business opportunity
• Paint a compelling picture of opportunity for:
– Investors
– Company personnel
– Customers
– Partners
– Market analysts/press

4. Market Research Sources
• Primary, direct:
– Conducting qualitative interviews
• Customers,
• Prospects,
• Suppliers & vendors
• Secondary, indirect:
– Published sources
– General information about target market,
industry, and competition

5. Primary Sources
Traditionally:
focus groups & interviews
Now:
email, online, website, panels, observation, field trials,
informal beta-user groups, customer panels, interviews,
survey monkey, LinkedIn, Google searches, Craigslist,
…

6. Secondary Sources
• Traditionally: expensive industry reports
(Gartner, Forrester, IDG)
• Now: publicly accessible records
– Local/Regional markets & industry sectors:
• Business Associations & Chambers of Commerce
• Trade Associations & Industry groups
• Business journals & Academic institutions
– International markets, add to the above:
• Chambers of Commerce of your target country
• Embassies and Consulates

7. Market Opportunity
• Investors want to participate in large, growing markets
• Every investor asks the question: “How big is the
market?”
• Small market opportunity:
– a family business, fundable by a bank
• Big market opportunity:
– upside, potentially fundable by risk capital

8. The language of “market size”
• TAM - Total Addressable Market
– Total number of customers or the amount of business being conducted
in the market in which you participate
– Everyone that could ever be to reached with your product
• SAM - Served Addressable Market
– The potential slice of that market that your specific product addresses
– The portion of TAM you can target
• SOM – Share of Market
– The actual slice of the market that you expect to achieve
– The subset of the SAM that you will realistically reach
– Measured in either % or absolute $

9. TAM:
total possible market for
your product category
SAM:
Based on your current
business model
SOM:
based on
practical limits of
your business
model

10. 2M Units
1.6M Units
0.4M Units

11. Types of market intelligence
• Quantitative:
– Size of market
– market demographics & cohorts
– business characteristics, trends
• Qualitative:
– Understanding customer behavior,
– Perceptions and buying patterns
– Market opportunities & threats
• Product/service features
• Are expectations met/going to be met?
• Perceptions on competitive advantage?
• Follow up – any action items to tweak product/service?

12. Market Sizing Process
Define
business
strategy
assumptions
Set timeframe
and growth
metrics
Identify
relevant
analogs
Model market
from 3
perspectives
Highlight
market trends,
discuss
key
implications
 Positioning strategy
- Market and
customer
segmentation
- Critical need
- Competitive
differentiation
 Business and pricing
models
 Partnership and
channel strategy
 3-5 years
 1 year of actual
market segment
numbers
 Annual growth
rates
 3-5 year CAGRs
 Market penetration
rates
 Financial analysts
 Market analysts
 Trade
associations
 Public Co.
information
 Trade journals
 Channel partners
 Total Available Market
(TAM)
 Served Available
Market (SAM)
 Share of Market
(SOM)
 Marketing
 Sales
 Finance
 Engineering
 Operations
Select
best
information
sources
 Products
 Markets
 Industries

13. Major Corporate Assumptions and Future Goals
• Assumptions:
– What do they believe about their reputation and capabilities?
– Who are their key decision makers? Functional backgrounds?
– What is their attitude toward change and risk?
• Future Goals:
– Financial goals (ROI, share price, sales volume?)
– Incentive systems for management?
– Who is on their board of directors?
– What are their governmental constraints?
Where can you obtain these answers? Public and private…

14. Product Positioning
Positioning Methods:
• By attribute
– BMW known for engineering, Volvo for safety & durability
• By price & quality
– Walmart vs. Neiman Marcus
• By application
– Morning blend coffee
• By user type
– Johnson & Johnson baby shampoo repositioned for adult use as mild
shampoo
• Vis-à-vis competitor
– Avis – “We’re #2 so we try harder”)
• As solution provider for a specific problem

15. Positioning Measurement
• Perceptual Mapping
Spatial mapping of brand perception by various individuals
• Positioning to a Segment
includes all the options a target market has to fulfill need for a
product/service, including substitute products
• Positioning Map
chart different products & services to enable comparison and
contrast easily
axes of map – price vs. quality, comfort vs. price, expertise vs. price
any gaps on the map can point to areas of new product development

16. Positioning Statement
Positioning statement breaks down into 4 parts:
1. Target Market
2. Your Product/Service
3. Frame of Reference/Category
includes all the options a target market has to fulfill need for a
product/service, including substitute products
4. Point of Difference or Uniqueness
the benefit that buyers get from your product uniquely

17. Construct a “Day in the life”
• This is the story telling part of what you do…
• What your customers need and what they care about
• How they will use your type of product/service
• How they gain value
• How they will be happy to pay you

18. You
Typical two-axis diagram
• You define the
axes to show
your strengths
• You’re always
in the top right
corner

19. SWOT Diagram
• Strengths
• Weaknesses
• Opportunities
• Threats
• Useful for internal and
external analysis
• Helps shape thoughts
on competitive
environment

20. Current
Industry
Structure
(rivalry amongst competitors)
Potential
Entrants
Customers
Substitutes
Suppliers
Competitive Analysis:
The Porter Model
Who is your
Competition?

21. Thinking through the Porter Model
• Minimizing Substitution Effects:
– How easy is it for a customer to
substitute your product/service?
• Minimizing Supplier issues:
– How easy is it for Suppliers to drive up
prices?
• Reducing bargaining power of
customers
Current
Industry
Structure
(rivalry amongst
competitors)
Potential
Entrants
Customers
Substitutes
Suppliers
Current
Industry
Structure
(rivalry amongst
competitors)
Potential
Entrants
Customers
Substitutes
Suppliers
Current
Industry
Structure
(rivalry amongst
competitors)
Potential
Entrants
Customers
Substitutes
Suppliers

22. Building Barriers to Entry
• High capital investment
• Specialized service delivery processes
• Special distribution channels
• Unique image or brand awareness
• Patented or difficult to copy features
• Geographical location advantages
• Specialized sources of supply (supplies and labor)
• Special purpose machinery or software
• Special financing techniques
• Experience curve knowledge
Results in higher profitability and less risk

23. Research Methods
QUANTITATIVE: CONJOINT
ANALYSIS
Helps analyze thought
process behind preferences.
Identify & describe levels of
product attributes or
characteristics.
Measure relative utility and
relative importance of the
attributes.
The relative value of
product/service attributes can
be analyzed statistically.

24. Research Methods
QUANTITATIVE: KEY DRIVER
ANALYSIS
Survey method that uses
statistical linear regression to
measure strength of multiple
attributes (variables) relative to a
strategic characteristic
(dependent variable).
Useful in answering:
• What is driving the brand it
its market segment?
• What would make its market
share rise?
• What makes a competitor’s
market share rise?

25. Competitive Analysis and Frameworks
• Investors ask: Who is the competition?
• Capabilities:
– Products and Services offered
– Marketing and selling
– Dealers and distributors
– Facilities and locations
– Operations
– Technology
– Overall cost position
– Financial strength
– Organizational culture
– Managerial capacity
• Strategy
– Corporate portfolio and SBUs
– Political ties and other special advantages
– Strategic direction? Growth, harvest…?

26. Conclusion
• Understand
– Target market and segment,
– Your industry
– Your customers
– Your competitors
• Know how to position yourself and your products and
services to pinpoint your messaging
• Reduce business risk and increase revenue & profitability