Description
In industry, product lifecycle management (PLM) is the process of managing the entire lifecycle of a product from its conception, through design and manufacture, to service and disposal
“No one really needed it” – Max Levchin
Marketing and Market Research
A Crucial Part of the Product Development Life Cycle
David Moeller September 14th, 2010
You already have experience in marketing, whether you realize it or not.
I. II. III. Products no one buys Products that I don’t buy Products that I do buy
Why focus on marketing? Crucial for business and product development success.
Business • "Because the purpose of business is to create a customer, the business enterprise has two and only two basic functions: marketing and innovation.” – Peter Drucker • “Marketing is . . . the whole business seen from the point of view of the final result, that is, from the customer's point of view.” – Peter Drucker
Product Development • Crucial to understand target customer’s needs and willingness to pay
• Customer desires will impact almost all areas of product development
Group Activity 1
• 3 products you use/buy • 3 products you don’t use/buy
A thorough understanding of your customer will influence every aspect in your product lifecycle
STP
• • • Segment Target Position
4 P’s
• • • • Product: Features, packaging Price Place: Channel to market Promotion: Branding and message
Market research is used to determine viability of the idea and create a marketing plan
What? • Verify need for product • Determine market size: How big is my idea? • Choose target customer: Where do we focus first? • Understand target customer How? • Primary
– Methods
• Surveys • Focus groups
– Risks: Question & facilitator bias
•
Secondary
– Methods
• Reports and studies • Try not to pay
– Risks: Report or study bias
Group Activity 2
• Pick 1 senior design project idea • Discuss
– What competitive products exist? – Who might the target consumer be? – What is a reasonable price point?
Case study – Claw Hanging Systems
Bicycle Storage Rack Case Study
Initial questions • Who is the target consumer? • Where will they buy it?
CLASS VOTE
• Consumers
1. Enthusiasts: Bike price > $350 and ride often 2. Casual riders: Bike price < $200 and ride occasionally
•
Channels
1. Independent Bicycle Dealer 2. Lowes/Home Depot
Case study – Claw Hanging Systems
Utilized secondary market research to determine viability, then primary to create marketing plan and select channels
• Secondary market research, conducted by David Moeller from 2004-2006
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. The Australian Bicycle Industry Report 2003 U.S. Department of Transportation, Bureau of Transportation Statistics, Bicycle and Pedestrian Data: Sources, Needs, & Gaps, BTS00-02,Washington, DC: 2000 REGIONAL SPENDING PATTERNS OF HOUSEHOLDS IN THE U.S. AND, METROPOLITAN AREAS IN THE MIDWEST, 2000-2001, Bureau of Labor Statistics US Consumer Product Safety Commission, Office of Hazard Analysis and Reduction, Directorate for Economic Analysis, Bicycle and Bicycle Helmet Use Patterns in the United States: A Description and Analysis of National Survey Data, 1992 US Consumer Product Safety Commission, Office of Hazard Analysis and Reduction, Directorate for Economic Analysis, Characteristics of Adult Bicyclists in the United States: Selected Results from a National Survey, April 1993 The National Bicycle Dealers Association – Industry Overview- from web page www.nbda.com, 2004 Copyright © 1999 Bicycling Life Website., Bicycle Vs Auto Production, Riley Geary Transportation Alternatives- GIANT bicycle presentation, 1999 Bicycle/Pedestrian Federation of America, Bicycle Facts and Trends, 1992 Omnibus Transportation Survey by Bureau of Transportation Statistics, July 2001
•
Primary market research - fall of 2006: 156 respondents
– Goals
• • • General Demand: Does anyone want it? And what will they pay? Competitive Intel: What rack are people using now? Demographics: Who will buy it? And who will pay the most? Correlating receptivity to current bike price or other demographic variables
•
Primary market research conducted by Magnus & Co.during July 2007: 256 respondents
– Goals
• • Obtain data to create realistic market segmentation Use pictures of final prototype to hone pricing
HBS Survey
Harvard Business School Student Survey
• Initial perceptions
– Tell me about the item. What are your thoughts? – What do you think this does? What would you use it for? – Do you value it? – What are five key words that describe the invention? – What else would you use this for?
• Additional Information
– Do you store bikes at your house? – If yes, where do you store them? – If yes, how do you store them and why?* – Do you own any current bike racks? – If yes, which ones? – Based on what you have seen today, would you consider buying the Claw? Why or why not? – What price level seems reasonable for the Claw?
HBS Survey
HBS Survey
HBS Survey
Sample respondent data
Case study – Claw Hanging Systems
When market research is utilized correctly to determine the target customer (STP), it should drive channel selection
Group Activity 3
• For previously selected senior design project idea • Discuss
– What are three key questions that could be addressed through primary market research?
Case study – Claw Hanging Systems
Hook & arm racks are the primary competition
Type of Rack Cable & Pulley Ceiling (Options for Suspenders ($35-$50) Garage Storage) Pro Effective Con Standing Bike Rack ($80- Leaning Racks ($40-$75) Hook racks ($2-$30) $240) Arm racks ($20-$30)
Easy to use
Easy to use
Cheap
Difficult to install, ease of Takes up space use, time to raise & lower the bike
Could fall over, takes up Ease of use space
Moderate Price, Ease of use Uses horizontal wall space
Pictures
Case study – Claw Hanging Systems
Recreational spending and new bike sales are increasing
Recreational spending in US increasing at a CAGR of 7.9%
Millions
Average 11.2M new bikes purchased yearly
16 14 12 10 8 6 4 2 0
Bike Sales (Wheel Size 20"+)
Magnus Survey
Magnus Survey
If we could offer you a such an easy-to-use, secure, simple, space-saving solution that’s affordable, would you buy it or convert to it? ? Absolutely ? Probably ? No Would you want to use it on your ceiling or wall? What would this solution be worth to you? ___ More than $ 40 ___ $ 30 to $ 40 May we ask your age? ___Under 30 May we ask your homeownership level? ___Apt – Rent ___Home – Rent ___Other ___30 – 45 ___Apt – Own ___Home – Own
___ Less than $ 30
___45 +
If respondent is willing to talk further, go ahead and ask: How often do you replace your bike? ___every yr ___every 3 yrs ___once in 5 yrs
Case study – Claw Hanging Systems
Storage Rack Market Overview
Use
Bike Bike Bike Non-bike
User
Active Active Inactive -
Dist Channel
IBD Mass merchants/DIY Mass merchants/DIY DIY
Size
10M 33M 55M 30M
High-end consumer (>$213 on last bike); visits independent retailer 1+ times/yr Mid-level consumer (<$213 on last bike, but buys bikes new); purchases bicycle from mass merchant
Case study – Claw Hanging Systems
Size of IBD channel (high-end) is 1.2M to 5.1M consumers
Secondary market research driven Primary market research driven
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Inactive vs Active Riders High vs Low-End Riders Owners vs Renters Buy vs Not Buy Abs Buy vs Prob Buy Abs Buy 54.8 3.4 1.6 33.0 3.9 43.1 6.8 5.1 1.2
97.8
43.1
10.1
10.1
6.7
5.1
1.2
1.2
Assumptions and Sources 1. US Bike Riders – Mintel/Simmons NSC 2001/US Census 2000 2. Active Riders – Magnus Corporation 2007/US Sporting Goods Association 3. High-end – 10.1mm riders, composed of 0.9 mm enthusiasts, 2.4 mm moving-up, and 6.8 mm casual riders - Rodale Press, The Cycling Consumer of the 90's, A Comprehensive Report on the U.S. Adult Cycling Market, Emmaus, PA: Author; 1991 4. Home or Apt Owner – 67% of riders live in their own home or apt- Rodale Press, The Cycling Consumer of the 90's, A Comprehensive Report on the U.S. Adult Cycling Market, Emmaus, PA: Author; 1991 5. Probably or Absolutely Buy – 76% of all riders would consider purchase – Magnus and Company, Primary Market Research, 2007 6. Absolutely Buy Claw – 18% of all adult riders would absolutely buy – Magnus and Company, Primary Market Research, 2007
Case study – Claw Hanging Systems
Size of DIY channel (non high-end) is 4.0M to 16.8M consumers
Secondary market research driven Primary market research driven
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Inactive vs Active Riders High vs Low-End Riders Owners vs Renters Buy vs Not Buy Abs Buy vs Prob Buy Abs Buy 10.1 54.8 10.9 5.3 12.8 33.0 43.1 22.1 16.8 4.0
97.8
43.1
33.0
22.1
16.8
4.0
4.0
Assumptions and Sources 1. US Bike Riders – Mintel/Simmons NSC 2001/US Census 2000 2. Active Riders – Magnus Corporation 2007/US Sporting Goods Association 3. High-end – 10.1mm riders, composed of 0.9 mm enthusiasts, 2.4 mm moving-up, and 6.8 mm casual riders - Rodale Press, The Cycling Consumer of the 90's, A Comprehensive Report on the U.S. Adult Cycling Market, Emmaus, PA: Author; 1991 4. Home or Apt Owner – 67% of riders live in their own home or apt- Rodale Press, The Cycling Consumer of the 90's, A Comprehensive Report on the U.S. Adult Cycling Market, Emmaus, PA: Author; 1991 5. Probably or Absolutely Buy – 76% of all riders would consider purchase – Magnus and Company, Primary Market Research, 2007 6. Absolutely Buy Claw – 18% of all adult riders would absolutely buy – Magnus and Company, Primary Market Research, 2007
Your challenge: Conduct secondary research, compose a primary research plan, and then execute. A null hypothesis needs to be tested.
• Conduct secondary research and create a primary market research plan
1. Secondary market research summary (1 page max)
• •
• • •
List of 3-5 information sources and valuable information you learned, either qualitative, i.e. mothers really like this product, or quantitative, 20MM women in Africa use this product. Secondary research need not be exhaustive. The goal is to gain a basic market understanding to aid in creating your primary market research plan.
Target Customer Selection. Select target customer and provide rationale. This will be the demographic you will survey. Do not interview your grandparents for your energy beverage idea. Bias Elimination. Question and proctor plan to ensure bias elimination. Study Purpose. Selection of a null hypothesis and explanation of particular choice.
2. Primary market research plan (1 page with three sections)
•
Conduct primary market research
1. Responses and statistical analysis in MS Excel format 2. 1 page summary of plan execution, responses, and results
Appendix
• • • • • HBS Survey Magnus and Corp Survey Customer Adoption Curve Claw Hanging Systems Channel selection Additional files
Different distribution channels could be leveraged to cross chasm as product adoption matures
Independent retailer should be first channel due to higher likelihood of early adopters
Channels to market
•Independent Retailers (Neighborhood Bike Shop) •Mass Merchants (Wal-Mart, Toys R Us) •Full-line Sporting Goods Stores (Dicks, Sports Authority) •Other (Internet, Container Store)
“Specialty bike dealers commanded the vast majority of parts and accessories sales . . .They dominate the market in bicycles selling for $250 and up.”
2002 Bicycle Sales % of 2002 % of avg bike Mkt Size units dollars cost (M $s) Mass Merchant 74 35.8 65 892 Ind Retailer 16.2 46.6 387 1,161 Full-Line Sporting 2.5 2.9 157 72 Other 7.3 14.7 270 366 2,491
Ind Retailers Bike Sales Parts and Accessories Revenue Revenue $1,160,806,000 $ 913,826,000
From The National Bicycle Dealers Association – Industry Overviewweb page www.nbda.com, 2004
doc_423009261.pdf
In industry, product lifecycle management (PLM) is the process of managing the entire lifecycle of a product from its conception, through design and manufacture, to service and disposal
“No one really needed it” – Max Levchin
Marketing and Market Research
A Crucial Part of the Product Development Life Cycle
David Moeller September 14th, 2010
You already have experience in marketing, whether you realize it or not.
I. II. III. Products no one buys Products that I don’t buy Products that I do buy
Why focus on marketing? Crucial for business and product development success.
Business • "Because the purpose of business is to create a customer, the business enterprise has two and only two basic functions: marketing and innovation.” – Peter Drucker • “Marketing is . . . the whole business seen from the point of view of the final result, that is, from the customer's point of view.” – Peter Drucker
Product Development • Crucial to understand target customer’s needs and willingness to pay
• Customer desires will impact almost all areas of product development
Group Activity 1
• 3 products you use/buy • 3 products you don’t use/buy
A thorough understanding of your customer will influence every aspect in your product lifecycle
STP
• • • Segment Target Position
4 P’s
• • • • Product: Features, packaging Price Place: Channel to market Promotion: Branding and message
Market research is used to determine viability of the idea and create a marketing plan
What? • Verify need for product • Determine market size: How big is my idea? • Choose target customer: Where do we focus first? • Understand target customer How? • Primary
– Methods
• Surveys • Focus groups
– Risks: Question & facilitator bias
•
Secondary
– Methods
• Reports and studies • Try not to pay
– Risks: Report or study bias
Group Activity 2
• Pick 1 senior design project idea • Discuss
– What competitive products exist? – Who might the target consumer be? – What is a reasonable price point?
Case study – Claw Hanging Systems
Bicycle Storage Rack Case Study
Initial questions • Who is the target consumer? • Where will they buy it?
CLASS VOTE
• Consumers
1. Enthusiasts: Bike price > $350 and ride often 2. Casual riders: Bike price < $200 and ride occasionally
•
Channels
1. Independent Bicycle Dealer 2. Lowes/Home Depot
Case study – Claw Hanging Systems
Utilized secondary market research to determine viability, then primary to create marketing plan and select channels
• Secondary market research, conducted by David Moeller from 2004-2006
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. The Australian Bicycle Industry Report 2003 U.S. Department of Transportation, Bureau of Transportation Statistics, Bicycle and Pedestrian Data: Sources, Needs, & Gaps, BTS00-02,Washington, DC: 2000 REGIONAL SPENDING PATTERNS OF HOUSEHOLDS IN THE U.S. AND, METROPOLITAN AREAS IN THE MIDWEST, 2000-2001, Bureau of Labor Statistics US Consumer Product Safety Commission, Office of Hazard Analysis and Reduction, Directorate for Economic Analysis, Bicycle and Bicycle Helmet Use Patterns in the United States: A Description and Analysis of National Survey Data, 1992 US Consumer Product Safety Commission, Office of Hazard Analysis and Reduction, Directorate for Economic Analysis, Characteristics of Adult Bicyclists in the United States: Selected Results from a National Survey, April 1993 The National Bicycle Dealers Association – Industry Overview- from web page www.nbda.com, 2004 Copyright © 1999 Bicycling Life Website., Bicycle Vs Auto Production, Riley Geary Transportation Alternatives- GIANT bicycle presentation, 1999 Bicycle/Pedestrian Federation of America, Bicycle Facts and Trends, 1992 Omnibus Transportation Survey by Bureau of Transportation Statistics, July 2001
•
Primary market research - fall of 2006: 156 respondents
– Goals
• • • General Demand: Does anyone want it? And what will they pay? Competitive Intel: What rack are people using now? Demographics: Who will buy it? And who will pay the most? Correlating receptivity to current bike price or other demographic variables
•
Primary market research conducted by Magnus & Co.during July 2007: 256 respondents
– Goals
• • Obtain data to create realistic market segmentation Use pictures of final prototype to hone pricing
HBS Survey
Harvard Business School Student Survey
• Initial perceptions
– Tell me about the item. What are your thoughts? – What do you think this does? What would you use it for? – Do you value it? – What are five key words that describe the invention? – What else would you use this for?
• Additional Information
– Do you store bikes at your house? – If yes, where do you store them? – If yes, how do you store them and why?* – Do you own any current bike racks? – If yes, which ones? – Based on what you have seen today, would you consider buying the Claw? Why or why not? – What price level seems reasonable for the Claw?
HBS Survey
HBS Survey
HBS Survey
Sample respondent data
Case study – Claw Hanging Systems
When market research is utilized correctly to determine the target customer (STP), it should drive channel selection
Group Activity 3
• For previously selected senior design project idea • Discuss
– What are three key questions that could be addressed through primary market research?
Case study – Claw Hanging Systems
Hook & arm racks are the primary competition
Type of Rack Cable & Pulley Ceiling (Options for Suspenders ($35-$50) Garage Storage) Pro Effective Con Standing Bike Rack ($80- Leaning Racks ($40-$75) Hook racks ($2-$30) $240) Arm racks ($20-$30)
Easy to use
Easy to use
Cheap
Difficult to install, ease of Takes up space use, time to raise & lower the bike
Could fall over, takes up Ease of use space
Moderate Price, Ease of use Uses horizontal wall space
Pictures
Case study – Claw Hanging Systems
Recreational spending and new bike sales are increasing
Recreational spending in US increasing at a CAGR of 7.9%
Millions
Average 11.2M new bikes purchased yearly
16 14 12 10 8 6 4 2 0
Bike Sales (Wheel Size 20"+)
Magnus Survey
Magnus Survey
If we could offer you a such an easy-to-use, secure, simple, space-saving solution that’s affordable, would you buy it or convert to it? ? Absolutely ? Probably ? No Would you want to use it on your ceiling or wall? What would this solution be worth to you? ___ More than $ 40 ___ $ 30 to $ 40 May we ask your age? ___Under 30 May we ask your homeownership level? ___Apt – Rent ___Home – Rent ___Other ___30 – 45 ___Apt – Own ___Home – Own
___ Less than $ 30
___45 +
If respondent is willing to talk further, go ahead and ask: How often do you replace your bike? ___every yr ___every 3 yrs ___once in 5 yrs
Case study – Claw Hanging Systems
Storage Rack Market Overview
Use
Bike Bike Bike Non-bike
User
Active Active Inactive -
Dist Channel
IBD Mass merchants/DIY Mass merchants/DIY DIY
Size
10M 33M 55M 30M
High-end consumer (>$213 on last bike); visits independent retailer 1+ times/yr Mid-level consumer (<$213 on last bike, but buys bikes new); purchases bicycle from mass merchant
Case study – Claw Hanging Systems
Size of IBD channel (high-end) is 1.2M to 5.1M consumers
Secondary market research driven Primary market research driven
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Inactive vs Active Riders High vs Low-End Riders Owners vs Renters Buy vs Not Buy Abs Buy vs Prob Buy Abs Buy 54.8 3.4 1.6 33.0 3.9 43.1 6.8 5.1 1.2
97.8
43.1
10.1
10.1
6.7
5.1
1.2
1.2
Assumptions and Sources 1. US Bike Riders – Mintel/Simmons NSC 2001/US Census 2000 2. Active Riders – Magnus Corporation 2007/US Sporting Goods Association 3. High-end – 10.1mm riders, composed of 0.9 mm enthusiasts, 2.4 mm moving-up, and 6.8 mm casual riders - Rodale Press, The Cycling Consumer of the 90's, A Comprehensive Report on the U.S. Adult Cycling Market, Emmaus, PA: Author; 1991 4. Home or Apt Owner – 67% of riders live in their own home or apt- Rodale Press, The Cycling Consumer of the 90's, A Comprehensive Report on the U.S. Adult Cycling Market, Emmaus, PA: Author; 1991 5. Probably or Absolutely Buy – 76% of all riders would consider purchase – Magnus and Company, Primary Market Research, 2007 6. Absolutely Buy Claw – 18% of all adult riders would absolutely buy – Magnus and Company, Primary Market Research, 2007
Case study – Claw Hanging Systems
Size of DIY channel (non high-end) is 4.0M to 16.8M consumers
Secondary market research driven Primary market research driven
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Inactive vs Active Riders High vs Low-End Riders Owners vs Renters Buy vs Not Buy Abs Buy vs Prob Buy Abs Buy 10.1 54.8 10.9 5.3 12.8 33.0 43.1 22.1 16.8 4.0
97.8
43.1
33.0
22.1
16.8
4.0
4.0
Assumptions and Sources 1. US Bike Riders – Mintel/Simmons NSC 2001/US Census 2000 2. Active Riders – Magnus Corporation 2007/US Sporting Goods Association 3. High-end – 10.1mm riders, composed of 0.9 mm enthusiasts, 2.4 mm moving-up, and 6.8 mm casual riders - Rodale Press, The Cycling Consumer of the 90's, A Comprehensive Report on the U.S. Adult Cycling Market, Emmaus, PA: Author; 1991 4. Home or Apt Owner – 67% of riders live in their own home or apt- Rodale Press, The Cycling Consumer of the 90's, A Comprehensive Report on the U.S. Adult Cycling Market, Emmaus, PA: Author; 1991 5. Probably or Absolutely Buy – 76% of all riders would consider purchase – Magnus and Company, Primary Market Research, 2007 6. Absolutely Buy Claw – 18% of all adult riders would absolutely buy – Magnus and Company, Primary Market Research, 2007
Your challenge: Conduct secondary research, compose a primary research plan, and then execute. A null hypothesis needs to be tested.
• Conduct secondary research and create a primary market research plan
1. Secondary market research summary (1 page max)
• •
• • •
List of 3-5 information sources and valuable information you learned, either qualitative, i.e. mothers really like this product, or quantitative, 20MM women in Africa use this product. Secondary research need not be exhaustive. The goal is to gain a basic market understanding to aid in creating your primary market research plan.
Target Customer Selection. Select target customer and provide rationale. This will be the demographic you will survey. Do not interview your grandparents for your energy beverage idea. Bias Elimination. Question and proctor plan to ensure bias elimination. Study Purpose. Selection of a null hypothesis and explanation of particular choice.
2. Primary market research plan (1 page with three sections)
•
Conduct primary market research
1. Responses and statistical analysis in MS Excel format 2. 1 page summary of plan execution, responses, and results
Appendix
• • • • • HBS Survey Magnus and Corp Survey Customer Adoption Curve Claw Hanging Systems Channel selection Additional files
Different distribution channels could be leveraged to cross chasm as product adoption matures
Independent retailer should be first channel due to higher likelihood of early adopters
Channels to market
•Independent Retailers (Neighborhood Bike Shop) •Mass Merchants (Wal-Mart, Toys R Us) •Full-line Sporting Goods Stores (Dicks, Sports Authority) •Other (Internet, Container Store)
“Specialty bike dealers commanded the vast majority of parts and accessories sales . . .They dominate the market in bicycles selling for $250 and up.”
2002 Bicycle Sales % of 2002 % of avg bike Mkt Size units dollars cost (M $s) Mass Merchant 74 35.8 65 892 Ind Retailer 16.2 46.6 387 1,161 Full-Line Sporting 2.5 2.9 157 72 Other 7.3 14.7 270 366 2,491
Ind Retailers Bike Sales Parts and Accessories Revenue Revenue $1,160,806,000 $ 913,826,000
From The National Bicycle Dealers Association – Industry Overviewweb page www.nbda.com, 2004
doc_423009261.pdf