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E/ME 105

Lecture 3 Marketing
October 3, 2006
Mission Statement

2 minute Team Mission


Presentations
Due on Thursday.
Send in ppt 1 hour before class
Since last week
• Friday phone conversation with Landivar
– They are working on the developing world barriers
thought process
– We will meet with them by Skype on Thursday
mornings
• They may be one lecture behind at the end of the week but
they will have seen the Tuesday Lecture and the Thursday
ppt.
– Tried Adobe collaboration product
• Not impressed
– Teams formed?
What is Marketing?
What is Marketing?
4 Ps of Marketing
Process of planning and executing

• Product
• Promotion
• Pricing
• Place (or distribution system)

of ideas, goods and services to satisfy


customers

True for developing world as well


Importance of Marketing
• Perhaps the single most important failure mode in the
product development process
– Sloppy research (confirm prejudices)
– In development, not really understanding the customer
• Poor communication
• The “Margaret Mead” effect
– Ephemeral nature
• Not in an equilibrium state
– (right wrong)
– Poorly coupled to design
• Treated as a separate activity
– Too well coupled into design
• Constant changes in specifications
Some good attributes
• Strong Customer involvement
– Customer cares
– Customer has “pain”
• Can define market segment (to be
discussed)
• Market growing
• Competitive advantage
• Others
Techniques
• Interviewing
• Polling
• Working together to a common purpose
• Filming
• Other?
Consider in turn
• P1 Product
– Needs identification
– How product would actually be used
– Context discovery
– Brainstorming of concept
– “Chilero” or coolness
– Modification of existing product for new
market
Consider in turn
• P2 Pricing
– What the customer can afford
– What value does the product bring
– What financing arrangements are
possible?
– What is the price of a competitive product?
– What price is necessary to return a profit?
• What is the reason for keeping the
price as low as possible?
• How does the cost effect the price
(don’t confuse!)?
• Is it “immoral’ to earn a “fat” profit?
P3 Promotion Consider in turn
– How do you make the customer aware of the existence of
the product?
• Word of mouth
• Brochures pictures?
• Demo at market
• Someone use it for free
• Product advertises itself
• Radio
– Evangelical stations
• Use Saturday loudspeakers
• Door to Door
• Use local languages
– How can you generate excitement about the product?
• Pizzazz
• Personal experiences- testimonials
• Promotion lower price
• Celebrity endorsements football players, community leaders,
church leaders
– What are the costs of Promotion
• Need to budget
Consider in turn
• P4 Placement (Distribution)
–How do you get the product to the
customer?
–Consider where it will be
manufactured
–Consider who will sell it? (effect on
price!)
–Consider how you get it to the
person who will sell it
–Consider how it will be maintained
Marketing Research
• Primary Research
– Original research - data collected from the
target market

• Secondary Research
– Meta research- data collected from literature,
internet

We have defined a third research


classification
Proxy research
– Research through knowledgeable third parties
• People with first hand experience in the specific
market
Marketing Research
• Primary Research
– Original research- data collected
from the target market
• Landivar students lead here
– Use in-country contacts (NGOs, professors,
other students)
• Use teleconferencing
• Interview people from indigenous
villages in LA?
• Other?
Marketing Research
• Meta research- data collected from
literature
• trade association data
• industry publications and databases
• “Economist” and other publications
• government databases (e.g., US Dept of
Commerce, State Dept, Guatemalan
trade)
• UN, NGO databases
• Other?
Go quickly from general to particular
Marketing Research

–Proxy research- data collected


from people with first or second
hand information
• Mentors
• Returning Peace Corps volunteers
• Returning NGOs
• Landivar partners
• Others?
Target Markets
• Who are the people who will use your product?
– Geographic
• Location, climate, population size and growth rate
– Demographic
• Age, sex, ethnicity, income, occupation, education
– Psychographic
• Life-style, activities, interests, opinions
– How will they use product (use patterns)?
– What benefits will they derive?

• Do for
– Primary market- the first market addressed
– Secondary market- the next market(s)
Segmentation- continued
• Psychographic variables
– life-style
– Activities
– Interests
– Opinions
– product use patterns
– and product benefits
Barriers
• What are some of the reasons why your
customer won’t adopt your product?
• What can you do to mitigate this risk?
After approval of your Mission
Statement. . .
Research Market
– Begin Research
• Write script
Script
• Begin with Market hypotheses (3-6)
– Examples?
• Design questions to test these hypotheses
• Keep short- you are using up people’s
time!! 30 minutes tops. 10 minutes better
• Can your customers use internet?
http://www.surveymonkey.com/
http://www.zoomerang.com
Market segmentation
• Market “strategy”
– There are 1.3B Chinese. Even if we got only
1% of the market. . .

What’s wrong with this?


The Technology Adoption Model
as the Basis for Segment Focus
Early Majority Late Majority
Rate of Adoption

Early Adopters

Innovators Laggards

Time
A measure of the rate of adoption of a cluster of new
technologies by a community over time
Where are you on this curve?
The New Idea Adoption Model in
the developing world
as the Basis for Segment Focus
Early Majority Late Majority
Rate of Adoption

Early Adopters

Innovators Laggards

Time
A measure of the rate of adoption of a cluster of new ideas
by a community over time

Where is your target segment on this curve?


The New Idea Adoption Model in the developing
world
as the Basis for Segment Focus

Early Majority Late Majority


Rate of Adoption

Early Adopters

Innovators Laggards

Time
Consider age, sex, leadership position in village, respect,
income, political savvy, entrepreneurial spirit, etc.
Generate Hypotheses & Identify Underlying Assumptions
EVALUATION For Which Does The How Many Requirements
QUESTIONS: Customers Do Value vs. Customers & to Attract, Sell
I Solve Competitive What Will & Support
Important Alternatives They Pay? These
Problems? Justify Customers?
Change?
State your Quantify the Quantify total Why will solving What will it take
assumptions problem you cost of this problem be to generate
regarding solve vs. adoption/ important to word-of-mouth
alternatives in switching vs. more and “brand”
what your
each target current customers over awareness?
product is, segment methods or time? What kind of
what it does, alternatives for
By Industry What will distribution
and the each target customers be model does the
By Application
implications segment willing to pay & business model
(Use the
for related Is it worth it to a what are the require?
product to…)
technologies customer? implications for What support
By other your business
segment Consider the will customers
cultural issues model? need to evaluate
variable that are barriers and use the
to change! product?
Recruit Interview Targets
• How do I get them to talk to me?
– Use your personal, student and other Guatemalan
contacts!
– Remember 6 degrees of separation! Do you know
someone who knows someone?
– Email addresses and numbers often on the web
– Tap your network for contacts, kiss frogs
– With IPOs, you are a credible student group
building products and services for Guatemala. --
meeting is a chance to influence those
investments
– With American Universities use the Caltech name!
Be shameless!
– From Guatemalan company names get HQ city,
find phone number.
For the real customer
• Develop relationships in the village
through multiple contacts
• Socialize
• Help them with what they are doing
• Use influencers (heads, other volunteers)
• Others
• (Landivar! Help!)
Interview
• How do I approach them?
– Use your 30-second pitch for in-person
calls
– E-mail, follow-up phone calls work well
– Send them a 2-pager on what you know to
date
– Provide agenda and general topics in
advance -- gives the target a chance to
think
Open Ended Interview Questions
• Flow from general to increasingly specific, but
always open ended
• Question “DOs”
– Why? How do you measure that? How do you define
that term? What’s working, what isn’t? Can you
draw a diagram of that so I can see where it fits in
your overall problem? How did you determine the
value of that? How would you make tradeoffs among
those things? How will you remove barriers to your
success? What would the ideal situation look like?
• Question “DON’Ts”
– Don’t you think if…? Would you like it if…? Black or
white, yes or no…? We think, what do you think? If
we do this, will you do that? What do you want?
What will you pay for it? What should we do?
Competition
• The competitive landscape
– Provide an overview of
Note: Size of circle
product competitors, their can represent market share
strengths and weaknesses
– Position each competitor’s A B

Price
product against new product
– No competition is also
competition i.e., “doing
nothing” is an alternative D
C

Performance
“Competition”
• Why have previous attempts at
development products failed in your
marketplace
• How are you going to do better?
• Why should you succeed?
• Write as hypothesis and test in your
market study
Stakeholders
• Who has to touch the product and the
process for it to be successful?
– Consider everyone involved
• Everyone who can help
• Everyone who can get in the way

Important part of understanding market


-people you ignore at your peril