© Inge Hill Start Up, Palgrave 2015

Finding or creating a market? CHAPTER 5 Finding or creating a market? © Inge Hill Start Up, Palgrave 2015

© Inge Hill Start Up, Palgrave 2015 Cube faces applied… © Inge Hill Start Up, Palgrave 2015

© Inge Hill Start Up, Palgrave 2015 Learning outcomes To differentiate customer and market types To define and plan market research To develop questions fit for purpose To Explore ethical issues and codes of research practice To define the story of change To analyse data and segment markets To discuss the minimal viable product © Inge Hill Start Up, Palgrave 2015

© Inge Hill Start Up, Palgrave 2015 Market? Definitions A place – physical or virtual – where buyers and sellers meet to exchange / purchase and sell goods / services No actual contact between buyer and seller needed All buyers of a particular good / service Market for toothpaste © Inge Hill Start Up, Palgrave 2015

© Inge Hill Start Up, Palgrave 2015 Market types Mass market Large group of consumers with similar profile(s) Niche market Small highly differentiated group of buyers Multi-sided market Different buyers: free newspapers – free for readers – paid for through advertising by businesses Geographical market Differentiated by location: city / rural Demographical Age, gender, ethnic origin Marital status Education, profession Employment status Income © Inge Hill Start Up, Palgrave 2015

© Inge Hill Start Up, Palgrave 2015 Market types Business-to-business B2B Businesses selling to other businesses Business-to-consumers B2C Businesses selling to end users / consumers Business-to-government Businesses selling to government funded organisations or government directly Consumer-to-consumer Consumers selling to consumers Third sector-to-government Non-profit organisations selling to government funded organisations or government directly Third sector-to-Third sector Non-profit organisations selling to other non-profit organisations © Inge Hill Start Up, Palgrave 2015

Four steps to finding the optimal buyers (after Blank, 2006) Customer discovery Customer validation – changed by Hill, 2015 to validation of sufficient numbers of customers to make the product marketable and viable Customer creation Company building According to Hill, 2015 the sustainable start-up is not aimed at creating necessarily the next scaleable multi-million pound business. © Inge Hill Start Up, Palgrave 2015

© Inge Hill Start Up, Palgrave 2015 Customer types Innovators 2 % Early adopters 15 % Mass followers 39 % Late adopters 38 % Laggards 6 % © Inge Hill Start Up, Palgrave 2015

© Inge Hill Start Up, Palgrave 2015 Market research Market research, which includes social and opinion research, is the systematic gathering and interpretation of information about individuals or organisations using the statistical and analytical methods and techniques of the applied sciences to gain insight or support decision making.” http://www.esomar.org/knowledge-and-standards/market-research-explained.php, accessed June 10, 2014 For the sustainable start-up: Focus on identifying the attitudes, feelings, consumption and / or usage behaviour of potential buyers of the product under development. © Inge Hill Start Up, Palgrave 2015

Purpose of your market research © Inge Hill Start Up, Palgrave 2015

1 - Identify research purpose Develop research questions Select research design and methods Develop questions for research Select research participants / sample and ways to contact them Test the research instruments Collect insight and data Analyse insight and data Finetune product idea Figure 5.2 Steps in the market research process for gaining customer insight © Inge Hill Start Up, Palgrave 2015

Most common market research methods for primary research Survey Interview (structured and semi-structured) Focus group Observation Field trial or product testing Increasingly – social media research and e-research: © Inge Hill Start Up, Palgrave 2015

Minimal viable product = MVP Offers those core features that allow the product to be used = Minimum feature set To gain further feedback from a subset of possible customers who are more forgiving if something does not work and eager to give feedback = a strategic tool in the process to developing the final desirable end product (see Ries, 2011) © Inge Hill Start Up, Palgrave 2015

Minimal viable product cont. Establishes a direct link to the potential customers through researching reactions and use To learn as much as possible as soon as possible from them Before investing lots of money into purchasing equipment, stock etc. To prevent waste of time and money © Inge Hill Start Up, Palgrave 2015

Minimal viable product example Create a mock website for the product and purchase online advertising to direct traffic to the site. Mock website may consist of a marketing landing page with a link for more information or purchase. The link does not lead to a possibility for purchasing anything, but instead clicks are recorded and measure customer interest. © Inge Hill Start Up, Palgrave 2015

Aim of using the minimal viable product Apply alertness and co-creation: Create the customer persona Matching The product / service with features that are essential for them to buy the product That offer a solution that makes a sufficiently big difference to their lives At work or at home or when travelling © Inge Hill Start Up, Palgrave 2015

Stakeholders impacting on the start-up and being affected by it © Inge Hill Start Up, Palgrave 2015

Example: benefits versus features of a solution to a customer problem © Inge Hill Start Up, Palgrave 2015

Ethical issues and codes of research practice Ethical principles: Voluntary participation Informed consent Avoid risk of harm as result of participation Confidentiality Anonymity Codes of conducts: Market Research Society https://www.mrs.org.uk/standards/code_of_conduct/ ESOMAR http://www.esomar.org/publications-store/codes-guidelines.php © Inge Hill Start Up, Palgrave 2015

© Inge Hill Start Up, Palgrave 2015 Summary There are many customer and market types. A careful creation and selection of customer groups needs to be based on insightful market research. Only focused market research leads to useful results that help to define your first customer. Spending time fine-tuning questions is a necessary investment. Ethical considerations are essential for professional research that respects the future customer and buyer. Benefits the customer gains when using the features you value is at the core of what you need to find out about. © Inge Hill Start Up, Palgrave 2015

© Inge Hill Start Up, Palgrave 2015 Questions? © Inge Hill Start Up, Palgrave 2015