1. Integrated Product Development
Forecasting
Jakob A. Bejbro Andersen
jaban@mek.dtu.dk
Unless otherwise stated, this material is under a Creative
Commons 3.0 Attribution–Share-Alike licence and can be
freely modified, used and redistributed but only under the
same licence and if including the following statement:
“Original material by Jakob A. Bejbro Andersen for course 42629 – Innovation and Product
Development Department of Mechanical Engineering, The Technical University of Denmark”
3. Introducing the hockeystick
- A market potential has no value to investors in itself.
- There has to be a credible plan for realizing this potential.
- The following questions need to be answered:
- When will you start selling?
- When will ”break even” be reached?
- When can the investor achieve an ”exit”?
- How much can the shares be sold for?
Financial
Balance
Time
3 Original material by Jakob A. Bejbro Andersen for course 42629 – Innovation and Product 2012
Development Department of Mechanical Engineering, The Technical University of Denmark
4. Requisites for the hockeystick (exponential growth)
• A solid execution strategy.
– Segment 1, then 2, then 3 ... (remember the bowling pins)
• A good knowledge of the customer / market.
• A credible sales approach.
4 Original material by Jakob A. Bejbro Andersen for course 42629 – Innovation and Product 2012
Development Department of Mechanical Engineering, The Technical University of Denmark
5. The lifecycle of a market (segment)
• Unexploited markets tend to have the following
characteristics:
– Early stage sales; driven by enthusiasts, lack of track record.
– Breakthrough; track record established, sales increasing drastically.
– Business as usual; Market saturated, few new customers.
Sales rate Market saturation
Early stage
sales
Breakthrough Business
as usual
Time
5 Original material by Jakob A. Bejbro Andersen for course 42629 – Innovation and Product 2012
Development Department of Mechanical Engineering, The Technical University of Denmark
6. Planning for continued growth
• As capital (liquidity) and track record is established…
• … the basis is formed for going into new segments.
• The specific strategy for entering into new
Seg 5
segments is a key parameter for investors.
Seg 4
Seg 3
Seg 2
Seg 1
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
6 Original material by Jakob A. Bejbro Andersen for course 42629 – Innovation and Product 2012
Development Department of Mechanical Engineering, The Technical University of Denmark
7. Projecting sales
• Sales are key as they validate the market for the offering.
• Investors rate sales over any other dimension.
• As with market estimates, there is a top down and a
bottom up approach.
– Again, it is beneficial to use both approaches.
SALES
7 Original material by Jakob A. Bejbro Andersen for course 42629 – Innovation and Product 2012
Development Department of Mechanical Engineering, The Technical University of Denmark
8. Choosing a sales approach
• Business to Business sales (B2B)
– The same product can be sold to different levels of an organisation.
– As a general rule:
• Higher in organisation you find more purchase power, but longer sales
cycles.
• Lower in the organisation you find smaller budgets, but shorter time
from introduction to actual purchase.
– Exceptions are however many:
• Strategic level can be used to push through sales
• The operational level can be to hung up on formal requirements.
• Business to Customer (B2C)
– Through distributor/partner.
– Direct sales.
– Web portal.
• Composite models (B2B/B2C) – Facebook, adwords etc.
8 Original material by Jakob A. Bejbro Andersen for course 42629 – Innovation and Product 2012
Development Department of Mechanical Engineering, The Technical University of Denmark
9. Exercise 5a:
(You are still with the brewery)
For one of the identified segments:
Identify two or more sales approaches:
1. _________________________
2. _________________________
3. _________________________
4. _________________________
• How will you sell your own idea?
9 Original material by Jakob A. Bejbro Andersen for course 42629 – Innovation and Product 2012
Development Department of Mechanical Engineering, The Technical University of Denmark
10. Projecting sales (bottom up)
• Describe sales going from day to day
• What steps need to be taken for each sale to be made?
• Which resources does it require?
• How can the resources required be minimised?
Establish contact
Create materials
Specify solution
Formulate quotation
Negotiate terms
Sale!
Wk 1 Wk 2 Wk 3 Wk 4 Wk 5 Wk 6
10 Original material by Jakob A. Bejbro Andersen for course 42629 – Innovation and Product 2012
Development Department of Mechanical Engineering, The Technical University of Denmark
11. To be reduced
The sales funnel (bottom up II)
Number of
Time usage candidates
T1 hours First meeting
per meeting
First meetings
N
Qualification
T2 hours
per lead
T3 hours Purchase
per lead order N/10 (?)
11 Original material by Jakob A. Bejbro Andersen for course 42629 – Innovation and Product 2012
Development Department of Mechanical Engineering, The Technical University of Denmark
12. Exercise 5b:
For one of the identified sales approaches,
list important tasks:
Task 1: _________________________
Task 2: _________________________
Task 3: _________________________
Task 4: _________________________
Task 5: _________________________
•What tasks will be important for your
own product?
12 Original material by Jakob A. Bejbro Andersen for course 42629 – Innovation and Product 2012
Development Department of Mechanical Engineering, The Technical University of Denmark
13. Projecting sales (top down)
• To get a reality check on sales figures, a number of
approaches can be used:
– Check media for sales intel (companies like to boast).
– Look adoption rates in for similar products/services.
• As a venture company, you should be ambitious:
– ”We expect to match or even beat on the sales figures of Company X”
– If you are no better than your competitor – why enter the market?
13 Original material by Jakob A. Bejbro Andersen for course 42629 – Innovation and Product 2012
Development Department of Mechanical Engineering, The Technical University of Denmark
15. EDGEFLOW
Sales forecast - bottom up
Based on sales to strategic level in large companies.
Motivation for sales approach (to strategic level):
• Selling to as high a level as possible
• Enables us to add CSR arguments to sales pitch
• Requires limited sales force (favourable at an early stage)
Procedure
-Proces validated with sales experts.
- Milestones and target sales # validated
with customers (where possible)
- Projected hit rate (8-12%)
Sales forecast excel sheet
16. EDGEFLOW
Sales forecast – top down
Based on sales to strategic level in large companies.
Procedure
- Identify competitors Comp 1, Comp 2 and Comp 3 (wind turbine manufacturers)
- Look for mentioning of sales figures in media (Comp 1 shown as example).
- Build sales history and projection from data obtained.
”…ramps up
”…Large order production to 30
with local utility units per month”
– 10 turbines
”…40 units sold” ”Comp 1 enters
sold in first 8 DE market – 15
months of units already
operation…” sold”
”Comp 1 lands
Year in
framework
agreement w…” market
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6
17. Q?
17 Original material by Jakob A. Bejbro Andersen for course 42629 – Innovation and Product 2012
Development Department of Mechanical Engineering, The Technical University of Denmark
18. Focus for Fridays Group Work (double diamond)
• Work on specifying and rating segments.
• Knowledge of customer needs required– how will you obtain it?
• Start formulating your value proposition.
18 Original material by Jakob A. Bejbro Andersen for course 42629 – Innovation and Product 2012
Development Department of Mechanical Engineering, The Technical University of Denmark
