In this lecture, Poornima digs into lifestyle marketing and certain market forces to consider when launching a new product. You can watch the lecture here: http://youtu.be/uYEdAvJchT4

1. Duke ECE 490L: How to Start New Ventures in
Electrical and Computer Engineering
Poornima Vijayashanker
poornima@femgineer.com
Jeff Glass
jeff.glass@duke.edu
Akshay Raut
ar118@duke.edu
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2. Review
Duke ECE 490L
• Risk
• Positioning
• Competitive Analysis
• Differentiation Techniques
• Goal: Identify and Attract Early Adopters
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3. Announcements
• Lab 2 is up!
• http://femgineer.com/duke-ece-490l-labs
• Get started early!
• There are 3 assignments that need to be completed by lab period on week 7.
• Durham Startup Scene
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4. Idea Summary
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5. Agenda
• More on positioning!
• Digging into the Competitor
• Horizontal vs. Vertical Market
• Substitutes
• Secondary Markets
• Point Tool vs. Integrated Solutions
• Customer Discovery
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6. Duke ECE 490L
Still no building...
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7. Duke ECE 490L
Know thy enemy.
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8. Duke ECE 490L
To thy own self be true.
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9. Dig Deeper into Competitor
• Product Line
• What are the various product lines and which customers does it appeal to?
• Do they have the entire spectrum? Loss leader, mid-range, and high-end
• All-in-One product that isn’t well suited to a particular segment?
• Do they have a process in place for upselling?
• Anticipate areas of growth
• If they are strong, where do they appear to be heading?
• If they are weak, where do they appear to be heading?
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10. Case Study: Mint v. Quicken
• Who they chose to neglect?
• Mac Users
• What didn’t they get?
• Packaging
• Market is moving away from shrink-wrapped software
• Ease-of-Use
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11. Case Study: Mint v. MS Money
• Who they chose to neglect?
• Mac Users
• What didn’t they get?
• Packaging
• Market is moving away from shrink-wrapped software
• Ease-of-Use
• Sunset in June 2009
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12. Takeaways
• Understand market trends
• Packaging
• Ease-of Use
• Adoption based on other factors e.g. web, mobile
• Understand neglected or up-and-coming user base and
their needs
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13. Duke ECE 490L
Create an image or identity in the minds of
the target market.
Occupy a position in a prospective
customer’s mind - one that reflects
company’s strengths and weaknesses as
well as those of the competitor.
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14. Duke ECE 490L
Re-positioning: changing identity of a
product, relative to competitor. e.g. luxury
line.
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15. Duke ECE 490L
vs
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16. Duke ECE 490L
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17. Lifestyle marketing.
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18. Duke ECE 490L
Lifestyle marketing: a brand attempts to
embody the values and aspirations of a
group or culture for the purposes of
marketing.
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19. Duke ECE 490L
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20. Early adopters embrace change.
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21. Open to a new way of life.
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22. Horizontal vs. Vertical Markets
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23. Horizontal Market
• Solves a BIG problem
• Large base of customers whose needs are the same
• Usually a strategy for a larger company that can spend
a lot of money marketing
• Create a single product or have upselling opportunities
• May neglect nuanced needs of subgroups
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24. Vertical Market
• Niche market
• Product that appeals to a particular group, and has a
specialized use case
• Avoids product from becoming commoditized
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25. Benefits of Vertical Market
• Clear value proposition
• Build a loyal following
• Product maybe specialized but hard to replicate
• Product can be subsystem for a larger product
• Product can be later “re-skinned” for other verticals
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26. Case Study: AeroVironment
• Two technologies: unmanned
aircraft and charging systems for
electric vehicles
• Seems like a niche market
• Products used in subsystems for
larger mainstream and horizontal
market products
• Mainstream is also starting to
adopt technologies
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27. Substitutes.
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28. Substitutes
• Are they part of the target market? And by how much?
• Do they reflect a particular behavior?
• Can you transition people from using substitutes into
using your product?
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29. Secondary markets.
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30. Competitors Own Reselling Market
• e.g. “Apple authorized reseller”
• Does this capture another position? e.g. lower end or
higher end
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31. Competitors Integrating into Larger Systems
• Do they supply other vendors?
• Are the vendors happy with them?
• Are the vendors open to trying out a new product?
• Are the vendors locked into a contract or have exclusive
limitations?
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32. Competitors Pricing and Distribution Schemes
• One-time use vs. contracts vs. upgrades
• Is there lock-in?
• Competition in product placement
• Your product is too similar?
• Your product is unknown and there is risk involved with selling it.
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33. Point Tool v. Integrated Solution
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34. Point Tool v. Integrated Solution
• Can you begin by partnering with a competitor?
• What are the limitations for building on their platform?
• e.g. Facebook Apps
• What will it take to then displace their product?
• What will it take to transition to your own platform?
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35. Case Study: Mint.com
• Initially integrated with third party solution:
Yodlee for data
• Quality of data limited potential
• Eventually began build in-house data
solution
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36. Market research is one part in leading to
customer discovery.
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37. What if you’re in a new market?
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38. Duke ECE 490L
Customers Market Product Features Competitors Risk
Existing Market Known Known Critical Many
Cost of entry;
Product
Development;
distribution
New Market Unknown
Unknown,
definition critical
Irrelevant at first
None at first (other
startups)
Long evangelism
and education
cycle
Resegment
Existing Market
Possibly known
Unknown,
definition critical
Critical; tied to
existing market
Critical, tied to
existing market
Market redefinition;
product definition
*Table 5.4 from The Four Steps to the Epiphany - Steve
Blank
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39. Other market forces to consider?
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40. Market Forces
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• Policies: these can be non-governmental
• e.g. franchise have to buy from a certain vendor
• Regulations: this is government based
• high barrier to entry, but once you’re in you have more protection
• permits, licenses
• Infrastructure: need to build additional support
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41. Duke ECE 490L
Customer Discovery Validation Customer Creation
Business/Company
Formation
Early Adopter
Pricing
Product
Distribution
Mainstream Adopters
Money for Marketing
Market Research
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42. Duke ECE 490L
Customer Discovery Validation Customer Creation
Business/Company
Formation
Early Adopter
Pricing
Product
Distribution
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43. Customer Discovery
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• Not stage of tell me what you want
• Not stage of here’s what I’ve built, will you buy it for $X
• Interview to understand pain points
• Focus on needs
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44. Goals of Customer Discovery
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• Goal is to valid user segments from market research to
identify viable early adopters
• Identify neglected segments
• Verify demand
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45. Early Adopter Characteristics to Look For
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• Has or can acquire a budget.
• Has put together a solution out of piece parts
(substitutes)
• Has been actively looking for a solution
• Is aware of having a problem
• Has a problem
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46. Other “Customers”
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• Decision Maker
• Economic Buyer
• Recommender
• Influencers
• Customers
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47. Put a price on pain.
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48. Level of need is an indicator for adoption.
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49. Characteristics of Needs
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• Latent Need: have a problem and know they have a
problem
• Active Need: they are actively searching for a solution
• Vision: have an idea for a solution, might have cobbled
together a solution but are prepared for a better one
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50. Level of loyalty to an existing solution is
an indicator you cannot convert
immediately.
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51. Characteristics of Loyalty
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• Need more features.
• Verifying credibility.
• Risk averse.
• Long decision time frame.
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52. Test across various user segments.
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53. Review
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• More on positioning!
• Digging into the Competitor
• Horizontal vs. Vertical Market
• Substitutes
• Secondary Markets
• Point Tool vs. Integrated Solutions
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