COMPETITION AND

ENVIRONMENT –
PRICING FOR
START-UPS

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AGENDA

• Contextual analysis and Trendspotting

• Pricing

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CLASSIC CONTEXT MODELS

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 THE SUPPLY CHAIN

Manufacturing Supply Chain

Raw Primary Product Marketer/

Material Manufacturer Fabricator Producer Distributor Retailer
Extractor

Service Supply Chain

Rainmaker Practitioner Contractor

 VALUE CHAIN

• The value chain is really a cross-linked network of distinct activities that

affect the cost or performance of the others.
• Optimizing the links as well as the functions or activities so that the entire
chain supports a strategy can yield a powerful, durable, hard-to-duplicate
strategic advantage.

Infrastructure

Human Resource Management

Technology Development
Margin
Procurement

Inbound Operations Outbound Marketing/ After Sales

Logistics Logistics Sales Service
 MARKET ANALYSIS: PERCEPTUAL MAP

• Map the key products or services along the dimensions that

are most important to the buyers and influencers.

Quality

Cost
 MARKET ANALYSIS: PERCEPTUAL MAP

• Other dimensions

Comfortable

Rolls-Royce

Low price High price

Ferrari

Sporty
 COMPETITOR ANALYSIS: STRATEGIC GROUPS

• Sometimes it is useful to subdivide industries into strategic

groups -- ie., groups of firms that pursue similar strategies with
similar resources.

ChiChi’s, Olive
Garden, Red Lobster

Country Kitchen,
Price Denny’s, Diners,
Shoney’s

Arby’s, Burger King,

Domino’s, Hardees,
McDonalds, Taco Bell,
Wendy’s

Selection
 COMPETITOR ANALYSIS

• The table simply summarizes the main players and their

central modes of competing (or their strengths and
weaknesses, or other important dimensions).

Market Timeli-
Quality Cost Notes
Share ness
Competitor1 15% H H M
Competitor2 25% L L H v. aggressive
Competitor3 5% M M H
Competitor4 20% L L H quality slipping
Competitor5 15% M M H
 ENVIRONMENTAL FORCES
Macroenvironment

Sociocultural Economic
Forces Forces
Industry
Union/
Communities
employees

Government Firm/
Organization: Trade
Structure Association
Stockholders Culture
Competencies
Resources Competitors

Creditors
Suppliers
Political/Legal Customers Technological
Forces Forces
 ENVIRONMENTAL ANALYSIS INFORMS ALL OTHER ANALYSES

Environmental Analysis
Economic, Sociocultural, Technological, Political-Legal Factors

Market/Buyer Analysis
Competitor
Analysis
Resource
Analysis
Supplier
Interest Analysis
Group Select
Analysis STRATEGIC FACTORS
ie Governmental
Opportunities Analysis
Threats
PESTLE analysis

12
 TOOL: MATRIX FOR TRACKING ENVIRONMENTAL FORCES

Env.
Economic Technological Political-Legal Sociocultural
Forces
Stake- 1. 1 1. 1.
holders 2. . 2. 2.
2
Communities .
Creditors Note how each force or set of forces affects each
stakeholder group...
Customers
Employees
Stockholders
Suppliers
Etc.
TRENDSPOTTING

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TRENDSPOTTING

• Seeing the future in the present

• Keeping abreast of trends and/or predicting them.
• Is fun!
– Looking around the world and trying to understand it is a great
intellectual adventure, and working with the myriad impulses
that society, culture and science throws at us can be
exhilarating.
• Is used to reflect about the future and events that may
influence the focal organization in any way.

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TRENDS

• Micro trends – Trending right now, little things, clues /weak

signals about the future.
• Macro trends – Aggregated microtrends or more sweeping
changes that are affecting society again things we
can already see
• Mega trends - Affect the lives of great swathes of the
human race.
• Giga trends - Trends that are so general that they
affect most areas of human life—or, at least, more
than one aspect of life or more than one industry.

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TREND ANALYSIS

• Set-up - the question(s) you want to ask,

• Scanning - the world and its different cultures in order to
get inputs about what is happening
• Scenarios - that can shed light on the changes you
observe and help you to understand the trend and think
about its implications.
• Scrutiny - your work, so as not to get stuck in generic,
cookie-cutter scenarios.

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SET-UP

• What are the general trends we’re interested in?

• What alternative trends can affect our overall business?
• In what context are we interested in these matters?
• What other contexts could affect the trends we’re looking
for?
• Within what timeframes could these things affect us?
• Level of analysis, consumer behavior, raw materials, legal?
• Balance between focus and peripheral vision.

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TRENDSPOTTING FOR BEGINNERS

• 1. Adopt a beginner’s mind

• 2. Why, what, how
• 3. Move in mysterious ways
• 4. Beware the peacock
• 5. Don´t judge
• 6. Count your blessings
• 7. Look for shifts rather than novelties
• 8. Spot the combos
• 9. There’s a reason—find it

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MOOD BOARD?

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MOOD BOARD
A mood board is a type of collage consisting of images,
text, and samples of objects in a composition.

It can be based upon a set topic or can be any

material chosen at random.

A mood board can be used to give a general idea of a topic, or to

show how different something is from the modern day.

They may be physical or digital, and can be

effective presentation tools.

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 What does a moodSimple
board look like?
finished

loose

collage
There are no
Rough or random
rules
WHAT IS A MOOD BOARD COMPRISED OF?

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 Imagery – Dig deep. Don’t settle.

Compelling/evocative/tell story

active

Elicit a response

emotive

beautiful
 Style/technique/trends

Beautiful type treatments

typography

trends
Paper samples

Look for trends on an ongoing basis. Don’t get stuck in a technique rut.
Color

critical to brand expression and mood setting

 Words

Suzanne

Know what words to include:

describe/support the look & feel:
traditional, modern, heartwarming, vibrant, subdued, prestigious, spirited

Know what words to search to yield the best imagery

bicentennial: vintage, historical, timeline
WHAT TOOLS DO I USE?
Lots of options: physical collage
or software
STORY BOARD?

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STORY BOARD EXAMPLE

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MY BUD, SAM
Meet Our User: TruckerDave
• Profession:
• Semi-Truck Driver
• Existing Problems:
• Long, monotonous drives
• Over-exhaustion /
Sleepiness at the wheel
• Lack of human interaction
& mental stimulation
• Navigation inefficiencies
 Our Solution
My Bud, Sam
The Ultimate Interactive Driving Companion
Key Features
• Uses body to politely influence safe driving
(increasing situational awareness)
• Uses body’s mobility to engage with driver,
whether it is prodding him to stay awake or
laughing along with his jokes
• Assesses & monitors driver’s needs/emotions
• Assists with navigation & locates nearest
necessary/desired destinations (e.g. gas
station, motels, diner, mechanic, etc.) using
truck’s built-in GPS system or its own internal
GPS system
• Constantly checks truck’s internal status (i.e. oil,
gas, tire pressure, etc.) using truck’s built-in
regulatory & diagnostic systems
Amenities
• Customizable human-like figure that has an
engaging physical body (i.e. user selects
gender, ethnicity, accent, etc.)
• Fosters relationships with driver by
remembering shared experiences/
conversations & creating common ground
• Connects to internal regulatory systems (e.g.
climate control, stereo, window controls, etc.)
• Up-to-date source for news
• Connects to driver’s phone & accesses phone’s
functions (upon driver’s command)
• Ability to become the driver’s “journal”
• Tells the best jokes around town!
Technologically Speaking
• Physical body is used to make physical
communications that complement the verbal
communications (i.e. arm, upper body, & head
mobility)
• examples: (1) reacts to driving stimuli/hazards similar to
a real-life human passenger; (2) prods driver when
drowsiness is noticed in voice or physical action/
appearance
• Internal camera & microphone
• used to assess & monitor driver’s needs/emotions &
surroundings for safety purposes by detecting changes in
facial expressions, physical actions, voice intonations, etc.
• used to “journal” shared experiences, surroundings,
conversations, driver information, etc.
• Bluetooth capabilities are used to connect to the
truck’s navigation system & internal regulatory/
diagnostic systems
• note that this connection is one-way – from truck to ‘My
Bud, Sam’ – for security purposes
• Operates everywhere via satellite & stores all
information in the “cloud”
What makes ‘My Bud, Sam’special?
Embodying the fundamental interface-related
technological characteristics of humanness and ubiquity,
‘My Bud, Sam’ not only keeps you company with its
physical body’s presence in the truck – so that you
neither feel lonely nor fall asleep at the wheel – but it
also teaches you safe driving in a way that is more
effective than any existing voice or car system (e.g.
GPS). It takes all existing technologies and combines
them in a way that increases your situational awareness,
helps you focus better on your driving, and makes you
absolutely love our unique new product.
{design examples}
Trucker Dave: “Man, I sure miss those long
drives with my old pal Joe. He was great
company. We had a good run, me and Joe.”

Dave’s Wife: “Oh Dave, I know those long

drives can be tough.”

Dave’s Wife: “I just heard about ‘My Bud, Sam’

on the TV the other day.”

Trucker Dave: “The ‘My Bud, Sam’!!! That sounds

just like what I could use for all those long
drives.”
{design examples}
Trucker Dave researches ‘My Bud, Sam’ to learn
more about this new product. He realizes that
he can customize appearance, voice, etc. and is
super excited about these options and decides
to place an order for the product.

When his order arrives, Trucker Dave realizes

that ‘My Bud, Sam’ is more than a companion –
it is actually a passenger that will make him a
safer driver, never ask to change the music, and
is better at navigating than a GPS. Maybe ‘My
Bud, Sam’ is actually a better pal than Joe!
{design examples}
Trucker Dave hits the road with ‘My Bud,
Sam’. ‘My Bud, Sam’ tells Dave the
destination (which this week, is New York)
and gets them going in the right direction
with its GPS, turn-by-turn capabilities.

Trucker Dave prefers getting his

navigation instructions from ‘My Bud, Sam’
because it provides him with an interface
that is better than his existing system –
‘My Bud, Sam’ is a local source, minimizes
distraction, and is completely hands-free.

Recognizing that Trucker Dave is planning to turn soon, ‘My Bud, Sam’ turns its head
towards the driver’s blind spot, which subconsciously prompts Trucker Dave to check
his blind spots. If ‘My Bud, Sam’ sees a car or other obstacle in the blind spot, it will
politely alert the driver with either words, gestures, or a combination of the two.
{design examples}
Trucker Dave didn’t get the greatest sleep the
night before and as they drive into the night
he begins to doze off. ‘My Bud, Sam’
recognizes that Trucker Dave’s eyelids are
getting heavy and he begins to yawn.
Using its physical
body, ‘My Bud, Sam’ prods Trucker Dave in
order to make sure he stays awake.

‘My Bud, Sam’ then tells him that the nearest

motel is approximately 20 miles away, and
simultaneously, reserves a room for Trucker
Dave. After they arrive, Trucker Dave switches
‘My Bud, Sam’ into hibernation mode for the
night and rests knowing his truck will be secure
under the watch of his new driving companion.
{design examples}
In the time it takes to get there, ‘My Bud, Sam’
engages Trucker Dave in conversation. ‘My Bud,
Sam’ asks about Trucker Dave’s wife and kids
to begin fostering a relationship and to create
common ground.

“The Cloud”
of Memories &
‘My Bud, Sam’ stores all of the information from Experiences
their conversation so that future conversations
will be based off of and built on previous
interactions.
{design examples}
Trucker Dave asks ‘My Bud, Sam’ if there has
been anything significant in the news lately.

‘My Bud, Sam’ begins a detailed dialogue

about the State of the Union speech, the meteor
strike in Russia, the stranded cruise ship in the
Gulf of Mexico, and the Oscar Pistorius murder
scandal.

Taking from last night’s Conan O’Brien show,

‘My Bud, Sam’ also includes some politically
charged jokes in their conversation that make
Trucker Dave laugh. ‘My Bud, Sam’ continues to
search through his collection of joke
subscriptions to keep Trucker Dave entertained.
{design examples}
‘My Bud, Sam’ and Trucker
Dave successfully deliver
their first shipment together.

6 months later… Trucker

Dave has another ride that
takes him to the upper-
Northeast.

As they pass through familiar scenery, he and ‘My Bud, Sam’ reminisce about the
experiences, conversations, and jokes that they had shared on their previous journey
to that part of the country.
PRICING FOR START-UPS

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BASIC PRICING PSYCHOLOGY

Thanks to PriceGain AB for the example

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Which ice cream do you chose?

Alt. 1 Alt. 2

35 kr 50 kr
Test outcome:

Alt. 1 Alt. 2

35 kr 50 kr
Which ice cream do you chose?

Alt. 1 Alt. 2 Alt. 3

35 kr 50 kr 60 kr
The alternatives matters more than the price points

Alt. 1 Alt. 2 Alt. 3

35 kr 50 kr 60 kr
 Price differentiation increases profitability

Alt. 1 Alt. 2 Alt. 3

35 kr 50 kr 60 kr

Cost 7 kr 12 kr 13 kr
GM 28 kr 38 kr 47 kr

GM alt.2 vs alt.1 + 36 %, 10 kr / ice cream sold

PRICING DETERMINATES YOUR MARKET POSITION

• Commitment of money is a very powerful validation of your

business model
• Price is the dominant factor for your profitability
DELIVERING VALUE
What type of value are you delivering? Make sure to offer
more than what the customer pay for.

• Features

• Advantage

• Benefit

• Benefit of the benefit

• The Pain of the Pain

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Factors influencing pricing
Costs

Trader

Manufacturer

Intellectual
property
PRICING METHODS

• Silicon Valley Rule of Thumb

– Price because customers get at least 10 times that value

• Customer Interviews

• Industry benchmark
– E.g. License 3-5 times Saas-model for lifetime licence

• Break-even point

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PRICING METHODS, CONT

• Google-ads
– Look up cost per click (Katalict). Add estimate for sales funnel
costs

• Anchoring benchmark
– Compare to something very expensive

• Decoy effect
– E.g.

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PRICING METHODS, CONT

• Buy vs. build psychology

– Annual basis for 10 years vs customer build themselves

• Pricing distribution fit

– Calculate distributors need for margins

• Competition
– Position vs. competitors

• Industry average

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The freemium approach

Establish purpose
• Viral growth?
• Hooking customers
and upsell later?

Establish ideal ratio

free vs paid customers

Eat competition, don´t

cannibalize your own offer

Often a way to go from

B2C(free) to B2B(premium)