0 MBA Second Semester (Start up and New Venture Management) SPPU UNIT 2 Customer Discovery 2.1.1. Introduction An entrepreneurial opportunity can be identified every time when there is a challenge, want, need, or problem that can be dealt with, resolved and/or fulfilled in a creative or novel manner. The situations in which new things like goods, services, production methods, raw materials, etc., can be introduced and sold at prices more than their actual costs, are termed as entreprencurial opportunities. There are many factors involved in launching a new business venture successfully besides having an ingenious business concept, arranging capital sources and presenting the good or service in the market. It is essential for the entrepreneurs to become proficient in studying the market and comprehend the business environments, in which they should function. Entreprencurial opportunity makes the entrepreneur able to identify and execute several things which are out of control or difficult (like defaulting contractors and opening & closing of business niches). The limit to which probabilities for new business ventures prevail and the level of flexibility entrepreneurs have to impact their odds by their actions for achieving success is known as opportunity. Explaining it in simpler terms, opportunity is an ascertained mode of income generation that have neither been exploited at an earlier stage nor being exploited by others presently. It is one of the major challenging tasks for the entrepreneurs to identify a suitable business opportunity for them. Generally, entrepreneurs use one of the following ways to start their ventures: 1) Offering new products or services to satisfy the unmet needs, 2) Offering the existing products or services into totally new market, or 3) Starting as a franchisee of a well-established business. Itis significantly noteworthy that in an ongoing process, opportunity identification is only the first step and is. entirely different from feasibility analysis and economic evaluation of the opportunities. It is relevant to understand that how an entrepreneur finds out and determines a new business opportunity having the maximum possibility to attain success. Finding a solution to an unfulfilled need or want in the market is the most crucial part of all successful start-up enterprises, The products which add value always attract customers. The major concern for buying a product is need fulfilment or solution to a problem. Actually, there is no other option available for an enterprise rather than to fulfil the unmet customer needs, 2.1.2. Characteristics of Entrepreneurial Opportunity ‘The characteristics of entrepreneurial opportunity are as follows: 1) Market-Oriented: An entrepreneurial opportunity is considered as good opportunity when it is market- oriented. It must be something receivable by others in exchange for money. It should be something which has a value and can be either bought by someone or sold by someone. 2) Feasible: An opportunity must be practicable, i.e., viable to be attained. It must be identifiable and exploitable by entrepreneurs. 3) Profit-Oriented: A workable business opportunity should be sought by an enteepreneur. A business opportunity must be one which ears profit Hor the organisation as profit is indispensable for business's existence. This opportunity must be such which offers the entrepreneur that profit to sustain in the market, Scanned with CamScannerysomer Discovery (Unit 2) ae 7 1 4) Specific: An entrepreneurial opportunity should be such which has a me servable, defined, explicit “i vhich bas a meaning, name and ee plicit and precise to be a good business opportunity. It must neces 5) Motivational: A. sound entrepreneurial opportunity is one which has the potential to encourage am individual to conquer his individual desites or atain his personal aims, In He ct acerca opportunity as an opportunity, it must have the ability to earn certain amount of profits. nies’ 6) Legal: A good entrepreneurial opportunity ies within the legal framework of the country. Is not against elles and regulations of the government. In ease, itis observed that it doesnot abide by such rules or regulations, the legal agencies can take necessary actions. ; f 7) Ethical: Since each and every business has its own moral principles and ethies, & tue entrepreneurial opportunity must be ethical. Every business has its set of do's and don’ts which are expected to be followed meticulously. Hence, an entrepreneurial opportunity should not be something that will have conflicting interests to the ethics and morals of the business. Advertising which are misleading or ambiguous, degraded food or drugs, cheating/defraud, manipulation and adopting wrong measures are few examples of unethical practices. §) Convertible to Product: An entrepreneurial opportunity must be able to be shaped in a product, It may be convertible into goods or services. An entrepreneurial opportunity is meaningless until and unless it results in a product which satisfies the needs and desires of the customers. sope. It should be ily be accurate 2.1.3. Environmental Scanning for Entrepreneurial Opportunity Identification Environmental scanning is essential to recognise a business opportunity. Environment offers twofold advantages; firstly, it acts us a great source of information to the entreprencur and secondly, it also acts 26 & source of material resources for the business of that entrepreneur. An entrepreneur must utilise the resouress sort information provided by the environment so as to deliver goods and services required by the environment tr the general public. Without this, it is not possible to maintain an alignment between the entrepreneurial venture and the environment, Environmental scanning is the sequential process of observing, assessing and distributing the information Concerning the external environment within the intemal environment of the firm. Th this Way, it helps in intifying the available business opportunities in the extemal environment External societal environment, aaeaeey tamediate or task environment, and internal environment are the thee layers of ‘environment which are scanned in a particular scanning process. But only the external societal and ‘extemal task environments provide the entrepreneurial opportunities. [Alterations in industry cycles, dynamics and trends are displayed by the concemed environment at the stage of cnvironment scanning. In a particular environment, the ‘guccess/failure variables keep changing giving rise to new opportunities or threats 'A business performance is widely influenced by the changes 1” macro-environmental factors like political, cconomie, social, technological and physical factors. There is a, consi need to pay attention to ongoing tnodificatione in government policies, demand and supply trends, innovations and creations in the markets and demographic profiles, alongwith the dynamic changes ‘occurring in the global weather. Consumer preferences nd theit market impacts are necessarily analysed to identify the entrepreneurial opportunities. Environment Changes in Business Opportunity Identification : Tn order to identify the entrepreneurial oppatunities, entrepreneurs should focus on external societal and a cevitaments. BY scanning these two environments the ‘opportunities are selected and threats are swolded, The Following factors are crucial to be scrutinised in the external environment: i 1) Economic Factors: These factors comprise of changes in competition, national income, demand and supply. lifestyle, prices, consumer spendmg, ct 2) Social Factors: Social factors involve knowledge and talents, tradition and beliefs, culture, value system, public viewpoints, changes in social attitudes, influence of educational institutions, et. 3) Political and Legal Factors: These factors comp lection and changes in legislation and government, ete. rise of world monetary order, war, natural calamities, Scanned with CamScanner —ypu n MIA Sec Semester (Stait up anit New Venture Manin 4) Technological Factors: New proces: innovations in machinery equipment 5) Demographic Rural and urban migs hie factors. 6) Ecological Factors: These factor ng techniques, new materials, inventions, discovering technology andl i tools constitute the technological taectons ves iN Population, ete, form the pt of involve ozone layer depletion, pollution, erosion, noises ete 2.1.4, Steps in Opportunity Identification Entrepreneurial opportunities act i. These ides can be executed to venture and obtain profits. There are many sources which provide information re Opportunities such as intemet, magazines, commercial organisations, relatives, friends, ete, to an entrepreneur, A thorough anx! in-depth analysis is required tw aelet the best business opportunity from the available information. Following are the three steps an entrepreneur follows for identifying new business opportunities: 1) Opportunity Search 2) Opportunity Analysis and 3) Opportunity Selection sonomic id lish av bi different business government, fing institutions, Wess 2.1.5. Opportunity Search Each and every entrepreneurial activity begins with the opportunity search stage, In this stage, a variety of Product ideas are generated and the unfeasible ones are neglected. Meas which are selected. toe further assessment are those which optimally utilise the available resources. A good opportunity: should be in accordance with customer need and its time schedule, purchasing power, size and potential of the market ete The Certeria used to evaluate the effectiveness of the opportunities include price versus perlonmance, competitiveness, perceived benefits and ri Creative ideas are developed with the help of divergent thinking. Divergent thinking refers to the thought Process or technique employed to produce innovative concepts by reviewing severat probable solutions. In Glivergent thinking, different logical ideas are developed spontaneously in a free-flow style. This thought Process is sually employed jointly with convergent thinking, which includes a specific set of logical steps to ‘each at one solution. This one solution is in certain instances a “correct” solution, Relatively, ina very short Period of time, a number of opportunities and their relativeness are explored via divergent thinking, On completion of the divergent thinking process, the convergent thinking is used to organise and structure the available opportunities. Opportunity search involves the idea generation for new business or for the future growth of the existing business. As per Peter Drucker, there are thre¢ types of opportunities, which are described below: 1) Additive Opportunities: Such opportunities cause the decision-makers to use the existing resources in more productive and useful manner. These also cause the alterations in the prevailing strategies of production as well as marketing. 2) Complementary Opportunities: Such opportunities include incorporating new ideas in the existing Products or businesses so as to satisfy the market demands. With such opportunity, risk is also associated, Ultimately the business attributes are likely to change, 3) Breakthrough Opportunities: Such opportunities result in new products, new locations or new technologies. Through following such opportunities the overall business structure, business value and business strategies are changed. These opportunities are able to provide highest gain: higher with such opportunities, \d risks are also 2.1.5.1. Sources of Idea for Opportunity . Following are the most frequently used sources: 1) Consumers: One of the most common sources of generating a business idea can be consumers, An entrepreneur should carefully observe and study the preferences and buying pattems of target consumers. This helps the entrepreneurs to identify a number of practical business ideas that can be converted inte business opportunities, Alongwith the business ideas, these researches and analysis also provide various suggestions for making a product or service more meaningful for the customers. Other than this, formal or informal surveys can also be conducted for generating business ideas. These surveys can be done by using questionnaires or conducting face-to-face interviews. Scanned with CamScannereT | | | Ce szomer Discovery (Unit2) on RB 2) a 4) 5) 6) nD 8) isting Products and ™ ceasing a neat ies: An entrepreneur can find a new business idea by reviewing, monitoring wrrent marketing strates ig products, services or markets. In addition, ideas can also be sourced froin the Sa ek areal s and distribution networks, which are used for delivering products or services (0 pasiness ‘dese, while Pee of existing products or services and markets can generate the most simple Busnes ee bination of new products or services and new markets may generate the most ‘he vimplest business ieee On faces high level of market risks and competition when chooses to work on eas. On the contrary, an entrepreneur is it i “ i provided with high security and first mover a Salaun = chooses to implement the most difficult business ideas. However, an entrepreneur can asa 1¢ decides to choose an existing market with new prod " a sw products and services, or chooses new markets for existing products and services. products and services, or chooses Distribution Channels: For gaining new business ideas, distribution channel is also considered as one of the important sources. The persons involved in the distribution network can provide various meaningful business ideas as they directly interact with the persons involved in the entire supply chain. It is necessary for an entrepreneur to know the response of the product when it comes out from the manufacturing system. aera tee in supply chain management and distribution channels know the exact pos tion of the produg in the market, and thus, provide a good source of business ideas. To take out corres! informa jon from the persons involved in the supply chain process, an individual must be well-trained and atentive enough to carry forward the responses of the customers. They should also exttict out various information related with the competitors, tastes and preferences of customers from wholesalers and retailers, etc. ‘Trends: Trend acts as an indicator of changes held in the marketplace. These changes ps business ideas to entrepreneurs. These trends can involve several changes such as economic, technological, governmental etc. Usually, there ate four types of trends that need to be observe i) Beonomic Trends: These trends generally include changes that take place in the economy 28 & wh For example, upper disposable incomes, performance pressures and dual income families. ii) Government Trends: The changes made in the government policies and regulations act as a trend like hike in petroleum prices, additional policies, terrorism, etc. iii) Societal Trends: These trends are related with the people of the society, 4 healthiness, aging demographics, number of senior citizens, ete. iv) Technological Trends: These trends involve the latest changes that occur in the field of technology, e.g mobile technology, e-commerce, internet advancements, ete rovide various societal, le, Research and Development: The research and development activities of enureprene\t® S22 generate numerous ideas for starting a business venture. The R&D efforts can be both formal as well as informal When these efforts are taken within the company, they are formal efforts. ‘And when these efforts are taken by the entrepreneur himself, or with the team, then they ae termed as informal efforts. Moreover, the research studies conducted by competitors also have the capability of providing practical business ideas. One should also know that the R&D activities are suitable for large organisations only. Small and medium pecinesees eannot afford to invest huge amount of money in R&D. 's an important role in providing business ideas to the entrepreneurs. _ procedures, rules and regutations create business opportunities ess and funds required for establishing an ‘automobile with high mileage when the Government: Government also play The changes held in government policies for entrepreneurs. This helps them in deciding the type of busin« enterprise. For example, an entreprencur can launch a new government announces high petroleum prices Strategic Changes: Entrepreneurs are the individuals who possess the capability of identifying strategic changes and create opportunities. They receive rewards such as wealth and personal satisfaction by jmplementing the strategic changes in their new ventures. Hence, these strategies motivate an entrepreneur to make changes in the business enterprise Exhibitions: By participating in different trade fairs, exhibitions, 5 entrepreneur can find out new ideas for setting up a new venture. Not only these Cxhibitions contain new products and services, many important salesmen, distributors, franchisers and othet entrepreneurs are also present there, All these participants act as a source of idea in some way or the other for an entrepreneur. Scanned with CamScannerm MBA Second Semester ( tat up and New Venture Management) SPU ‘Tools and Tech ‘There are different methods to s iques of Opportunity Seare! “arch for new opportunity, Some follows: }) Focus Group: When a group of persons provide information in an organised manner, they are termed as 4 focus group. Generally, these groups consist of 8 10 14 members that are led by a moderator in a directive or a non-direetive manner depending upon the type of discus depth and open, where every member can put his or her views in generate feasible business ideas by conducting e Stimulate each other to involve their views in the discussion. This gives a proper direction 10 the discussion thus leading towards a feasible business idea, In this process, relevant ideas are dropped out and only relevant ideas are taken. 2) Brainstorming: One of the most common methods of bu: ys It is a method in which a gfoup of persons interact and stimulate each other into a creative: si de, pa veap discussion. ‘The ideas generated under brainstorming sessions usually do not have funher scope of development, but Sometimes great ideas ean be generated from them, These sessions are more effective when directed towards a Particular market or product. Brainstorming sessions invites large number of ideas, whether feasible or tmpractcal, fom the group members. I opposes eritiism or negative comments and encourages eombinations or improvements in them for suecesstal generation of ideas. Tis technique is used by many large organisations and commercial banks for developing a 3) Reverse Brainstorming: It is simi Permitted so as to reach the best ide: ideas is the main activity in this tech idea is generated. in. These discussions are in- an organised manner. These groups depth discussions on various topics. Here, the members ess idea generation iy brtinsionn nstorming technique but in this, cri Identifying the shortcomings or negative point que. Thus, through thoughtful discussions s about the given and criticism, 2 useful 4) Check List: Discussions conducted on list of associated problems form the basis of generating new ideas for business, The entrepreneur enumerates a particular area of discussions and subsequently a checklist ot Hapees, Statements and recommendations is established for comprehensive talks. In this check list following type of questions are discussed: i) “The very reason as to why the product is used, Who uses the product? The method followed while using the produc ji) New possible ways of using the product. iii) Any type of changes possible to inerease the utility level of the product. iv) Which substitutes are available in the market? Their level of competitiv Possible to incorporate those attributes to develop a new ¥)_ Check if modifications are possible, {sit viable to modify the shape, colour or packing of the product? Can we increase or decrease the of the product, or increase frequency or add new ingredients in the existing list of ingredients? vii) Is it possible to introduce a substitute product in the market? viii) Can we alter processes, make it lighter or make it smaller? ix) Change appeal, modify the intention with whi of construction and introduce additional positi X) Find out wl feness with our product, Is it improved product? *h the product is being offered, make use of different materials. ive features that can appeal an ich all products are being used in foreign countries and why? Xi) Identify new emerging products in a certain product range, 5) Problem Inventory Analysis ons are developed in terms of the cxisting problems. These ideas are generated by the consumers of a particular product. A list of problems Teaated to general product category is given to every customer or consumer and then they are veken ry a prety e exact problem. Further, this process is followed by discussions in regard with the problems ot & product, which finally leads to the generation of a new business idea, Since thes Opportunity. the results of this analysis should be evaluated analysis should be mainly used for generating i method, maximum results can be obtained. 6) Synecties: William J.J. Gordon coi creative problem-solving, “Synecti unrelated elements, define prob In this method, new ideas and solut ¢ ideas create a business refully. Also, it is recommended that this leas of new products from existing ones. By adopting this fined the method of syne: "means combi Under synectics, the ideology of lems and “making the familiar strange” conc tics used 10 upgrade the process of i distinct and seemingly disconnected and ‘making the strange familiar” is followed to cpt is followed to seek new ideas, The second Scanned with CamScanneree es seme Discovery (U2) 1 15 concept aims at making the known strange, i manithe behaviour of others both are ee ways of perceiving and general expectations use of four types of metaphors which are as follows: nique. In this process, symectios makes i) Personal Analogy: a i ) cee 7 ric Pd using a personal analogy, decision maker actually imagine themselves as the ee or example, if the purpose is to reduce the incidence of panhandling on city er ier - Es ight want to imagine themselves as a panhandler. This might ‘sound unbelievable, ain Probably wil increase the number of ways that they think about the problem. As lout that, even Einstein used a it Se ite oncnee used visual and muscular analogies in understanding ii) De aaa metaphor of direct analogy is identical to the problem with reference to the facts, technology or nowledge. Organisational theory can be an appropriate example ere. Usually, cxgsisaind theory describes about organisation functioning as organic systems, employing @ Ba aie metaphor where there are inputs, a conversion process outputs, and a feedback loop. i) Sy Hie Analogy: In this pe of metaphor, a symbol or image is used to describe a problem. For instance, tbe role of a supervisor can be considered equivalent to the role of a coach, a conductor, @ teacher, a gardener or a tug-boat, or creating a work team can be regarded similar to developing @ collage with a usual theme. iv) Fantasy Analogy: Under the fantasy analogy, the decision-maker can ask himself the question as to ‘What is the wildest imagination about how to resolve a problem?” The intention of the decision-maker behind asking such a question is to presume the best features of all possible outcomes. It prompts free- thinking about the issues and avoids becoming confined by current restrictions. 7) Information from Publications: Abundant information about various products and services are available In several publications of different organisations. Some of these sources of publication include sales trcchures, advertisements, catalogues, publicity posters, etc. These sources are realy available for anyone and may sometimes, trigger new ideas and business concepts. 8) Seminars and Conferences: ‘The emerging opportunities and challenges of business are discussed in serous seminars and conferences held on a regular basis. An inexperienced entreprenott will be able 10 equire a fot of information and useful tips from such seminars and ‘conferences dedicated to business. 9) Diseussion with People: It is quite possible that if an entreprencdr inattentive or careless, he may lose tut important opportunities. A skilled entrepreneur is one who is an attentive listener with an analytical sa Buch an entrepreneur will be in a position to lear regarding the isles needs and preferences of people surrounding them by being @ good listener, ‘The information acquired from people will aid the Entrepreneur to create produets and services that indeed have the level of fulfilling consumer requirements. 10) Day Dreaming and Fantasising: Daydreaming is another useful method of generating business ideas as many inventions are born out of imagination. Its 8 thought process which allows a person to creatively and maa ally think about a particular problem or isu, Tt enables © Petes to establish an emotional connect rea the problem, which is beneficial in werms of coming XP ‘with great ideas. Business opportunities are developed automatically when someone dreams productively focussing upon a specific goal, In the past severaf inventors have undergone daydreaming, thereby Comin OP with ideas that led to their life-changing wvertion, Kor example, an airplane invited by the Weight Brothers was just a daydream 11) Combination of Above Methods: Methods of generating ideas do not necessarily involve choosing one cothod at a time. An entreprencur can combine the above methods in order to generate innovative and feasible ideas. An idea can be generated from any source ‘and does not have any boundaries or time frame 2.1.6. Opportunity Analysis ; Entrepreneurial opportunities refer to the economic {ideas which can be implemented to form a business enterprise. The entrepreneur selects the business ‘dea which is the most possible of all the opportunities and yields greatest rewards. This can only be Gone if the entrepreneur analyses all the opportunities and understands the demand-supply gap. The essential characteristic ‘of an entrepreneur is that he is forever looking out for the ‘opportunities. An entrepreneur, in the first instance, must identify a business opportunity, ‘analyse its pros and cons and then select it on the basis of the identified attributes. Moreover, an ‘opportunity must be understood as any business idea which is viable and feasible for a ‘business venture. One of the pre-requisites of a viable Scanned with CamScannerMMA Secwint Semester (Startup anal Now Venture Management) SPU ness application, As Drojeet idea iy that it should be eapable of being: tanstated into feasible and practical bus Such favourable business oppott 1 thas puaante ity has the following essential characteristics: H scape interns of market sh {has a remmnerative and attiaetive tate of return for the entrepreneur 3) Tis practical enongh for application 4) tive ipable of being used by the entieprencur as a business project, 5) Thay potential growth prospects 2.1.6.1. Ways to Assess Opportunities Hhere are several ways of assessing at business apportunity, some af which are discussed below: 1) Needs and Wants: “The basis tor recognition of opportunities in the market is analysis of the Ainsatistied needs and wants of the mutket, However, an opportunity derived solely tram the wants of the market canot be regaled as g true business opportunity. The applicability and viability a the phortunity, im essence depend! upon the determination of the fuet that the idea or the product will serve juomers” teed and will be acceptable to them, when it is finally launehed, ‘The product therefore, has less chances of survival when itis Launched solely on the basis of perceived wants of the market Ie such canes, the sales of the product will be adversely affected as product serves no need of the customers or may be unacceptable to then, ne nt or New Market: Opportunities for new busines market being targeted, ic, whether opportunities exist i rise m: aire also analysed in terms of thei the present market or ready been conducting its business operations ina marketp ‘nt market, Whereas, a marketplace where the compa possible retums is referred to as a new n relations with anew market, Also, the » known as present or Y Wishes o carry out its business activities for et for the company. The firm may choose to enhance its performance in its present market itself. This hieved either through inereasing the sales of the current product offering or by introducing a completely new product in the market fre the firm aims at increasing its revenue from its current market by ifeteasing the sles ofits existing product is referred tw as market penetration. On the other hand. where eg ah Aims at increasing its revenue from the current market by introducing a new product ix said te {otlow a strategy of product development, Thus, product development, in essence, involves introdetion OF a new product of offering a differentiated product from the one already in the market, For exa nple, an Od product may be kwnched in a new packaging or be incorporated with more features, When the enteuprive tries to sell its existing basket of products in an entirely new market segment, then it is ealled market development, Whereas, itis referred to as diversification when the firm tries to launely 4 new ket, uch a strategy wi 2» Ret Markets Another way of finding out the opportunities in ‘owith of consumers. A new entrant will find it very difficult to Also, nature market characterised by intense competitive rivalry will put up strong entry ba cw firm, While, it is almost impossible for a small-sized or medium-sized firm to enter i suarker hich has a significant presence of big business houses or MNCs. However, chances of survival are relatively greater when the competitors in the Prada i Mnall in number. A smallsized fim has greater chances of survival inthe new marker the Product is one which the government has reserved for the small-scale sector and may even comer a ‘gniticant portion of the market share, if the proauct is experiencing a tise in-demand, small firm cannot BONNY choose a produet category which is highly sensitive to price-wats. Such situates necessitates shewsine « product which can profitably compete on parameters like quality, innovatiy design, packaging, clivery time, after sales services, replacement options, ete. I is easier fora firm to enter a new market which is witnessing demand surge and itis possible o introduce somewhat differen iated product which meets customers’ needs, 4) SWOT At sis is a unique technique used for evaluating the likely chances of success sc aticular business opportunity. This aims to identity the four aspects of venture in terms of its Strengths. Weaknesses, Opportunities and Threats (SWOT). The rengths and weal S relate to the internal dimensions of an organisation, whereas the opportunities and. throne the external environment of the organ a market is t0 research the trends in the enter a new market which is declining, CW market are weak in Scanned with CamScanner~~ customer Discovery (Unit 2) 2.1.6.2. . Tools and Techialuas of Opportunity Analy Opportunity analysis can be done with the help of the fall gives hi jenty of le to make use of it, Trend analysis enables th start an sin by making use of the idea behind the trend and successfully creating, developing ind cas ; aw 2) Demographic Analysis: Business opportunites ean also he identified hy tooking at dem sarisbles an Ment any noteworthy shift Demographic changes which ane considered test for analysis include variables like households with dual incomes, increasing ged population. £ penetration of mobile and social tools, nature of jobs, ele, Increase in fami wth dal incon hi led to the increase in demand for products which hour of for specific services which can be availed by them, Some of te services i sevice services, babysitting, day-care services, ete. dl include Jaundry onomise on seen growth in their d alysis which is based upon igus ways which jap Analysis: Another technique for evaluating business opportunity is gay idemifying gas in the market. These gaps oF opportunites ean be show nth ox of are enlisted below i) Product Line Gaps a) Related to size b). Related to alternatives c) Related to style, colour, flavour, fragrance, etc. 4) Related to form ¢) Principle or method of operation f) Operation range g) Format of the product h) Composition of the product i) Type of container j) With reference to quality and price k)_ Related to distributor brand ii) Distribution Gaps a) Gap in coverage or distribution b) Intensity gap c) Exposure gap iii) Usage Gaps a) Light user gap b)_Non-user gap iv) Competitive Gaps: method, the existing products size, available alternative inspecting these variables, meeting the needs of the service. Analysing the 8: business opportunities. ‘The most commonly used method is identifying the product line gaps. In this the market are analysed on the basis of y of parameters like style, favour, frag quality, price, distributor brand. ete. By ‘a gap can be identified in terms of a product feature which is not stomers, This creates the opportunity for a new and better product or bution, usage and competition can also be used to identify new ps in di 2.1.7. Opportunity Selection / ‘The entrepreneur has 10 consider all the factors which have an impact on the em of a business opportunity as the decisions regarding the selection of business ‘opportunity is taken at the very beginning which is not so easy to change later. An entrepreneur needs to be careful regarding factors which may interfere the smooth functioning of the business in the future. As such, the entrepreneur needs 10 have all the relevant data for selecting the right kind of business Tine as @ wrong decision taken at i beginning will affect subsequent decisions as well. Hence, it is necessary for the entrepreneur to study al the opporuites carefully before any one of them is selected. One should member that all dhe businesses are built upon the cee Ciatone of carefully analysed business opportunities and entrepreneurial behaviour, Scanned with CamScannerem NEE 37 EER P32 mm 78 ‘MBA Second Semester (Start up and New Venture Management) SPPU Right market conditions are required by the entrepreneurs to transform their business idea into a profitable venture, Further, it necessitates creation of beneficial situations wherein opportunities can be availed. Before the business opportunity is selected, the entrepreneur has to confirm that the product or commodity, which is going to be produced, has a ready market that will provide sufficient profit in retum, Also an entrepreneur needs to collect all the important information regarding the chosen business opportunity before analysing it, Finalisation of Opportunity or Product The finalisation of a product or an opportunity needs to be done after Keeping in mind the following factors: 1) Total investment 2) Return on investment 3) Returns on equity 4) Expected sales volume. 5) Gains and Profitability After going through the analysis, the selected product/service will be the most viable one to be used as a business idea. Besides, the whole volume of data collected above, an entrepreneur need to work oat following additional data that enable him to take ground-level decisions, These data correspond to: 1) Total investment required in plant and machinery. 2). Possible sources of raw materials 3) ies for infrastructure. 4) Project size 5) Availability of requirement of manpower 6) Amount of finances required 7) Government policies and procedures regarding starting of a new venture 8) Government incentives, subsidies, exemptions, ete. ‘hese factors play determinative rote in selecting a project which is not only feasible but also financially viable. For a long term growth, it is necessary that the opportunity is capable of giving consistent and continuous Telurns over a fairly long period of time and can be diversified into other businesses if required. 2.1.7.1. Objectives of Opportunity Selection ‘Selection of any business opportunity should be guided by the following objectives: }) To resolve the business problem by developing a conventional solution, agreed-upon consensually. 2) To achieve the external goals which are beyond the control of an entrepreneur and thus are dependent on his personal thinking 3) To remove probable chances of vagueness in the selection of business opportunity. 20 Tools and Techniques of Opportunity Selection Experts have, over the years, developed several tools and techniques for guiding the decision of opportunity selection, Some of them are as follows: 1) Hits: This is @ very fast way of identifying best opportunity among alternatives. The idea is to hit (mark) the most attractive, interesting, feasible, creative alternative as dots or a hit mark by using a pen, 2) Clustering: In this method, similar alternatives are grouped together so that repetition can be avoided. After the bits are marked, clustering is done in a manner that not more than three opportunities occur in one group. 3) Restating Clusters: It is a tool which tries to capture the central theme of a cluster so that it can be expressed as a single statement. While doing this, it should be kept in mind that the original and. interesting facets of the ideas are not lost. ‘Point: POINT is a four-stage approach used for the evaluation of an altemative. POINT stands for Pluses, Opportunities, Issues and New Thinking. Under this technique, a list of all. pluses, followed by qpporiuntties (business potentials), then issues (various problems, concems, etc.) and finally new innovative thoughts for resolving such issues is prepared in that order, 5) Card Sort: This is one way of ranking or assigning priorities when faced with many attractive options. In a given set of opportunities, mark a 1 on the most attractive alternative and a 6 on the least attractive and put them aside from remaining alternatives. Next, mark 2 on the most attractive and an altemative 5 on the least. attractive. Continue the same for the numbers 3 and 4. Although, this does not ‘he alternative but helps in ranking them on the basis of some criteria, Ip in selecting an —————— y Scanned with CamScanner_—_ customer Di 0 ” 2.2.1. Introduction Market intelligence can be the difference betwee mission critic environment approach it as a strate For the most part, entrepreneurs ¢ people churning numbers from a vi therefore, map out competition and g be the exclusive preserve of karge tech companies. Market intelligence is a good start point to gather evidence for the asst comes in the form of both qualitative and quantitative information, research that mitigates risk and guides i budget. As an entrepreneur, the investment d based on critical cash flows, Market Intelligence can help identify opportunities and n feedback loop of learning and the 1) 2 3) 4) 5) 6) 7) 8) % 2.2.2, Steps to be take ) a iscovery (Unit 2) ” and the options are cted. At last, every | Evaluation Matrix: In this technique, the eri jisted row-wise in a grid matrix. After that, altemative is rated against the selected ct ia for selection are listed column-wis a rating scale (such as A-B-C or 1-5) is sel the options are listed row-wise and columnewise on a grid. Now, each option is rated against other options using a rating scale (e.g, 3 is preferred little 2 is preferred ired Comparison Ans “ i Paired Comparison Analysis: In this technique, every alternative is compared with other alternatives. All | more and | is preferred the most). The final rating of the option is the total score that it gets, | r suice in tai nables entrepreneur to understand his/her competitors, customers, actors, Most entrepreneurs do not fully appreciate the importance of market intelligence or ic business function though. and failure of a startup. Market intelligence is | | ink Market Intelligence is what large companies with their big desks of | | ‘and other busine: c iety of sources including paid reports and open sources. A lot of startups, rely on gut feel and seat of the pants driving and the VC inputs ~ to shape and design their product auge the response of the market they wish to disrupt. But it is not, and it should not sumptions of startup business. Evidence collected from primary and secondary wvestment. This doesn’t occur only in large companies with a large fecisions are even more critical for success because they may be monitor market threats. Entrepreneur can create & tion involving customers, competition and marketing action. He/she can lower of new products or services that he/she plan to introduce. Some of what an entrepreneur can Ausser is, Where, how and who are an entreprencur going to sell .0? That includes geography, pricing models etc. What Kind of business models exists? What is the size of each? What are potential and addressable markets? What do entrepreneur substitute and solve? Are entrepreneurs really uptive? What is he/she replacing? Whe me entrepreneur's direct competitors? Do they have a diversified portfolio? What is entrepreneur's competitive advantage? How an entrepreneur is going to postion hirnself/hersel(? How will he/she move with market plays? Does he/she compare producUtechnology claims? , . | What are entrepreneur's weaknesses and strengths in capabilities, USP’s, value & quality, financials, ' cashflow, people? What is the regulatory environment? .n by the Start-up to Improve Market Intelligence : ‘Train and Motivate Sales Force: A company’s sales force can be an excellent source of information about the current trends in the market. They are the “intelligence gatherers” for the company. The acquired facts ' can be regarding the compat 2s, whether any improvements are required or not or is there | any opportunity for new products, etc. I can also provide & credible source to know about competitor activities, consumers, distributors, and retailers. Motivate Distributors, Retailers, and Other Intermediaries (0 Pass along Important Intelligence: Specialists are hired by companies to gather marketing intelligence. In order to measure the quality of production, the way the employees are behaving with custome quality of facilities being provided; Production, ie ice providers send mystery shoppers. Firms can also assess the quality of customer experience with the shops with the use of mystery shoppers. ny's market offer TT Scanned with CamScanner80 MBA Second § ser (Startup and New Venture Management) SPPU 3)_ Network Externally: Every firm must keep a tab on its competitors. Competitive intelligence describes the broader discipline of researching, analysing and formulating data and information from the entire competitive environment of any organisation. This can be done by purchasing the competitor's products, checking the advertising campaigns, the press media coverage, reading their published reports, etc Competitive intelligence must be legal and ethical 4) Set up a Customer Advisory Panel: Companies can set up panels consisting of customers. They can be the company's largest customers or representatives of customers or the most outspoken customers. Many business schools set up panels consisting of alumni who provide their knowledge and expertise and help in constituting the course curriculum, 5} Optimal Usage of Government Data Resources: Governments of almost all countries publish reports regarding the population trends, demographic characteristics, agricultural production and a lot of other such data. All this data must be or can be referred to as base data. It can help in planning and formulating policies for the companies. 6) Information bought from External Suppliers: Certain agencies’ sell data that can be useful to other companies. For example, television channels will requite information on the number of viewership, ratings of TV programs, etc. An agency that calculates this information and generates this data will provide it to companies that need it. . 7) Collect Competitive Intelligence through Online Customer Feedback: The customer's view of a product is essential for any company. Ultimately i's the customer who's buying the product. Hence customer feedback must be taken. Online platforms like chat rooms, blogs, discussion forums, customer review boards can be used to generate customer feedback. This enables the firm to understand customer experiences and impressions. It becomes easier for companies to apply a structured system to do so as it can then scan out the relevant messages without much of a trouble, 2.2.3. Role of Marketing Intelligence Marketing intelligence provides organisations with several distinct opportunities to accurately navigate the complexities of the marketing landscape that are unique to the organisation, When done correctly, there are four sides that help entrepreneurs formulate successful strategic decisions: 1) Competitive Advantage: This form of marketing intelligence involves collecting data from competitors in order to distill insights that can be used to more effectively develop business strategies. By understanding, which consumers choose competitors and why, brands can better align matketing efforts to shift products and messaging toward the ideal consumers 2) Product Intelligence: Product intelligence involves taking a deep dive into the brand’s products as well as how those products stack up within the market. Typically done by speaking to consumers, polling target audiences or engaging them with surveys, organisations can better understand the differentiators and competitive advantages of their products. From there, teams can better align products to the unique consumer interests and problems that help drive conversions. 3) Marketing Understanding: The data used for this variant of marketing intelligence revolves around examining the marketplaces populated by customers or prospects. Are there magazines, books or industry journals the marketplace reads? Or perhaps organisations they are a part of? Understanding the areas where the target audiences are most active can help entrepreneur identify the right media mix, the touch points and channels to use and where his/her products can fit into those elements. 4) Consumer Understanding: Although the focus for most companies is on new sales, customer retention is just as important. In fact, on average, it costs brands five times more to acquire a new customer than to retain an existing one. With this in mind, understanding the customers can help effectively target new customers for less marketing spends, while helping boost retention rates. Consider the following questions: i) Whoare buyers? )) Why are they buying from a startup? iii) Are they satisfied with the level of service? iv) Are there things that can be improved? vy) What are the challenges entrepreneur's teams can help them with? RTT ET ETE Scanned with CamScanner} cast omer Discovery (Unit 2) 81 124. Importance of Market Intelligence Market intelligence is vital to the success of any organisation, being the foundation on which all marketing is bas Market inte ed. ciesive mse of markt intelligence involves the collection of dt, analysis and end use of he information. Ips entrepreneur to become customer-centric, understand the market demands and consumer real a ee Se pemind ornate boost upseling opportunites, reduce risks, capture higher market shares an nm ive advantage. These benefits are crucial to the suck " pee seess of any business and hence market intligen is one of the most crucial elements in executing effective plans for the prosperity of any business. ig are a few points, to understand why market inteli i Points, yy ma igence is crucial to any business. }) To Understand the Position in The Market: Collecting market intelligence through surveys allows to 3) 4) cadena are in-depth. It will give entrepreneur insights into what the competitors are doing, what is the wand and who will be target audience and many more. Analysing this information will enable a company to evaluate its position in the market and make strategies accordingly. To Erlaae Frock Conducting marketing intelligence surveys will give actionable insights on the product wends in the markt, the ‘demand for specific features and product specification currently in demand. Such information helps entrepreneur o evaluate product and make wise business decisions accordingly. To Know T arget Audience: Gathering market intelligence wil allow a company to understand the needs of the audience and using surveys, businesses can shortlist their target audience for specific products/services. To Conduct Competitor Analysis: Market intelligence is a vast field Conducting surveys to gather intelligence about competitors is vital in today's business environment. Using such information, businesses tan modify their products as per the need, understand competitor's failures or successes, and devise strategies based on the competitor's position. 22.5. Types and Methodologies of Market Intelligence While market esearch is a vast topic and can be gathered through various quantitative or qualitative methods, most companies prefer the following basic methodologies to collect market intelligence. ) Data collection: Some basic data collection methodologies for market intelligence are as follows: i). Surveys: Survey research involves a set of questions put together in a concise manner 10 gather data from the target market and analyse the same to create valuable market intelligence. The larger the groups of people, the more reliable are the results. There are various methods in which surveys can be conducted depending on what information needs to be collected ii) Questionnaires: A questionnaire isa series of questions asked ina printed or online format to conduct aeeareh. They can be used for qualitative as well as quantitative research and can be used to gather data from a large set of audience. ii) Polls: Polls are somewhat like surveys, however, in such a method there is only one question to answer, Since it takes very less time to answer these, the response rate is extremely high, jv) Forms; Forms are a set of questions asked by a researcher (¢ collect very specific information required forthe task at hand. Such & method does not include questions that will tate opinions or feedbacks from the respondent. ¥) Focus groups: Focus groups are a set of people selected carefully to represent a target market, Using focus group surveys, a company can evaluate customer ‘demands and opinions or even take feedback from the group. This enables to collect information that can be helpful to « company to penetrate that -cisting market. Usually, a moderator is required to ask the market or to Jaunch a rew product in an ext arke u ; {question to a set of people where a discussion unveils insights into that topic. However, focus group surveys can now be done onfine as well thus eliminating the need for a moderator. vi) Personal Interviews: Interviews are generally an expensive affair but provide valuable, reliable Fuiceenation. Such a method is used to understand in-depth about a particular topic or a product. They are unstructured open-ended questionnaires and can Tast (0 an hour. However, since they are done on an ae ual basis, such a method iS not preferred to gather market information, as it will not represent the aanevt as 2 whole. Although, interviews with subject matter exper 1 sive an understanding of the market trends in a particular industry if one is not well ‘acquainted with such industry information. For cxample, A company wants to understand what are the current technological trends in the market. An Geren with a subject matter expert in technological solutions can give a company valuable information as to what is trending and what can be expected in the near future. Accordingly, strategic business decisions can be taken to invest in the right direction. Scanned with CamScanneraonk ae a MBA Second Semester (Stat up and New Venture Management) SPPU vii) Observation: Sometimes the data gathered through other types will not give reliable data jor would at give insights about the customer attitudes or buying behavior. In such a case the observa ia et Provides wit information such as habits ofthe customer, buying pattems, customer preference such a ualty or price ete, Understanding this information will enable a company to sell better and make changes in their products according to the demand. For example, Brands have cameras fitted in their Stores, which are continuously recording and viewed later t© understand the behavior of their consumers. Using this observation, a company can hack into unconscious buying behaviors or attitudes of the target market. ; vil) Field trials: Field trials are like conducting experiments in real time, It involves placing a product in Specific stores to understand customer response to the new product. It can be called a pilot fun to test jhe Product in the market. For example, A chocolate company wants to test a new product they want to launch. Hence a few select stores are provided with these chocolates to be tested with their target customers. These customers have to represent the target market and hence their feedback will enable the company to understand if the product will work in the market or not, 2) Analysis: Information is different from intelligence. Information isnot useful uni it has some meaning to it Information is nothing but knowledge about a particular topic or product, while intelligence is about eaningful information which can be used to take action. In order to transform collected date to meaningful intelligence, analysis has to be performed on the collected data. There are vatious wave imtelligence i re not only allows to collect data but also to analyse the data using saved analytical methods. Analysing the information collected helps transform ft t velable mane intelligence thus enabling a company to understand target market opinions, trends, competition and where improvements or modifications are needed. Advanced analytical techniques such on Conjoint analysis, Mandiff analysis, Gap analysis, Trend analysis, Text and Sentiment analysis allow company to understand the market accurately which aid them to make strategic business decisions, 3) Reports and Presentation: Reports and presentation are an important step in using market intelligence. software. Thus using market intelligence effectively can enable a company to penetrate a successfully and effectively, determine market segmentation, understand the compet the market as a whole, 2.2.6. Advantages of Market Intelligence Market intelligence not only helps companies to distinguish their brand from its competitors but also helps in Providing valuable information to stay in the game and excel at it. Following are some of the benefits that market intelligence provides. 1) Holistic View of The Market: ‘Understanding the market completely can lead a company to success in no time. Market intelligence is gathering data in real time from the market and further understandit 1g the customers, ends, behaviors, etc., thus enabling a company to stay competitive and meet market demas 2) Customer Retention: No ‘matter how old a customer is to a company, they are always attacked by the competition, ‘Understanding when the customer is dissatisfied and the reasons behind it can *) ‘Improve Sales Process: Businesses having a variety of products and a large number of customers often Gio. an issue, i. which product to target to which groups? Market intelligence helps entrepreneur to determine market segmentation, thus allowing the company to understand which produet will succeed with which group of people. 4) Boost Process Efficiency: Market intelligence helps businesses to boost overall efficiency and productivity by identifying saps, giving actionable insights to devise crucial strategies and provides ag organisation with | real time data and analytics, Scanned with CamScannerA - Discovery (Unit 2) er 3 cust By fabs a esas aaa First mover advantage or the launch of a product at the perfect time is a well eard off sta in a lot of business conversation. These ae possible only by } et intelliges el cr ossible only by us ‘market intelligence. Marie Seat : Ips entrepreneur keep @ watch on the competition, the upeoning trend, and ives a ‘complete picture of the market, which allows a company’ to penetrate the market or capture th + market share bs ; Jeunching a product ora new feature atthe right time thus giving the varie p je advantage. i mena Was 23.1. Introduction Foirepreneurs need t0 attract customers aid it is important wh iMeraken {0 assess the potential demand for the service or product being offered. Marketing embraces the fmetion of meeting customer requirements and getting the ight product inthe right place atthe right time. [tis important for businesses to make decisions which are based on the findings of market research. A market analysis isa documented investigation of a market that is wed to inform a frm’ planing aetviies particularly around ie fon of; inventory, purchase, workforce expansionfcontraction, facility expansion, purchases of eaptel equipment, promotional activities and, many other aspects of a company. A larEs number of market analysis ariniques are related to sales forecasting, thers are more general techniques for analysing markets. The Whesae defines several areas in which market analysis js important, These include: sales forecast market research and serkating strategy. Sales forecasting and market analysis are complementary skills that any marketing manset Thould possess. The goal of a market analysis isto determine the attractiveness of a market and to understand its i evolving opportunities and threats as they relate to the strengths and weaknesses of the firm } setting up a business that sufficient research is 2.3.2. Dimensions of Market Analysis Dimensions of market analysis are as follows: 1) Market Structure: Market structure relates to the number of rivals pantcipatine it industry. It is important to consider the number of rivals as well as their size. In othet swords, it is important to gain @ thorough understanding of the type of market that we intend or re currently operating 1% Tac essential to lear about the industry's structure, whether or not it is changing and why. Apart from the selling side of the market, the number and size of the buyers is also significant and ought to be included in the analysis of a market structure. 2) Market Size: The size of the market can be evaluated on the bans of present sales and potential sales. The following are some information sources for determining market size: i) Government data, fi) Trade associations, iii) Financial data from major players, and iv) Customer surveys. 3) Growth Rate/ Potential: A simple means of forecasting the Mahe! growth rate is to extrapolate historical data sito the future. While this method may provide a first-order estimate © does not predict important tuning points. ‘A better method is to study growth drivers such as demogr phic information and sales growth in complementary products, Such drivers serve as leading indicators that are more accurate than simply extrapolating historical {ta Important inflection points inthe market growth ri ‘sometimes can be predicted by constructing a product dittaster eurve. The shape of the curve can be estimated by studying the characteristics of the adoption rate of a similar product in the past. Ultimately, the matty ‘and decline stages of the product lifecycle will be reached. Some leading indicators of the decline phase include price pressure caused by competition, a decrease in brand | regucts, market saturation, and the lack of growth drivers. loyalty, the emergence of substitute Pr ‘a market will have different levels of profitability, the average 4) Market Profitability: While different firm 1 : profit potential for a market ean be used asa guideline for knowing how difficult it is to make money in the eet eentichael Porter devised a useful framework for valine the attractiveness of an industry or market. “This framework, known as Porter's five forces, identifies five factors that influence the market profitability: i) Buyer power, ii) Supplier power, iii) Barriers to entry. | iv) Threat of substitute produets, and ¥) Rivalry among firms in the industry. —$errre Scanned with CamScanner° 23. Following Industry Cost Structure: The cost structure is important for identifying key end, Poster's value chain model is useful for det The cost structure is also helpfial tor formulating. s example, in some environments the experience curve effeet can be used to develop competitors. Distribution Channels: The following aspects of the dist istribution Channels: It ii) Trends and Emerging Channels: New ch i) Existing p advant, iti) Channel Power Structure: have negot ting p Market Trends: Changes i opportunities in price se may be relevant, Key Success Factors: of the firm. A few example i) Access to essential unique resoure Ability to achieve economies (0 distribution channel iy) Technological progre: should be defined i markets, if applicable. We will be guided throu; links to each of the resources. i) Demographics: Government census dat ii) Psychographics: Psychographies spend their join, and more. Niche Markets: interests, spending habits, It is best strategy for a bland, to try all things to al Research the Competition: important to discern check-out the general addition. specifically inve i) Check-Out their complete? What productservices to their target market? Wh: content they pro they feature speci: ii) Investigate the Pri the same products/se iii) Determine who t charge for advert ul threats, The relevant trends are industry-dependent, but some vity, demand for variety, and level of emphasi isposable income, MBA Second Semester (St ‘New Venture Ma s for success. To this ‘rmining where value is added and for isolating the Costs, egies to develop « competitive advantage. For cost advantage over tribution system, re useful in a market analysis: be described by how direct they are to the customer. n offer the opportunity to develop a competitive anels ¢ or example, the case of a produet having little br: facturers andl ean capture more margin, 1d equity, retailers the market are important bi ‘ause they often are the source of new examples include changes ‘on service and support. Regional trends also ¢ These are those elemei of such factors includ that are nec ary in order to achieve marketing objective of scale, and Market Analysis Process re the steps of market analysis process: 1) Identify Target Markets: Whom are we selli 1g to? Who are our ideal customers 8s? Our target market Psychographies, and special ch: iaracteristics of niche igh a full listing of marketing research sites with hot in terms of demographics, Ir refers to population characteristics, regarding age, income, and education, ais a common source of demographic information. Itis used to determine the attitudes and tastes of a particular segment of a population. ‘amines lifestyles: where People spend their vacations, where they shop, how they what sports they participate in or watch, which clubs/organisat tions they These are small segment of the p tc. Successful niche market mall business to achieve a people. opulation that shares common characteristics, ing focuses on a small segment of a total market, market leadership position. It is expensive, and Who is competing with us What other companies are health of the business, their ? After we have identified our target market, itis after the same market. In researching our competitors, approach to marketing and their financial information, In stigate the following in depth Websites: Examine their design, format, and content. Is the features and benefits do site professional and they promote? How do they position their at websites do they link to? What is the nature of the de? Do they offer any community-building, message boards, or char rooms? Do al events? ses of their Products and Services: How do they compare to ours? Do they offer *ervices? Do they offer discounts? Any other special offers? their Advertisers are: Who advertises on their website '8? What are the terms of their affiliate programs, i now? What rates do they ifany? +, Scanned with CamScanneroe 2 sgomer Discovery (Ut 2) es Asses Market Trends: Our marketing plan should fect our observations and insight out tes inoue is an st ket. Information about de genera direction ofthe mrkeplace can help US Wat sehat people Want, What market trends will have an impact indluescing nitro at n impact on our business, influencing the demand for our {). Industry Trends: It influences almost every business within its segment, These are ax the increase in service businesses in the U.S, the dect the p . dectin of Imernet pure-play batslies najor trends such turing, the pre-curious position to name it few ii) Target Market Trends: be influenced by di population and huge number of baby-boomers re influences outside the realm of demographics demographic shifts i innovative products fends ¢ nographics, such as the aging of our f ige 50 every minute, or by cultural and social ° Examples of market trends that evolve from s¢ in the number of assisted-living facilities and the growth of and services designed for a more “youthful” retired population, iii) Conduct Market Research: Market research can prevent our company from making erroneous decisions that result in expensive design mistakes in new products, marketing campaigns and more. Market research has traditionally been conducted through techniques such as questionnaires, polls. surveys and focus groups, 23.4. Sub-sections of Market Analysis It should include the following sub-section n 3 Market Research: This section provides a summary of all information one referred to in order to determine that there is a demand for his product/service. Particularly important section for start-up businesses or new products/services is the market research and it should include the following sub-sections: i) Secondary Research: It involves using material prepared by third parties that may or may not be specifically oriented to market. Basically, it involves identifying information uncovered by others (such as research groups, the government, industry experts, etc.) that is relevant to the business. Common examples of secondary market research includes looking to population and demographic data taken by the government, consumer surveys, targeted articles or surveys, or data derived from other stu ii) Primary Research: It, on the other hand, involves direct research of intended customers. Direct research of customers generally involves some form of informational gathering about the customer's preferences, such as questionnaires, or surveys. It could also include observational research, such as the monitoring of potential customers to determine preferences or characteristics of their consumption or purchasing acti This analysis provides trends, major players in the industry, and estimated industry Industry Anal sales, It also examines: i) Total industry size (revenue generated, number of companies, etc.), i) Growth potential and factors influencing the industry growth, iii) Standards and regulations affecting the industry, iv) Common costs and profit margins, and i {) Industry trends, including opportunities and theats trends, major players inthe industry, and estimated industry sales. Customer Analysis: This analysis examines the primary target market for the product or service, including geographic location, demographics, target market's needs and how these needs are currently being met This section covers the following: i) Identify and define typical customer segments, ii) Characterise each segment by location, age, gender, income, characteristics of the target group, iii) Discuss the buying criteria of target market decisions it makes? (i.e. price, quality, location, etc.), iv) Market niche, ¥) Size of market, and anticipated market share, and Vi) Market trends and outlook. lifestyle and any other relevant — ie, what motivates this group to make the purchase Scanned with CamScannerMBA Second Semester (Start up and New Venture Management) SPPU 4) Competitors Analysis: This analysis investigates the business’s direct and indirect competitors, assessing the business's competitive advantage and analysing how it will overcome any entry barriers to the chosen market. This section covers the follow i) Discuss the similarities and competitors’ relative strength ii) Competitive advantage ~ wl advantage, and iii) Detailed description of main 2.3.5. Market Research for New Venture A formal process with an objective of obtaining, analysing and interpreting data for exercisi ferences between product/service and those of competitors as well as hs and weaknesses, hat makes the producservice unique, and how will one use this 10 competitors, including size, location, products/services, market share. 1g decision making in marketing is known as marketing research, Problems related with marketing of products and services are Systematically studied under this process. Marketing research is not limited to just one specific area of marketing, Therefore, it would not b and covers all phases of marketing. ‘The American Marketing Asso function which links the consumer, customer, and public to the marketer throu, and define marketing opportunities © wrong to say that marketing research is applicable to almost all the arcas nm (AMA) has defined marketing research as, “Marketing research is the igh information used to identify and problems, generate, refine, and evaluate marketing actions; monitor marketing performance, and improve understanding of market as a process” According to Philip Kotler, “Marketing research is the systematic design, collection, data relevant to a specific marketing analysis, and reporting of n! situation facing an organisati Marketing research undertakes many functions such as it defines the information needed to tackle marketing problems, outlining the technique for gathering information, c ‘ontrols and executes the data collection process, evaluate the outcomes and conveys the observations and their relevant inferences, 2.3.5.1. Process of Marketing For any new venture itis always adv: Research ‘antageous to take up a market research for the chosen product in the chosen marketing area. The various steps involved in marketing research are as follows: 1) Problem Defi m: In order to carry out the marketing research in an orderly and coherent way, a Seguence of actions or steps is needed to be followed. The foremost work in this direction is identifying and defining the research problem. While identifying rescarch topic, the researcher should keep in mind thit the research problem should be neit ither too broad nor too narrow. The research problem should be defined clearly and precisely. The research problem which is clearly defined solves half of the problem, Defining the research problem precisely for some marketing researches is not possible. For example, defining research problem for poor sales is a difficult task, as it needs exploratory research to explore the are, further. A well-defined research problem is crucial for fulfilling the requirements of a research, study, 2) Development of an Approach to the Problem: ‘This is the step of marketing research process where a basic approach towards the research formulation of objective or theoretical framework, research questions, analytical models and hypotheses Different types of secondary data, different industry experts are organised 50 as to effectively develop the approach tothe research problem 3) Research Design Formulation: design. The conceptual framework Problem is made. It includes determination of required information and ,Fesearches and pragmatic considerations are evaluated and discussions 1 Next s fep in the marketing research process is developing the research which research must be conducted is known as research design, {tis the research design which enumerates the procedures and methods in which a specific research should be conducted. These methods should be conveyed by the researcher. The main funetion of a research design is to contribute time, effort and money, Research design can be classifies i) Exploratory Research: used in exploratory research for the collection of applicable evidence and proofs involving minimum cd into three categories namely: i xploratory research design aims to get a better understanding of the problem by explaining the concepts and developing hypotheses regarding the research study. Various is techniques study are literature survey, surveys, focus groups, case studies, ete. Scanned with CamScannercustomer Discovery (Unit 2) 87 escriptive Res 3 il ieee pena exploratory research, the aim of descriptive research isto describe the Sees a naa ee more rigid than exploratory research. It describes various aspects feat 1 popalai study that is designed to depict the population in much more accurate iy. It attempts to describe, explain and interpret the conditions in much detailed approach. al Re . i ce peau or experimental research design is a type of research design which is pr tructured in nature. It is used for causal or conclusive research, which is conducted quantitatively. It is called causal research, becaus i i ele because it is helpful in exploring the cause and effect 4) Fieldwork or Data Collection: After the problem is formulated, data collection is performed systematically. Actually this step is an intermediary stage between theoretical and practical aspects of a research, In the beginning of the marketing research process, a basic idea about a research problem is developed with the help of available knowledge. After the research problem is formulated, data collection is performed systematically. Without having accurate data about the research problem, it is not possible to complete a study as it works as a source of information helpful in getting the solution, The methods used for data collection depend on the type and nature of the research. The few commion methods are surveys, interviews, observation, case studies, ete. 5) Data Preparation, Analysis and Interpretation: Editing, coding, transcription, and verification of data are the main activities involved in data preparation. The observation form or the questionnaire must be thoroughly analysed, followed by required corrections. This is known as data analysis. The gathered data through questionnaires should further be stored in the database. For this, the information should either be transcribed or keypunched onto magnetic tape or disks, or directly put into the computer. Data analysis is conducted to gather information related with the research problem and providing assistance to management decisions for solving the problem. Data preparation and analysis is very essential to draw-out the required information from the raw data by making it organised and meaningful. Organising and analysing the data facilitates the researchers to understand the feature of sample. There are many techniques available to analyse the data. Sometimes during data analysis, researchers manipulate the data to get desired conclusions or outcomes. Therefore, it is very important for the researchers to pay attention to the data analysis process and the procedure through which outcomes are calculated, ‘As the collected data is analysed through different statistical techniques and methods, the final results should be given value and meaning. The meaning and valuation of the results depend upon the process of interpreting results. On the basis of interpretations, various conclusions and generalisations are made, Researchers can generalise the research results if they conduct the testing a number of times, and the outcomes are found similar every time. But, if there is no hypothesis, then the outcomes are explained on the basis of some theories or concepts. This explanation often triggers new issues for further researches, 6). Report Preparation and Presentation: The final step of any marketing research process isthe preparation cr research report. After collecting, analysing, and interpreting the data, the next task is to compile all the Steps and present those phases in a writen-form. Tt includes detailed description of research design, sample design, tools for data collection, and statistical techniques for the analysis of the collected data. Since, reccurch report is very useful for current as well as further researchers, hence proper care must be taken ‘while preparing the report. The comprehensive format should be used to represent the findings of the aoe Buch findings are readily used by decision-makers. To improve the clarity and influence of the mnarketing research, the findings are orally presented to the management Different figures, graphs and ree ine used in it, Another way of disseminating the research report is to circulate the finding of marketing research and reports on internet. The results of the reports can be posted on the web and the managers worldwide can access it from anywhere. 2352. Importance of Marketing Research Marketing planning makes use of marketing research ‘marketing, The significant importance of marketing researc 1) Decision-Making: Marketing research facilitates de analysed and processed information about the market, managers in taking crucial mazketing decisions. As variety of are developing every day in the market, itis very necessary fo supportive tool in decision-making. ‘as one of its radical instrument for effective product ‘h can be understood with the help of following points: on-making in the organisation. By providing consumer or the business environment, it helps new technologies and competitive strategies the managers to use business research as a Scanned with CamScannereT Se SS ES mi 88 MBA Second Semester (Stan up and New Venture Management) SPU, 2) Management Planning: Another importance of marketing research is to aid organisations in management Planning. Different opportunities available in the market are explored by marketing research and some Promising ones are selected by the management. Thus, management designs organisational objectives and Utilises useful resources for its planning. 3) Problem-Solving: Marketing research also assists managers in solving different management problems. A manager faces decision related problems with respect to the marketing mix elements of the organisation, Different shor-term as well as long-term decisions have to be taken by the manage 0 as to make the marketing of the organisation effective and competitive. For a particular business problem, differen alternative solutions are developed and evaluated by marketing research, 4) Control Technique: Marketing research is also used as a contro helps in controlling as well as managing different plans and poli efective or poor management decisions within the organisation. 5) Large-Scale Produetion: Another importance of marketing research is tat i helps the producers in taking Production related decisions. These decisions relate to the optimum utilisation of the available nesouroos as to fulfil the market demands. Marketing research also helps in evaluating the market porentil and the resource availability. ©) Helps in Dealing with Complex Market: With the development in science and technology and growth in the andard of living of customers, need for connecting with the complex markets is evolved: Marketing research helps in communicating with these growing markets. A wide communication gap gets created beinees the producer and the customer due to the size and specialisation within the business unit and the intervention ct many middlemen. A marketer becomes able to cover such gaps with the help of matketing research, 7 Pattern of Consumption: It is important for the marketing managers to have krowledge regarding the Gonsumption pattem of the buyers. Such information is assessed by them with help of marketing research Gata AS we know, marketing research helps in studying the behaviour, attitude, and purchasing capacity oF ‘the customers/consumers. It finds out the purchasing capacity on the basis of income level of the customers, Therefore, we can say that marketing research helps the management in finding out the corsumption pattern of the customers. ling technique for the organisation. It ies of the organisation by exploring 8) Suitable Marketing Operations: For any organisation marketing as well as production operations are the key tools for generating revenue from the market. Here, production operations focus on reducing cost of Production, whereas profit maximisation is the aim of marketing operations. Information collected through marketing research helps in effectively determining marketing as well as production operations. 9) Marketing Strategy: It is obligatory for the marketing management to set appropriate marketing strategies to face competition, to strive for achieving growth and development in market and to accomplish organisational objectives. All this can be achieved with help of appropeiate marketing research. 10) Operating Managerial Functions: Different business functions are based on the information from the market, This information is collected through marketing research methods, Therefore, it helps in operating different managerial functions like forecasting, planning, motivating, coordinating, controlling, evaluation, ete. 2.3.5.3. Limitations of Marketing Research Limitations of marketing research are as follows: 1) Fragmentary: The data of a marketing research is likely to be broken or fragmented, most of the times, Therefore, having an overall view of a marketing problem under study becomes challenging, 2) Superficial and Faulty: The data of a marketing research is used very litle by those who possess the Teauired expertise and knowledge concemed with an industry. This is due to the fact that such data, irrespective of the efficient principles of marketing research, tends to become very defective and shallow in a specific industry, 3) Communication Gap: Another limitation to marketing research is the occurrence of a sort of communication gap in the form of absence of a meaningful conversation between the marketing research team and the management, This makes the research team deviate from the main topic of marketing, 4) Not a Science: Various uncertainties act as obstacles in the generation of correct outcomes in a marketing research as its not considered as a science. For example, the theory of consumer behaviour does net prove to be much help as such a field of study is very abstract and indefinable. ntl Scanned with CamScanner—————————————————— customer Discovery (Uit2) oo 5 nfs At Himes, the outcomes of a marketing research is misused, i.e., not used in the intended way: However, sich distortions are not considered to be the limitations ofthe concer subject 6 Delay in Decision: Another limitation to marketing research ean be inthe form of intentional del: making certain decisions. The marketing research can be used by incite a eng the deision-making altogether or delay it. This might be due to the fact tha of the marketing research are not completely available at that point of time. tthe findings 241. Introduction The Business Model Canvas is a visual framework for describing the re itillystrates what the business does, for and with whom, the resources it needs todo that and how money flows in and out of the business. It can be used to design new models or to analyse current models. The canvas is made up of nine different elements. One advantage to the Business Model Canvas is that it is not a linear i wsption. This allows forthe effets of alterations in one area tobe clear, making it easier to play around with thanges to current or potential models. ferent elements of how a business itis useful in helping people in the organisstion gain a common understanding of whet they are working on and 'e underlying assumptions behind why they are working on it, Used properly, it helps continuously challenge thi the organisation's business model. The Business Model Canvas presents ¢ quick way to evaluate all the aspects ae pusiness. AS thorough business planning process requires @ huge investmeyt of time and resources, the Canvas can be a quick fire way to ensure that entrepreneurs have a complete picture of the business without ing extensive business expertise and time. requiti 2.4.2. Developing a Business Model ‘The Business Model categorises the processes and tach representing a building block in the creation of the produc oF Se fnajor aspects of a business, viz, customers, offer, infrastructure, 28 well as finan categories are listed and explained below: internal activities of a business into nine separate categories, ice. These categories represent the four viability. All nine 2.4.2.1. Customer Segments The total customer pie is divided into segments based on the manne in which an organisation's products or services address a specific need for the segment. "The customer segment is an essential part of an organisation's business aiid key to ensuring thatthe product features ar aligned ‘with the segments characteristics and needs. ‘To cary out effective customer segmentation, a company must first know its customers, both through their current and future needs. ‘Then the organisation must list its customers in terms of priority, including a list of potential future customers. Finally, the company ‘hhould do a thorough assessment of its customers by tnderstanding their strengths and weaknesses ‘and exploring other kinds of customers who may benefit the company more if they are to focus on them. Various customer segments are as below: 1) "Mass Market: An organisation opting for this {yP° ‘of customer segment gives itself a wide pool of potential customers because it feels that its product is a relevant need amongst the general population. potential product for such an organisation could be flour. 2) Niche Market: This customer segment is based on highly specific example of an organisation with a niche customer segment is Louis Vitton 3) Segmented: Organisations adopting the segmented approach create further segmentation in their main cneomer segment based on slight variations in the ‘customer's demographics and resultantly, their needs. 4) Diversify: An organisation with a Diversified Market Segment is flexible in the iterations of its product or aavtce tyeaking it to suit the needs of segments with dissimilar needs or traits. 5) Multi-Sided Platform/ Market: This ikind of segment serves customers who have 2 relationship to each Slogging sites need a large group of active DIOBEr to attract advertisers. And they need i Snow. Hence, only by creating & pull with both sezments will the blogging site be needs and unique traits of its clients. An other, ie, advertisers to create Ca able to have a successful business model Scanned with CamScanner[SES APRA Uf EF me ‘ MBA Second Semester (Start up and New Venture Management) SPPU ~ g a Value Proposi / save proposition is the combination of products and services it provides to its customers, Osterwalder stated that these offerings need to be unique and easily differentiated from competition. Value propositions can he divided into to categories: 1) Quantitati This stre: the price or efficiency of the product or service 2) Qualitative: This value proposition highlights the experience and results of the product and its use, produce. The value proposition provides value through @ number of atsibutes such as eustomisation, performance, ~geuting the job done", brandistatus, design, newness, price, cost and risk reduetion, accessibility, as well as convenience! usability, The value proposition forms the core of the business model. Without a value Proposition, it is impossible to know if and how the business will make money, which partners to need, the nature of the key operations, and how to acquire and retain customers, When ercating the product's value proposition, the first question an entrepreneur must ask himself” problem he is solving through his offered product or service. Then one needs to look into how the product, service of overall experience can be improved so that it provides greater value than the competition. Finally, it imperative to identify the core value that the business provides. One way to identify this value is for an owner te specify what he/she wants customers to remember about their interaction with the company, what 24.2.3. Channels ‘The medium through which an organisation provides its value proposition to its customer segment is known asachannel. There are various options for channels available to an organisation, and the selection is based on the channel that is the quickest, most efficient with the least amount of investment required. There are two Besic Kinds of channels: Company owned channels such as store fronts or Partner Channels sech ee Distributors. A company can opt to choose either one or employ a combination of both, For an entrepreneur, ihe first step in dealing with channels isto identify the customer channels, Touch points with customers cog bt uimited or diverse depending on company strategy. Then he/ she needs to evaluate the strength of the Channel by conducting a SWOT analysis on the channel. Finally, the company can identify and build neve customer channels. 2.4.2.4. Customer Relationships ‘Am organisation must select the kind of relationship it will have with its customer segment in order to create financial success and sustainability. Customer Relationships can be categorised as follows: 1) Personal Assistance: In this kind of relationship the company interacts with the customer directly through arc nployee who provides the human touch by assisting the customer presale, daring the sale and even may Provide after sales services. 2) Paeiiicated Personal Assistance: This kind of relationship is characterised by a very close interaction between the customer and the company through a dedicated representative who is assigned set of clicne and is personally responsible for the enti experience the customer has with the company. 3) Self-Service: Self-Service places the o: for the customer to serve him or herself, nus of the customer experience on the tools the company provides 4) Automated Services: These are customised self-service relationships where the historical preference of the customer is taken into account to improve the overall experience. 5) Communities: In today's electronie age creating communities of clients allows organisations. to roauunicate with them ditectly. This allows for an enhanced client experience because the community allows clients to share their experiences and come up with common challenges and solutions, ©) Co-Creation: The customer has a direct hand in the form the company's product or serv ice will take, For an entrepreneur, the priority isto identity the type of relationship he/she has with the customer. Then the Scanned with CamScannerqastomer Discovery (Unit 2) 31 2425. Revenue Streams {revenue siream is the methodology a comp 1) Asset Sale: The company sells the right of ownership over the good to the cus 2) Usage Fee: The company charges the customer forthe use of its product or service. Subscription Fee: The company charges the customer forthe regular and consistent use ofits product ce. 3) Li ‘pany charges for the use of its intellectual property —— 6) Brokerage Fees: Companies or individuals that act as an intermediary between two part 7) Advertising: A company charges for others to advertise their products using their mediums. setting up revenue streams, it is i i When setting up revenue streams, it is important to recognise that an effective price for the product and/or service willbe arived au through the process of elimination. Different iterations of prices should be listed and evaluated. It is important, in the end to take a break ad reflect on possible avenues open to entrepreneurs as business, 2.4.2.6. Key Resources These are the assets of the organisation fundamental to how it provides value to its customers. Resources categorised as human, financial, physical and intellectual, For an entrepreneur, it is important to begin ing the resources. This gives a clear idea of what final product or service the company needs to create for the customer and which resources are dispensable, resulting in cost savings for the company. Once the final list of resources is available, the company can decide on how much it needs to invest in these key resources to operate a sustainable business. 2.4.2.7. Key Activities ‘Activities are the key to producing the company's value proposition. An entrepreneur must start by listing the ey activities relevant to his/her business. These activities are the most important processes that need to occur for the business model to be effective. Key activities will coincide with revenue streams. Now itis important to evaluate which activities are important by adding or removing some and evaluating their impact, 2.4.2.8. Key Partnerships To create efficient, streamlined operations and reduce risks associated with any business model, an organisation forms partnerships with its high-quality suppliers. Key partnerships are the network of suppliers and partners who complement each other in helping the company create its value proposition. Partnerships can be categorised as follows: 1) Strategic alliance between competitors (also known as competition), 2) Joint ventures and 3). Relationships between buyers and supplies [An entrepreneur must begin by identifying its key partners followed by making future partnership plans. This can be done through an evaluation of the partnership relationship to judge which characteristics of the relationship need improvement and what kind of future partnerships will be required. 2.42.9, Cost Structure 5 ; This defines the cost of running a business according to a particular model, Businesses can either be cost driven, ie., focused on minimising investment into the business or value driven, i.¢., focused on providing maximum value to the customer, Following are some traits of common cost structures: 1) Fixed Costs: Costs that remain the same over a period of time . : 2) Variable Costs: As the name suggests, these costs vary according to a variance in production 3) Economies of Scale: Costs decrease as production increases 4) Economies of Scope: Costs are decreased by investing in businesses related to the core product. The first step for an entrepreneur is to obviously identify all costs associated with the business. A realistic understanding of the costs of the business is one ofthe hallmarks of a good business model. After identification, itis important to list all the costs on the canvas, so they are visually present and then create plans for each cost. Some costs may be decreased through certain measures while others may 80 UP 1 one decides that an investment in a particular section will result in future gains. Scanned with CamScannerMBA Second Semester (Start up and New Venture Management) SPPU 2 PRODUCT. DEVELOPMEN’ 2.5.1. Introduction + needs a ‘A product is the item that is developed and refined for sale in the market. It aims to mete oe “ees and ‘wants. The concept of product can be categorised into two, ie, narrow concept and wide eo ~n ie concept. a product isa combination of physical or chemical characteristics which has te eae non-living object or a physical substance. A product also has other functions than its utility like satisf i Se faced and wants, eg. fan, table, pen, cooler, chair, etc, In its wider concept, a product having veal of colours designs, packaging and brand is said to be a different product. For example, if a shampoo is made availa fe ie dierent vavianty and smells, then these are three products, as they are fulfiling needs of customers with varie choices. Hence, proxtuet is defined as a complete package of benefits received by a consumer. al services and symbolic particulars expected to According to Philip Kotler, “A product is a bundle of physi yield satisfactions or benefits to the buyer”, Product plunning and development is the most critical aspect of the product decision, Product planning is Somprised of both the corporate plan as well as the marketing plan, based on which the product plans are made, “reduct planning is followed by product development, which involves finding ways to produce the product wd on the blueprint of product derived during product plan, The development process also involves the ity and profitability, i.c., whether developing the product will be profitable decision regarding product's feasibi for the firm in the long-run or not. According to Johnson, “Product planning determines the characteristics of product best meeting the consumer's numerous desires, characteristics that add stability to products and incorporates these character tics into the finished product” According to Karl H. Tien, “Product planning is the act of making out and supervising the search, decane, evelopment and commercialisation of new products; the modification of existing line and discontinuance of marginal or unprofitable items”, According to Limpson and Darling, “Product development involves the adding, dropping, and mo of item specifications in the product line for a given period of time, usually one year”. ication juctefore, we can conclude that the product planning and development is comprised of the product mix dceisions related with the product and services which the firm intends to produce and sell It eo includes ierions regarding product policy and strategies, which serve as guidelines for the target market and therefore, help in fo 2.5. Objectives of Product Planning and Development Some of the specific objectives set-up during product planning are as follows: 1) Po Hdentily and Fulfil Customers? Needs: The very frst objective of any Product planning is to determine ihe customers’ nveds and thereafter designing the required products and services, Te fulll sig objective all the resources and efforts of the firm are directed towards it, 2) To Determine Strengths and Weaknesses of the Fir the stre nother objective of product planning is to determine ths and weaknesses of the firm so as to effectively develop the blueprint of the required product. It helps in developing such products which reduce the weaknesses ofthe frm and empower its strength, +) To Ensure Optimum Utilisation of Resources: Ensu ing optimum utilisation of resources is also an objective of the product planning. Here, the objective is to maintain the mininure cost level of the roduction while allocating firm's resources in manufacturing. the product, Product planning involves Feasibility ‘Market feasibil weer [ian ey Ee sein a jm 4 Intellectual decison 5 Prototype 6 Market = : reopen) Replay Refine and Redesir : Laie "Sen Stabasness OS Develop operation an — ‘Sell or joint venture Develop marketing plan ane ‘Secure needed management = uy funding needs snd sures qo asa oe Dirt Scanned with CamScannerFr LAE RR RTS RM oe MBA Second Semester (Start up and New Venture Management) SPPU 2.5.4.1. Customer Discovery = 7 In order to make the most of the customer discovery process, entrepreneurs need to understand what itis as well as what it is not. Without this understanding, too many businesses work to get the information that supports their beliefs about their business rather than the information that will help their business. The goal of customer discovery is figuring out who the target customers are and whether entrepreneur's idea will appeal to them. Entrepreneurs are not trying to figure out what every customer wants or needs. When entrepreneurs are looking for their initial customers, they are not looking for the masses. Entrepreneurs are really looking for those few customers who their product is suitably designed for right now. These customers, often called product evangelists, are those who will adopt entrepreneur's product early and then share it with all friends, They will be the most important and most valuable customers that company can ever have, In the customer discovery phase, entrepreneur need to figure out what problem their product solves and whether their customer actually has these problems and will use product to solve them. Finding these early customers shows that entrepreneur's problem is real for someone. He/She will then use these early customers to help them iterate the product to suit their needs. Customer discovery is also not about pointing out which technical aspects of a product solve the customers’ problem. When entrepreneurs are going out to discover their customers, they are worried about their problem and finding a solution. Initially, they will want to know that you understand the problem and can offer a solution. But they will not be able to find these customers by spouting a list of features. These features are important to some customers. However, during the customer discovery phase, it is the overall narrative of the solution that people are interested in, When entrepreneur have a narrative or vision that offers a solution to a problem, he/she can establish whether or not there is a market that will ultimately share his/her vision, Customer Discovery Process Blank has developed a process that businesses can use to implement customer discovery. It does not include anonymous surveys or focus groups. Instead, it involves taking a measured approach to discovering customers that can be broken down into four main stages: 1) State Hypotheses: Write down core business assumptions in a set of briefs. These form the basis for subsequent testing. 2) Test Hypotheses: Seek validation for hypotheses. Speak to those in and around target market, including potential customers, anelysts and the media, These should not be sales-oriented conversations. 3) Test Product Concept: Once entrepreneur have a deeper understanding of the customer problem, they should test product idea to get a sense of the relevance and attractiveness of product solution and its features. They can do this by engaging potential customers and sharing information with product development team. 4) Evaluate Customer Feedback and Determine Next Steps: Entrepreneurs must reflect on the information obtained in phases 2 and 3. Is entrepreneur ready to move forward with what he/she has? If not, he/she may need to conduct another iteration of problem/solution validation or halt the project. 2.5.4.2. Customer Validation Identifying a sustainable business model is a critical but sometimes elusive step for many Start-ups, The “customer validation” process offers start-ups a way of developing the insights required to design business model. The objective of this customer validation process is to validate sales process and the assumptions that underpin the business model. In other words, customer validation is a critical step that needs to be undertaken before entrepreneurs grow their venture. Blank describes customer validation as a “method that allows entrepreneur fo develop a predictable sales process” and suggests that one should not scale the business until they have developed a solid understanding of a repeatable sales process. The nature and importance of customer ‘validation strongly suggests that this is an undertaking that should involve the company’s top management. Customer Validation Process The various phases involved in the customer validation process are as follows: Phase I: Preparing to Sell: This first phase is about using the insights generated in the customer di Pre covery Process, starting with entrepreneur's value proposition. Make sure to prepare: 1 Any sales materials required in order to present to customers, including the website, price lists, and product data sheet and customer ation. 2) A preliminary list of marketing material, 3) A preliminary channel strategy. Scanned with CamScanner