Frames Flashcards
Framework: Market Entry assessment
1) Market (ensure market is attractive):
Value
* Size (large)
* Growing market / lifecycle
* High margin market
Competition
* non existent or weak (ideally fragmented)
* offerings/value they bring (easily replicable)
* strengths (easily replicable)
Customers
* segments/accessibility/WTP
* low bargaining power
* loyalty to current products the buy
External
* Covid
* Interest rate
* war in russia (less oil)
Ensure market is attractive to us (good fit for our company)
Ease of entry
Financial (capital, patents, tariffs)
Political (policies/regulations)
Safety (safe country?)
We understand the market (intangibles)
past experience with similar product/service
customers (similar products/tastes, where they buy from)
culture (type of advertising that is appeal if different from US)
Bring strengths/expertise (tangibles)
Product (Our product is / will be better than the competitions products, in the areas/attributes that the consumers care about weak competition)
Technology
Distribution channels (or already formed relationships)
Financials (Could be part of last bucket)
Revenues
Product mix/offering
Pricing structure
segments/wtp (are we maximizing revenue from each segment? Should we adjust price? elastic vs inelastic
demand)
Costs
FC
Facilities/rent/mortgage/loans
Advertising
Payroll
VC
Labor
Materials
Transportation
Alternatives (profits)
Best market entry strategy
Scratch (organic)
Joint venture (organic)
Outsource (inorganic)
Acquire (inorganic)
Within each market entry strategy evaluate:
Plan strength/odds of success
Cost/Funds available
Projected revenue, profits and ROI (e.g. net benefit)
Timeline
Risk
Framework: How to enter market
Define target customer
- Target geos
- What are the target customer groups?
- Segment groups by attractiveness
- Target groups that where our product brings the most value, are easily accessible and who have high WTP
Market to Target customer
- Establish price (value based, cost based, competitive benchmarking)
- Create optimal brand (around product + customer)
- Advertise across channels that reach our customers
Get product to customer
- Transport of materials
- Store inventory
- Distribution: Online vs physical vs omnichannel (optimal stores)
- DTC, DTB or middleman
Best market entry strategy
- Scratch (organic)
- Joint venture (organic)
- Outsource (inorganic)
- Acquire (inorganic)
Ways to enter market and potential tradeoffs
Best market entry strategy
- Scratch (organic)
- Joint venture (organic)
- Outsource (inorganic)
- Acquire (inorganic)
Framework: Growth (main)
Typical growth framework (option 3):
- Product mix
- Revenue:
- mix/new products)
- price
- segments/wtp (are we maximizing revenue from each segment? Should we adjust price?
- Need that product fills (substitutes?
- Costs (only include if question is growing profit instead of revenue)
- FC
- Facilities/rent/mortgage/loans
- Advertising
- Payroll
- VC
- Labor
- Materials
- Transportation
- Client
- Capabilities/resources
- Capacity
- Marketing/distribution sales channels
- Funding availability (own/borrow)
- Dependent on above (if new product), should make themselves, outsource, partner or buy
- Customers/market
- customer segments - current/new
- Large market/large growth
- distribution channels (e.g. types of customers)
- Customer needs
- Price sensitivity
- Competition
- Product offering/price
- benefits of product?
- company linchpin - operations, product, relationships
- Winners vs losers
- compete vs partner vs acquire
Framework: Alternative growth options
Growth framework (option 1 - focus on new geos & customers)
- New geographies
- Existing customer (New Products)
- New Customers (Existing Products)
- New Customers (New Products)
Could breakout above into only 2 categories - existing products/new (and put new/existing geos below)
Growth framework (option 2 - focus on new geos)
- Which markets are attractive?
- Which are available?
- Which can we win?
- Which can we win cost effectively
Product journey (option 3):
- Production (R&D, product itself, MNF)
- Distribution (accessibility, physical vs online, DTC vs middlemen)
- Sales (right targeting, marketing, brand perception)
Framework: M&A (very similar to market entry)
Similar to Market entry (market is exactly the same) but also have to look at synergies between companies and examine target company
Market/customers (ensure market is attractive):
- Value
- Size (large)
- Growing market / lifecycle
- High margin market
- Competition
- non existent or weak (ideally fragmented)
- offerings/value they bring (easily replicable)
- strengths (easily replicable)
- Customers
- segments/accessibility/WTP
- low bargaining power
- loyalty to current products the buy
- External
- Covid
- Interest rates
- recession
- war in russia (less oil) Size (large)
Ensure company/product/market is attractive to us
- Goal: rev, prof, MS. diversification
- Availability of funding
- Ease of entry
- Financial (capital, patents, tariffs)
- Political (policies/regulations)
- Safety (safe country?)
- Synergies/dis-synergies (understand the market and can capitalize on efficiencies)
- Experience (similar product/service/industry)
- customers (cross selling, similar products/tastes)
- Distribution channels (B2C/B, stores, online) & transportation
- MNF/production (scalable)
- Labor (e.g. salesforce)
- Tech (bring to new product)
- Cannibalization
Target company
Cost (does this align with value and synergies)
Value (vs competitors)
- high market share
- growing
- high margins
- physical and intellectual property value
Intangible benefits
- Brand
- Relationships with customers
Tangible benefits
- New technology
- Non copyable product
Alternative investments (varies)
- Build out capabilities ourselves
- Enter different industry/geo
- Enter same industry/geo but different company
- Add on XX to increase profits
Framework: Profitability
Revenues
- By product type
- By geo
- quantity by type
- Price and Price that consumers are WTP (are we pricing correctly?)
- Increase switching costs for consumers
Costs
- FC
- Facilities/rent/mortgage/loans
- Advertising
- Payroll
- VC
- Labor
- Materials
- Transportation
Options to respond (will vary depending on problem - may go under revenues)
Company
- Are we targeting the right customers (high WTP/accessible)
- Right product? What the customers want
- Are we using the right channels to reach customers (advertising)
- Is product placement right (Location/distribution)
- Are we converting customers (branding product correctly) Are we highlighting the attributes that consumers are interested in and where we are better vs competitors
Market
External factors changing
- Political (War, elections)
- Economical (interest rates)
- Regulation
Value
- Size of market to understand share
- Growth/decline of market to understand if industry problem or customer-specific problem
- Prices up or down?
Customers
- Have customer preferences changed?
- Have they substitued to a different product?
Competitors
- are there new entrants?
- has a product vastly improved?
Could also do
- Options to respond (2-3 buckets with financial implications & risks) and market (with competitors/customers)
New/Existing Market vs. Product Tradeoffs
Framework: Pricing
Product and company
- Client Objective/Quantity, Rev or Profit?
- Customers WTP/value
- Product mix
- Product benefits (quantify these in terms of value to other products on the market)
- Demand/supply prediction
- Costs
Pricing strategy (best to worst strategy)
Value based (customer value and do slightly below) - always choose if possible since highest price, just below ceiling
- Market must allow this if there are no competitors or few competitors hold power
- Must know WTP
- Can do value based after benchmarking range to competitors (e.g. car industry has wide
- product must be differentiated/compet advantage/first to market to do this
Cost based
- If new market (first entrant) and can’t figure out WTP then must do this
Competitor benchmarking
- If competitive market and difficult to differentiate
Ways to determine customer WTP
To determine customer WTP for value based (and then price small % below):
- WTP could be $ saved (cost) or $ increased (revenue) due to product
- Approximate value saved, for instance increased efficiency so decreased labor
- Look at similar services/products
- Surveys
Framework: Opportunity Assessment
Depending on question, take a mixture of below:
Target/How to deploy:
Good fit for company
Revenues/Costs:
Market:
Alternative Strategies:
