L5, Target market & user identification Flashcards
Explain and differentiate between the meaning of key terms such as customer, user and consumer!
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Explain and differentiate between the meaning of key terms such as need, want, demand and engineering requirements!
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Explain what is meant by market segmentation and describe aspects by which a market can be segmented
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What methods can you use to get to know the company and its context?
- PEST analysis
- Business model canvas
- SWOT analysis
What can you do to learn about competitors?
benchmarking
What can you do to learn about B2B customers?
Customer needs study
What can you do to get to learn about customers?
Market identification
What is the end result of identifying customer needs?
A customer needs list including:
- articulated as well as latent needs
- All critical needs are identified
- Basis for stating technical requirements
- common understanding in the team
- documentation
what is a customer?
- The individual or organisation that PURCHASES the product
2. the same as client, buyer, purchaser etc.
What is a user?
- The human being involved in a USE activity
2. The same as end-user and primary user
Har is a secondary user?
e.g. the person who is to repair ot maintain the product
what is a lead user?
- A person who experience a new product ahead of others
- Stand to benefit greatly from. the new product
- often have useful ideas to share
- can articulate their needs better than the average user
facts about lead users and innovation?
— A user that develop the solution that they need by themselves
— Even if the lead user themselves innovate the actual product they might trigger the product development of the innovation
— About 30% of the 30 top innovations from the last 25 years have been lead user initiated
what are extreme users?
- users who use the product in special environments
OR - Have individual circumstances that require them to have an adapted product
- Extreme users special needs may reflect latent needs of mainstream users.
what is a consumer?
- one that consumes
- Person that acquires goods or services for direct use or ownership rather than for resale or use in production or manufacturing
What is a stakeholder?
- A person, group or organization that has interest or concern in a situation
- someone who is involved or affected by the course of action
e. g. investors, employees, suppliers, customers, society, community
name som definitions of “need”!
MASLOW:
“A lack of something necessary for survival and well-being”
ULRICH & EPPINGER:
1. “Statement and phrases, stated in the customer’s own words that enable the design team to focus on delivering the benefits of the customer wants”
- “the gap between existing situation and the desired situation”
- “Any attribute of a potential product that is desired by it’s customers”
what is a want?
the forms taken by human needs as they are shaped by culture and individual personality
what is a demand?
wants when backed by buying power
what is a customer/user requirement?
- the customer/user’s own formulation of requirements, usch as, “easy”, “fast”, “natural”,
- user requirements are those requirements which the user has for the product in use
what is a technical requirement?
- the desired properties of a technical product, service or system.
- statements that in a clear concise and ambiguous way describe the significant aspects of the future product
- the customer/user requirement transformed into a “measurable” engineering term or specification.
describe the iceberg phenomenon
only a very small amount of the total list of customer requirements are immediately available
Top of the iceberg:
- requirements of which the customer is aware
- problems that the customer wants solved
- solutions identified in other products
Below the surface:
- requirements associated with problems which the customer is not aware due to habits “compensating behavior”
- Emotional and semantic requirements
- requirements associated with culture and socio-historical aspects
describe how the customers values and views on products has changes with time!
The customers fascination with technical functions has shifted. Functionality, reliability and cost have been replaced by e.g. comfort, enjoyment, satisfaction and usability
describe the kano model!
The kano model proposes three types of need and requirements that need to be adressed from a competitive perspective
- basic needs/requirements
- Performance needs/requirements
- Excitement needs/requirements
What do Johan mean with saying we often have too much focus on the product?
We have to little attention to the product in a context being used, maintained etc.
what is the consequence of having too much focus on the product?
Requirements customer needs elicitation METHODS
- the methods must adress a multitude of stakeholder needs
- the methods must helt detecting articulated as well as non-articulated needs
- the methods must take into consideration that functionality and functions are not the only thing that will provide the company with a competitive edge.
—>Its the functionality, usability AND pleasure in experience. - methods must be able to elicit basic performance and excitement requirements
describe the customer needs study process!
INPUT: research objectives and questions
- plan the customer needs study
- Gather raw data from customers
- Interpret the raw data in terms of customer needs
- Organize the needs in a hierarchy
- establish the relative importance of needs
OUTPUT:
Customer needs list
describe some desirable characteristics of markets
Facts that can be used to form a market profile
- large market size
- high market growth potential
- strong economy - high potential for sales
- early appropriate time of entry
- competitively attractive
- low rivalry
- low investment required
- no specific technological development required
- no patent protection
- high reward potential
- low risk
what is a target market?
A group of customers that:
—> is interested in product
—> has the resources to purchase the product
—> is permitted by law or other regulations to acquire the product
How do you define different markets?
The market definition begins with total population and progressively narrows down
e.g.
- total population
- potential market
- available market
- qualified available market
- Targeted market
- penetrated market
how do you define a market segment or target market?
A target market is defined by the measures or criterion used to definite. The criteria describe customers or competitive products.
E.g.
- demographics
- Individual —> sex —> age —> nationality —> income —> education —> occupation —> marital status —> family size —> geographical location
- corporate
—> size of company
—> numer of manufacturing sites
—> geographical sites
- attitudes
- beliefs
—> religion
—> politics
- attitudes
—> family
—> health
—> self-achievement - preference
4. price sensitivity Willingness to pay for the product —> low cost —> medium cost —> premium
- decision making processes
- usage
- way of use
—> professional
—> do-it-yourself
- extent of use
—> daily
—> weekly
—> monthly
- competitive products
Segmentation based on clusters of products rather than customer characteristics
—> e.g. cars segmented in mini, light, compact and so on..
give some examples of segmentation of vacation travel market
- “The demanders”
want exceptional service and expect to be pampered - “The escapists”
Want to get away and use relax - “The educationalists”
wants to see new things, go to museums, go on safari pr experiment new cultures
Step-by-step procedure for market identification, segmentation and selection
INPUT???: Product idea, PEST, SWOT, Benchmarking analyses
- create a list of customers/users that suffer from the problem that you adress
- Group customers, e.g. by geography, to form an initial list of target market segmentations
- Collect additional market and customer information as needed. Review and refine market segmentation
- Screen out infeasible taget market segmetns
- rate with respect to desired market characteristics
- evaluate and decide on remaining potential target market segments
OUTPUT: Prioritized list of viable target markets (segments)
Difference between target market and segments?
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Step 3, “collect additional market and customer information as needed”
Describe models for estimating sales volume
- Estimate sales volume (1)
Q=NAP
Q= estimate of sales volume during a period
N=number of potential customers who will buy during the period
A= fraction of customers for which the product is available and who are aware of it
P= probability that the product will be purchased
where P=:
P=CdefFdef+CprobFprob
Fdef=fraction of survey respondents who would “definitely buy”
Fprob= fraction of survey respondents who will “probably” buy
Cdef= experience value 0.1-0.5
Cprob= experience value 0-0.25
what is the real-win-worth method?
“screen out inferable target market segments”
A market screening method suggesting a set of market screening criteria
what is quantitative market evaluation?
- generate weight market selection criteria
—> chose form “desirable characteristics of markets”
—> assign relative weight to different criteria - Rate each market on each criterion
- calculate the overall weighted sum of the ratings for each market
- evaluate the ratings to identify the markets with the best opportunities
how can a market selection decision-making process be?
- choices can be made based o formal decision analysis
- choices can be Mae based on communication and dialog, consensus between managers but supported by the market profile analysis
- strategic considerations must include role position of the new product in the firm’s portfolio
- the result is a prioritizes portfolio of market opportunities
What is the essential difference between a lead user and the first adopters?
A lead user have to develop the solution thats needed by themselves
Give examples on organizations that uses lead users for development!
- Military or medical organizations are frequently involved in lead user innovation because:
- Their need are acute and compelling
- Their need is linked to Saving human lives
Describe lead user innvoations?
Tend to be radical as compared to incremental
Give example of the Kano model on tesla
EXITORS
—> acceleration
—> 17” screen
PERFORMERS
—> range
—> high performing sound system
BASIC
—>anti-lock breaks
—> anti-theft system
Give example of the Kano model on an office chair
EXITORS
—> drink bottle cooler
—> back massage system
PERFORMERS
—> adjustable armsets
—> quality letter seat
BASIC
—> seat height adjustment
—> ability to rotate
Considerations when defining target markets?
- If defining the the market too broad
—> difficult to evaluate the market
—> difficult to define target customers
—> difficult to understand competition - If defining the market too narrowly, the market may be too small to be of any commercial interest
