42629 lecture 12 pt2

Protovation – Market testing
Thomas J. Howard
https://sites.google.com/site/thomasjameshowardhomepage/
thow@mek.dtu.dk
Unless otherwise stated, this material is under a Creative
Commons 3.0 Attribution–Share-Alike licence and can be
freely modified, used and redistributed but only under the
same licence and if including the following statement:
“Original material by Thomas J. Howard for course 42629 – Innovation and Product Development
Department of Mechanical Engineering, The Technical University of Denmark”

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2 Original material by Thomas J. Howard for course 42629 – Innovation and Product Development 2012
Department of Mechanical Engineering, The Technical University of Denmark

3 2012
Blank 2012, Crossing the Rubicon: Entrepreneurial education at the crossroads
Original material by Thomas J. Howard for course 42629 – Innovation and Product Development

4 2012
Blank 2012, Crossing the Rubicon: Entrepreneurial education at the crossroads
Original material by Thomas J. Howard for course 42629 – Innovation and Product Development

5 2012
Blank 2012, of Mechanical Engineering, for course 42629 – Innovation and Product Development at the crossroads
Crossing the Rubicon: Entrepreneurial education
Original material by Thomas J. Howard
Department The Technical University of Denmark

Hypotheses Testing and Insight

6 2012
Blank 2012, of Mechanical Engineering, for course 42629 – Innovation and Product Development at the crossroads
Crossing the Rubicon: Entrepreneurial education
Original material by Thomas J. Howard
Department The Technical University of Denmark

Determine Your Market
• Should be divided into seven key parts
1. Consumption
2. Markets
3. Distribution system
4. Market entry
5. Buyers
6. Selling Arrangements
7. Prices
Material from:
Khaled Ayesh 2009, “How to Prepare Innovative Feasibility Study in
transitional economy”, Consulting Group for Development, CGD

1. Consumption
• What is the current consumption of the
product or service?
• What are the current trends in
consumption? Is consumption increasing
or decreasing?
• How is the product or service being
consumed? (Packaging, volumes)

1. Consumption… cont.
• What is the quality of the product that is
being consumed?
• Who consumes the product? What are
their demographics?
(Age, income, educational levels, marital
status, family size)
• Are these demographic segments growing
or shrinking?

2. Markets
• What is the current structure of the
marketplace?
• Who is currently supplying these products to
customers?
• What will be the reaction of these firms if a
new firm enters the market?
• Can a firm compete with existing firms or
other potential entrants?

2. Markets ……cont.
• What are the implications for a firm who
wants to expand its market?
– What are the costs?
– What revenues can be expected?
• Where are the markets (customers)
located? Are they
local, regional, national, or international?
What will it cost to serve them?

3. Distribution System
• Will it be necessary to provide delivery
services?
• What delivery schedules will be required?
• What common carrier options are available?
• Should the firm provide delivery itself?
• Should delivery equipment be purchased or
leased?

4. Market Entry
• How will the product or service be
introduced to the market?
• Will the product be marketed under the
company’s name or under some other
name?
• What will attract buyers? (Low
prices, advertising, promotion, customer
service, or some other method)

5. Buyers
• Will you sell directly to consumers or go
through a “middleman” buyer?
• What types of buyers will purchase the
product?
• Where are they located?
• What product specifications will they
require?

5. Buyers ……cont.
• Have potential buyers expressed an interest
in the product?
• What type of purchasing commitments are
buyers willing to make?
• How reliable are the buyers?
• What type of payment schedules will be
encountered? How severely will this affect
the firm’s cash position?

6. Selling Arrangements
• What type of selling services will you need
to provide?
• Will you need to employ a sales force or
go through a buyer?
• If you employ a sales force, how many
people will this require? What is their
compensation plan?

6. Selling Arrangements ….cont.
• How will they be selling the product?
• What are the costs of these activities?
• Should you have sales offices located
throughout your geographic market area?
• Why have you chosen one method of
selling activities over another?

7. Prices
• Setting a price is a critical activity in the
market portion of the study.

• The price must be high enough to cover
all costs and provide you a profit, but low
enough that customers will purchase the
product or service.

7. Prices ………cont
• To help determine the price, look at:
– Past prices of the industry
– Current price trends
– Expectations of buyers (brokers)
– Expectations of consumers
– Quality levels of substitutes or competitors
• These factors only help you set a price.
They can’t set the price for you

Sun cream on demand

What are the burning
question related to the
market feasibility of this
product?


The burning questions about market
feasibility of sun cream
1. How much variety is required in SPF ?
2. What are the primary location for sales/need?
3. Will customers change their mindsets/habits?
4. How many (% & Vol.) people forget to bring
SC?
5. What are customers willing to do to receive the
product?
6. What is the required dosing sizes?


Choose a couple of the
questions and discuss
how you could test the
feasibility using a
prototype
10mins


Protovate your market

Taking your own project
and your list of burning
questions, design 2
market feasibility tests.
10mins


Questions

?

42629 lecture 12 pt2

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