Market Solutions Module 1
5 C’s Analysis
Product’s Life Cycle
$
Development
Saturation
Sales Profit Concept Creation
Introduction
Growth
Maturity
Decline
T
Interrelation Lifecycle – BCG
Top 10 strategic technology trends
Gartner, 2020
Gaming industry trends
Gaming industry trends
Gaming industry trends
Gaming industry trends
Gaming industry trends
The 5 key attributes to qualify a technology as emerging Radical novelty
Relatively fast growth Coherence Prominent impact
Uncertainty and ambiguity Rotolo D, et, al. 2015
What an emerging technology is
â—? A radically novel and relatively fast growing technology characterised by a certain degree of coherence persisting over time and with the potential to exert a considerable impact on the socio-economic domain(s) which is observed in terms of the composition of actors, institutions and patterns of interactions among those, along with the associated knowledge production processes.
Rotolo D, et, al. 2015
Types and degrees of innovation Kyllianien, J. 2019
The Innovation landscape map It requires a new business model, but not necessarily a technological breakthrough
It combines technological and business model disruptions
company's existing technological competences and existing business model
The polar opposite of disruptive innovation .The challenge is purely technological
Pisano, G. 2015
Disruptive Innovation
Christensen Institute, 2020
Disruptive innovation and business model
� This type of innovation requires a new business model but not necessarily a technological breakthrough. For that reason, it also challenges, or disrupts, the business models of other companies. � For example, Google’s Android operating system for mobile devices potentially disrupts companies like Apple and Microsoft, not because of any large technical difference but because of its business model: Android is given away free; the operating systems of Apple and Microsoft are not.
Innovation trends in the chocolate industry ● Companies are introducing products “that give consumers reasons to try something new,” and keep them buying chocolate.
● The latest innovations are more about attracting inquisitive customers than cutting costs.
Innovation trends in the chocolate industry www.fortunebusinessinsights.com/share-infographic/real-and-compoundchocolate-market-100075
WHAT IS THE VALUE PROPOSITION OF SNICKERS?
HOW CAN SNICKERS CREATE VALUE TO THE GAMERS?
HMW Statement
Future Scan
Idea Sketch
Business models and innovation ◦Companies commercialize new ideas and technologies through their business models. ◦Technology by itself has no single objective value.
◦The economic value of a technology remains latent until it is commercialized in some way via a business model. ◦A new business model may turn on designing a new product for an unmet need or on a process innovation. That is it may be new in either end. ◦Introducing a better business model into an existing market is the definition of a disruptive innovation. ◦Clay Christensen presented a particular take on the matter in “In Reinventing Your Business Model” designed to make it easier to work out how a new entrant’s business model might disrupt yours.
◦This approach begins by focusing on the customer value proposition — what Christensen calls the customer’s “job-to-be-done.”
WHAT JOB NEEDS THE GAMER TO BE DONE?
JTBD methodology
HOMEWORK - Quiz preparation Readings: • https://expansion.mx/tecnologia/2020/08/29/diadelgamer-desde-distintos-enfoquesesports-marcas-y-desarrolladores • https://mailchi.mp/expansion.com.mx/mexicanos-muy-gamers?e=1ceff43d69 • https://www.elplural.com/esports/tendencias-gaming-2020_233605102 • https://bloygo.yoigo.com/aloyoigo/mas-alla-del-juego-casual-estas-son-las-tendenciasgaming-mas-importantes-en-el-mundo-movil_38027574.html
General Review 1. Understanding of innovation tools and strategies 2. Industry and Market research to know the context (secondary data) 3. Statistical identification and testing of the best market segments (primary data) 4. Price, demand and sales forecasting to determine the Marketing Strategy (justify your choices with data and not just inferences) 5. Translate the math and statistics into Data Storytelling to make it relatable 6. Determine the differentiation strategy and the positioning of the product for the chosen target, based on the How Might We and Value Proposition innovation strategies 7. Build a Marketing Plan that follows the innovative strategy to transform Snickers into an iconic product among the target consumers through gaming 8. Financially analyze and justify the Marketing Plan
Potential Demand Forecasting Scenarios Design through Predictive Models
Once we have chosen the ideal Target Segment, we can calculate the expected sales.
1. Through historical sales analysis, we predict the future sales of the product.
2. Then, we use a model to estimate the potential price of it.
Potential Sales A general method for estimating total market demand uses three variables: (1) the number of prospective buyers, (2) the quantity purchased by an average buyer per year, and (3) the price of an average unit. Using these numbers, we can estimate total market demand as follows:
Q=n*q*p where
Q = total market demand n = number of buyers in the market q = quantity purchased by an average buyer per year p = price of an average unit
Example (Videogames) The U.S. Census Bureau estimates that there are approximately 113 million house-holds in the United States. Research also indicates that 50 percent of U.S. households might buy a videogame. Finally, research also indicates that 33.1 percent of households possess the discretionary income needed and are willing to buy a videogame. Then, the total number of households willing and able to purchase this product is: 113 million households * 0.50 * 0.331 = 18.7 million households
Assuming that households will need only one videogame, and the average retail price across all brands is $75 for this product, the estimate of total market demand is as follows: 18.7 million households * 1 videogame per household * $750 = $1.4 billion Assumig that households will buy 3 videogames per year, the demand is: $1.4 billon * 3 = $4.2 billion
How to Set a Price on a Product
Setting a price on a product is a four-step process: 1.Establish pricing goals
2.Estimate demand, costs, and profits 3.Choose a price strategy to help determine a base price 4.Fine-tune the base price with pricing tactics
1) Establish Pricing Goals •The first step in setting the right price is to establish pricing goals •A good understanding of the marketplace and of the consumer can sometimes tell a manager very quickly whether a goal is realistic •Trade-offs for each pricing objective that managers must consider in light of the target customer, the environment, and the company’s overall objectives
2) Estimate Demand, Costs, and Profits ● After establishing pricing goals, managers should: ○ Determine corresponding costs for each price and then estimate how much profit and market share can be earned at each possible price. ○ Estimate total revenue at a variety of prices. ● Next, they should consider the possible elasticity. Elasticity is a function of the perceived value to the buyer relative to the price ● The types of questions managers consider when conducting marketing research on demand forecasting and elasticity understanding are key.
3) Choose a Price Strategy â—?
Price strategy is a basic, long-term pricing framework that establishes the initial price for a product and the intended direction for price movements over the product life cycle. The price strategy sets a competitive price in a specific market segment based on a well-defined positioning strategy. A company’s freedom in pricing a new product and devising a price strategy depends on the market conditions and other elements of the marketing mix.
â—? Two basic pricing strategies are: penetration or skimming.
Penetration pricing: A pricing policy whereby a firm charges a relatively low price for a product when it is first rolled out as a way to reach the mass market. –Requires a higher volume of sales to reach break-even point –Low prices can attract additional buyers to the market
–Increased sale can justify production expansion or the adoption of new technologies
Price skimming: A pricing policy whereby a firm charges a high introductory price, often coupled with heavy promotion. This strategy is successful when:
–There is strong demand for a good or service – Product is legally well protected, represents a technological breakthrough, or has blocked the entry to competitors
4) Tactics for Fine-Tuning the Base Price The Base price is the general price level at which the company expects to sell the good or service. Fine-tuning techniques include discounts, geographic pricing, and other pricing tactics.
Pricing methodologies Qualitative:
Delphi Method
Quantitative:
Time Series
Experimental:
Monte-Carlo Method
Delphi Methodology ●
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It’a a method used to estimate the likelihood and outcome of future events. This forecasting process framework based on the results of several rounds of questionnaires sent to a panel of experts. A group of experts exchange views, and each independently gives estimates and assumptions to a facilitator who reviews the data and issues a summary report. In each round, the group members discuss and review the summary report, and give updated forecasts to the facilitator, who again reviews the material and issues a second report. This process continues until all participants reach a consensus. The experts at each round have a full record of what forecasts other experts have made, but they do not know who made which forecast. Anonymity allows the experts to express their opinions freely, encourages openness and avoids admitting errors by revising earlier forecasts. Step # 1: Step # 2: Step # 3: Step # 4: Step # 5:
Define the Problem Choose a Facilitator Identify the Experts Start the Rounds of Questions (at least three rounds) Act on your findings
Time Series Forecasting Time series analysis is based on historical data, in order to extract meaningful characteristics, patterns, and other statistics. Time series forecasting is the use of a model to predict future values of a certain variable (like sales, or price), based on previously observed values.
In time series we analyze the following statistics:
Observed Values
Predicted Values
â—? Moving average. â—? Exponential soothening â—? Correlation
Moving Average (mean) The moving average (mean) can be used to identify interesting trends in the data. We can define a window to apply the moving average model to smooth the time series, and highlight different trends. Of course, the longer the window, the smoother the trend will be. Bigger Window
Smaller Window
Exponential Soothening This method has a similar logic to moving average, but a different decreasing weight is assigned to each observation. In other words, less importance is given to observations as we move further from the present. The smoothing factor takes values between 0 and 1. It determines how fast the weight decreases for observations until it gets to zero.
Multiple Regression It’s an extension of simple linear regression, used to predict the value of a variable based on the value of two or more other variables. The variable we want to predict is called the dependent variable (the outcome, target or criterion variable), while the other ones are independent variables.
Monte-Carlo Method ● This is a simulation method, based on experiments. It uses random sampling in order to solve problems, and computational algorithms to obtain a numerical result. ● It could be used for 3 purposes: optimization, numerical integration, and probability distribution. ● It’s frequently used to solve any problem having a probabilistic interpretation. By the law of large numbers, results of the expected value in a random variable prediction, can be approximated by taking the mean of independent samples of that variable. When the probability distribution of the variable is parametrized, it’s often used a Markov chain Monte-Carlo to validate probability of occurrence. ● It can be used to calculate potential future prices in a market, in order to reduce uncertainty and control risk.
Activity: Demand Scenarios thorough Predictive Models Analyze historical data that help to understand the sales trends, as a guide to predict future sales. Identify several models to predict potential price for the product. ● ●
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Identify the main elements in your Data Base Identify the forecasting model you will use: ○ Qualitative: Market Research, Delphi Method, etc. ○ Time Series: Moving average (simple and weighted), exponential smoothing, simple and multiple regression, etc. ○ Simulation: Montecarlo model, etc. Supporting resources: ○ Using Multiple Regression in Excel for Predictive: https://www.youtube.com/watch?v=HgfHefwK7VQ ○ Predictive Models:: https://www.youtube.com/watch?v=aOqBjIwdqU&feature=youtu.be
Data Storytelling
How to tell Engaging Stories with Data
Creating a Game Plan GAME: Goal, Audience, Message, Engagement ●
Goal: Determine what you hope to achieve with your story and when that goal has been reached.
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Audience: Understand who your audience is. Who are the decision-makers and who can influence the process? And how do they want information presented to them? Determining the answers to these questions will help you develop empathy for your readers and create relevant messaging for them.
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Message: Determine the most important message you’d like to communicate to your audience. Narrow your message down to a few key points that you’d like your audience to internalize and remember— less than three sentences altogether.
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Engagement. Has two components: your channel and your media. ○ Your channel is how you reach your audience. Channels include email, regular mail, websites, social media, webinars, and such in-person venues as community health fairs. ○ Your media is the form your message takes. Media include websites, printed reports, videos, presentations, or a combination. When choosing a channel, consider where you are most likely to find your audience. Your choice of channel helps you determine the best medium to use.
Build your Framework Sketch out the Layout Once you’ve created your GAME plan, sketch out the layout of your story. What elements should go where? Feel free to grab a pen and paper. You might also meet with your audience and ask them for ideas on how best to package and present your story.
Keep it to the Point Most data stories don’t need to be much longer than a few paragraphs. They should include an intro, your three main points, and a conclusion with a call to action. You may also make room for personal narratives, such as quotes from or stories about people in your community.
Appeal to the Mind with Data Focus: Decide on the most important aspect of your data and hone in on it. If your chart is too complex, cut it up into simpler ones, so each focuses on a single point. Ideally, the readers should be able to interpret the key point in a chart in less than 5 seconds. Limit your Data Points: Don’t try and cram too much information into one spot. Our rules of thumb: no more than 10 categories at once for bar charts and heat maps, and no more than five for line charts or pie charts. Using more categories risks losing your point in a crowded sea of data.
Catch the Attention Give Your Charts Room to Breathe: Whether you are creating a presentation, a webpage, or a PDF report, make sure to leave plenty of margin around your charts so they can “breathe.” Leaving room around an important chart helps emphasize its importance—just like great speakers leave longer pauses after an important point.
Select the Right Visualisation Distribution: Distribution means looking at the count of something across a dataset’s various categories—for example, the number of survey respondents by age groups. Your best choices for showing distributions are: Bar Chart, Column Chart, Line Chart, and Area Chart.
Comparison: A comparison is when you compare two or more categories in a chart— for example, departments, cities, income breakdowns, or budget versions. Your best choices for this type of data presentation are: Column Chart, Bar Chart, Line Chart, Line-Bar Chart, and Multi-line chart.
Composition: A composition analyzes the underlying categories of a number. For example, an organization’s budget is the sum of each department’s budget. Each department budget, in turn, might have multiple components as well. In a composition, you are looking at the percentage split and for this purpose your best choices are: Pie chart, Stacked Column Chart, Stacked Bar Chart, and Stacked Area Chart.
Trend: Trend has to do with time, whether hours, days, months, or years. Trend charts show how data have changed, and suggest what they might look like in the future. Your best choices for trend data are: Line, Dual Axis line, Multi-line, Date/Time Line Chart, and Cumulative Date/Time Line Chart.
Relationship: If you are looking at the relationship between different categories or indicators (numerical values), you are directly or indirectly looking at the correlation and perhaps a causation between data points. For example, cities where exercise is less common also have higher obesity rates. The best visualizations to use for this type of data are: Heat Maps, Bubble Charts, Line-Bar Chart, Line Charts, and Scatter Plots.
Statement: When showing a single number or percentage in your story—what we call a statement—you can use Number Tiles or Donut Charts. Icon charts work well for percentage-based statements.
Location: If your data has a geography associated with the data points, consider displaying it on a map. Maps can be particularly engaging and are great at showing a larger number of data points, as the geographic context helps the reader comprehend and compare the data with ease.
Add Visual Oomph Captivating Cover Images: A story’s cover image is your version of a movie poster or a book cover. It should draw the reader into your story. Select an image or illustration that is engaging, but also indicates what your story is about. Make sure any text you add to your image is legible, so that you can have a great cover image.
Visuals Should Support Your Narrative: A good visual conveys the same message and tone as your written narrative. What your story involves needs to be supported by an image that clearly transmits that. Make sure that even without reading the headline, you can easily tell what the story is about just by the picture. For example, can you guess what the following image talks about? (even without seeing any headlines or text on it).
Use Action Shots to Help Your Story Come Alive: Images with well-focused movement—action shots—are more engaging than still portraits. Avoid a photo that doesn’t show movement, or a highly detailed background, which is distracting. Choose a photo that has a clear focus on the foreground, and that reflects action. Embed Videos from YouTube and Vimeo: YouTube.comand vimeo.comare the most popular video hosting sites. To embed a video from either site, look for the “share” button and click embed. Copy the code and paste it into your website or story. Start on a Strong Note: Look for videos that captivate the audience in the first 15 seconds. Online readers tend to have short attention spans. If a video doesn’t seem worthwhile from the get-go, few will watch it to the end. Keep it Short and Sweet: Wistia.com analyzed more than 1 million videos to see when viewers would stop watching them. On average, after 3 minutes, videos lost almost 40% of their viewers. Long videos are also problematic because fewer people will commit to watching them in the first place.
The Emotional Color Wheel: When picking colors for your story, think of the mood you want to evoke and who you are trying to impact. “Warm” colors—red, orange, and yellow— are perceived as warm and welcoming. “Cold” colors are often considered less approachable. That said, color symbolism depends on context and varies between cultures.
To Write or Not to Write Make Sure Your Section Titles Pop: When the reader glances over your story, they should get the gist of it just by reading the section titles. Newspaper headlines are a great model to follow. See the examples from The New York Times.
Each of the three examples does more than just describe what the article is addressing. Their choice of words, such as: “Sorry, Kids” and “Wildfires” also piques the reader’s curiosity and makes the title more engaging. Even if your topic isn’t as exciting as wildfires, you can still create engaging titles. Now compare these titles. Which one would you rather read? The right-hand title isn’t just more descriptive; it invites the reader to engage by asking a question.
Tell your Story Make Your Story Easy to Read: Be careful not to make your story unnecessarily difficult to read and understand. This is often exemplified by the use of jargon or abbreviations, which your audience might not be familiar with (this applies to both chart titles and contextual information). Another way to make your story easy to read is by pulling out quotes or other key points and giving them more prominent visual treatment.
Example The Economist are experts at writing about complex topics in a manner that makes them easily comprehensible. They even created a style guide with rules for how to write easily comprehensible articles. It’s an introduction to their style guide:
Dashboard It’s a summary of the most relevant findings of your research, presented through quantitative information (charts), that also take into account the qualitative recommendations.
Activity: Dashboard Design ● Design a dynamic dashboard where you can explain your results, using Data Storytelling and the qualitative recommendations. ● Include the sensitive variables of the demand forecasting model, with at least 3 market variables (segment, age, potential purchase, price, etc.)
● Supporting resources: ○ ○ ○ ○
To create a Dynamic Dashboard in Excel: https://www.youtube.com/watch?v=Oanr41Tz28U https://www.youtube.com/watch?v=FzUB1p-QZwI How to build Interactive Excel Dashboards:https://www.youtube.com/watch?v=K74_FNnlIF8 Data Storytelling: https://www.analiticaweb.es/data-storytelling-que-necesitas- saber/ The Power in Effective Data Storytelling | Malavica Sridhar TEDxUIUC: https://www.youtube.com/watch?v=0e52QfQngrM
Primary Research - Ad Hoc Studies
Marketing Plan 1. 2. 3. 4. 5. 6.
Situation Analysis Target Segment Marketing Objectives Marketing Strategies Implementation Control
American Marketing Association
Marketing Performance
Quantitative Market Share:
Sales of the Company Total Sales of the Market
Sales Growth:
( Sales Year 2 / Sales Year 1 ) Sales Year 1
Return on Investment:
Profit Investment
Qualitative
● TOM: Top of Mind
● Satisfaction ● Mistery Shopper