Chapter 6

Current buyer's decisions occur without ______.

SELLER INPUT

SABOTEURS

Saboteurs are anyone who can veto or slow down a purchasing decision

SAM

Serviceable Available Market, is the section of the TAM that your product or service intends to target.

Customers can be divided into separate segments if ______.

-their needs validate an offering -paying for different aspects of the offer -they have different distribution channels

Types of Customers

-users-recommenders-influencers

CALCULATING MARKET SIZE

1. DEFINE YOUR SEGMENT OF THE MARKET 2. CONDUCT TOP DOWN ANALYSIS 3. CONDUCT BOTTOM UP ANALYSIS

What is the difference between a customer and a consumer?

A customer buys the product while the consumer uses it.

Biggest fears and motivators

Find out what keeps your end users awake at night and identify their top priorities in order to understand their biggest fears and motivators.

SOM

Share of Market, is the portion of the SAM that your company is realistically likely to reach.

SOURCES FOR DATA

WEB ANALYTICS SOCIAL MEDIA DIRECT CUSTOMER CONTACT

Customer segments can be defined in four ways

Who are they? Find out their demographic (age, gender, education, income, etc.). Where are they? Note your customers' locations. How do they behave? List all behavioral or lifestyle habits demonstrated by your customers. What are their needs? It is essential that you record your customers' needs to clarify your offering.

product application

goods or services created to meet this demand, thereby providing a solution to a customer problem.

market

place where people can sell goods and services (the supply) to people who wish to buy those goods and services (the demand)

WATERING HOLES

places where users meet and swap information. They are also the best spots for word-of-mouth recommendations. There are many different types of watering holes, both formal and informal.

What is share of market (SOM)?

the portion of the market realistically reached

Which is a factor that defines a beachhead market?

Customers in that market buy similar products.

The customer segment defined by who they are is ______.

DEMOGRAPHIC

DEMOGRAPHICS

Demographics are useful data in identifying your target end user, but they may not be entirely accurate when it comes to understanding your end user

_____ personas save you time and resources by identifying the people who will not buy the new product.

EXCLUSIONARY

All five categories of customers in the adoption life cycle will adopt the new innovation.

FALSE

INNOVATORS

First adopters of new products (2.5%). NEW TECHNOLOGY

EARLY ADOPTERS

People who adopt new products early, choose new products carefully, and are viewed as "the people to check with" by later adopters REASONED DECISONS (13.5%)

PROXY PRODUCT

Proxy products give you an idea of what else the user is likely to buy.

Which is a main element that defines a market?

a given set of products or services

When entrepreneurs check out all the data for customers by going to where they will sell the products and then estimating realistic sales, they are using the ______.

bottom-up analysis

Analyzing demographics is the most important piece in creating an end user.

false

Businesses should identify a single type of customer.

false

The only definition of the market is the place where people sell goods.

false

Marketing sizing is a method of determining ______.

potential customers

When Smart Skin Care patented a slow-release medication, they found what beachhead market?

extreme sport competitors The founder of the company knew the sunscreen market was too large, so he came up with a smaller segment of the market.

When analyzing the market, entrepreneurs need to go for it and not worry about if the numbers are wrong.

false

Finding your beachhead market is a key to establishing early adopters.

false Analyzing demographics is the most important piece in creating an end user. Finding your beachhead market is a key to establishing early adopters.

Product application refers to the place where goods are sold.

false Product application refers to goods or services created to meet demand.

BUYER PERSONAS

profiles or representations of your ideal customers based on information and market research. These personas help you to create strategies to connect with your target audience and promote product and services to people who will potentially buy them.

What is the stage in the customer journey where a decision is made?

purchase

What type of customer is a mother who buys her son a toy train she noticed at the grocery store?

purchaser

END USER PROFILE

demographics, psychographics, proxy product, watering holes, day in the life, and biggest fears and motivators

What is the stage in the customer journey where the need is identified?

discovery

Entrepreneurs identify the target customer segments before they have an idea for a new product.

false entrepreneurs usually have the idea well before finding a target group.

Haim Saban, The Mighty Morphin' Power Rangers

innovative business model, Saban Entertainment was born. Haim realized that it was time to sell the network as they had started competing with firms like Disney and Warner Brothers that were 10 times their size. He knew that there were two potential buyers, CBS and Disney. Disney was very interested in the assets of the company and bought the company for $5.3 billion.

The best way to build buyer personas is

through real interviews with prospective customers

A big part of entrepreneurship is discovering the market opportunity for a new idea.

true

Consumers

use the product or service.

______ are customers who actually use the product.

users

PSYCHOGRAPHICS

a method used to describe the psychological attributes (attitudes, values, or fears) of your target end users.

Customer Journey Map

A visual representation that captures customer experience across multiple touchpoints. holistic view, painpoints, early stages of startup PUT YOURSELF IN CUSTOMERS SHOES

The technology ______ life cycle is a model describing the process of acceptance of new innovation over time

ADOPTION

BEACHHEAD > CHASM

Once you have identified your beachhead market, then you can use the following three steps to successfully cross the chasm: (MOORE BOWLING) Create the entire product first. (FIRST PIN) Position the product. Distribute the product through the right channels. (KNOCKING DOWN ALL AVAILABLE PINS) (SUCCESS=TORNADO=HIGH DEMAND) (MAINSTREET=AFTER TORNADO CALM=STILL WORK TO BE DONE)

______ refers to the people who compete for customers in the marketplace.

Supply

LATE MAJORITY

These customers are typically skeptical, pessimistic, risk averse, and less affluent than the previous groups. However, because this group makes up such a large portion of the life cycle, they cannot be ignored. It is possible for entrepreneurs to win over this group by providing simpler products or systems at an affordable cost. (34%)

TAM

Total Available Market, refers to the total market demand for a product or service.

In the textbook's donut café example, what was the total available market?

United States

Building buyer personas will help you ______.

connect with your target audience

Customer segments are part of ______.

customer groupings of a market

Supply

sellers who compete for customers in the marketplace

What are social media tools for learning about client experience called?

social mentions online

What is most challenging in identifying market opportunity?

A large enough market exists.

BEACHHEAD MARKET

BATTLE OF NORMANDY WW2 1. The customers in that market buy similar products. 2. Those customers have similar expectations of value. 3. The customers use word of mouth to communicate to others in similar regions or professional organizations. EX;SMARTSKIN

CROSSING THE CHASM

GEOFFREY MOORE the biggest difficulty is making the transition between early adopters and the early majority; he calls this the "chasm." Crossing the chasm involves focusing your resources on a single, primary market first, known as a beachhead market, before winning over that market and then using that momentum to dominate larger markets.

In traditional marketing, the most viable customer segment is ______.

IDENTIFIED

Companies group customers into specific groups to gain ______ about who might buy their product.

INSIGHT

Which category of customers tends not to buy the new innovation?

LAGGARDS

Decision makers

customers similar to economic buyers who have even more authority to make purchasing decisions as they are positioned higher up in the hierarchy. The ultimate decision makers do not need to be CEOs—they could also be "Mom" or "Dad," who have the power to approve purchases for their family.

Influencers/Opinion Leaders

customers with a large following who have the power to influence our purchase decisions. Sometimes the biggest influence on the success of a service or product comes from "customers" who have no involvement in it all.

Economic buyers

he customers who have the ability to approve large-scale purchases, such as buyers for retail chains, corporate office managers, and corporate VPs. Economic buyers have the power to put your product on the shelves, physically or virtually.

market opportunity

identifiable by the degree of customer or market demand for a specific product application

When the customers are segmented and an end user profile created, the entrepreneur has a better understanding of ______.

important groups to target

A(n) ______ is someone who uses status to promote a product without necessarily using it himself.

influencer

What is the method of estimating the number of potential customers and possible profitability?

market sizing

MARKET SIZING

method of estimating the number of potential customers and possible revenue or profitability of a product or service.

Recommenders

people who may evaluate your product and tell the public about it, such as bloggers or experts in an industry. Their opinions have the power to make or break your reputation.

End users

the customers who will actually use your product. They will buy it (or not), touch it, operate it, use it, and tell you whether they love it or hate it.

DAY-IN-THE-LIFE

One of the most useful ways entrepreneurs can create a profile of their end users is to walk in their shoes for a day. This method is particularly effective after you have spent some time observing and talking to a group of end users.

In order to cross the chasm after the beachhead market is identified, the entrepreneur should ______.

POSITION THE PRODUCT

Laggards

People in this final category are the last to adopt a new innovation. They tend to have a negative attitude toward technology in general and have a strong aversion to change. Despite their best efforts, entrepreneurs may never be able to persuade this group that their innovation is worth a first glance, never mind going so far as to purchase it. (16%)

SUBGROUPS OF THE MARKET

TAM SAM SOM

If the projected numbers exceed the market, the entrepreneur rechecks the ______.

TOTAL AVAILIABLE MARKET

Focusing your resources on a single, primary market is known as a beachhead market.

TRUE

EARLY MAJORITY

interest in a new product as it begins to have mass market appeal. They are both practical and extremely risk averse, preferring to wait and see how others view the technology before they buy it themselves. (34%)

TOP DOWN ANALYSIS

involves determining the total market and then estimating your share of the market -typically uses demographic data like population, age, income, or location to calculate market share

BOTTOM UP ANALYSIS

involves estimating potential sales using calculations in order to arrive at total sales figure.

Demand

prospective customers' desire for the goods and services available

______products give you an idea of what else the user is likely to buy.

proxy