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Why new products fail and what you can do about it… a big presentation 1224 slides, 24 hours of instruction ..
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Bryan Cassady Guest Professor, [email protected]
INTRODUCTION The sad fact is 9 out of 10 new products/services fail. This course is about why products fail and what you can do to increase your odds of success. In this PDF you will find 11 lectures from my last course and a bonus lecture on viral marketing. I hope in 1224 pages that follow you will find new ideas and inspiration If you have a new product or service you would like help with, please feel free to contact us. We offer a 1 hour first consultation free of charge Bryan Cassady [email protected] +32-475-860-757
Bryan Cassady Guest Professor, [email protected]
Click on layers to to the different lectures and slide titles
Or simple go to the page numbers listed Eg. 6 Fist Movers vs. Fast Seconds _ 528
Starts on page 528
Click here for outline
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Daves story
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
"A medium-sized 'butter' popcorn at a typical neighborhood movie theater
contains more artery-clogging fat than a bacon-and-eggs breakfast, a Big Mac and fries for lunch, and a steak dinner with all the trimmings combined!"
Bryan Cassady Guest Professor, [email protected]
Talk to someone tonight
The kidney heist The story
The details (probably not all)
Movie popcorn A lot of fat
The car The visuals
The brand
The benefit
The non-profit
company ?
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
A lie can get halfway around the world before the truth can even get its boots on.
Mark Twain
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
To develop sticky ideas, make your
message:
1
2
3
4
5
6
S imple U nexpected C oncrete C redible E motional S tory Based
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
1
2
3
4
5
6
10 minutes
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
It is always easier to explain after the fact
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
16 reasons products fail (Nielsen) Lecture Number 1 A less-than-optimal "configuration" of product or service attributes and benefits is selected. 1 What is a new product
2 Marketers fall in love with a product no one else loves 3 Marketers assess the marketing climate inadequately. 2 Market research
4 A failure to ask the right questions and a belief that everything is a big idea
5 A questionable pricing strategy is implemented. 3 Pricing 6 Cannibalization underestimated 4 Forecasting and business planning
7 Over-optimism about the marketing plan leads to a forecast that cannot be sustained in the real world.
8 Too focused on the internal game not enough on the market 5 What really happens at work/ Selling a business case 9 Too focused on being first 6 Timing: Is there a first mover advantage
10 The Lemming effect 11 Lack of a strong sustainable position in the market 7 The basics of market interaction
12 The marketing plan for the new product or service is not well implemented in the real world. 8 Execution
13 The plan is too complicated 14 No Support to get things done 9 Selling your ideas 15 A weak positioning strategy is used.
16 The advertising campaign generates an insufficient level of new product/new service awareness.
10 Popper : Asking the 1 big question
Bryan Cassady Guest Professor, [email protected]
A group presentation 20-30 min
Lecture 80-90 min
Then a discussion 60 min
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Date Lecture Who Assignment Student PresentationPresentGroup
Reading
11/02/2010 intro B Brand You None Summary: Made to Stick
18/02/2010 What is a new product B Concept proposals None New product evaluation methodsConcept Training
25/02/2010 Market research B 3 big research Qs/ How to answer Concept proposals 1-Jan The wisdom of crowds
04/03/2010 Pricing for Value B Pricing Reco in 1 category 3 big research Qs/ How to answer 2-Jan TBD
11/03/2010 Forecasting and business planning B A systems view of the business Pricing Reco in 1 category 3-Jan Chapter 5 Senge + Fifth discipline
18/03/2010 Building Buzz and interest B A buzz activity: contest invite or link requestA systems view of the business
4-Jan The cluetrain manifesto
25/03/2010 What really happens at work/ Selling a business case E Choosing the Best adA buzz activity: contest invite or link request 5-Jan PG 99
01/04/2010 Timing: Is there a first mover advantage E First mover or fast second your reco Choosing the Best ad 6-JanManaging What consumers learn through experiencethe second mover advantage
08/04/2010 No Class(Spring Break) X no assignment X X
15/04/2010 No Class(Spring Break) X no assignment X X
22/04/2010The basics of market interaction (strategy)
E Choice of a value discipline First mover or fast second your reco
7-Jan The discipline of market leaders
29/04/2010 S-D Logic (execution) E A service Mantra proposal Choice of a value discipline 8-Jan TBD
06/05/2010 Selling your ideas E A sales letter A service Mantra proposal 9-Jan Cialdini/ The new positioning
13/05/2010 New Class or no class ? E Winner or loser A sales letter 10-Jan TBD
20/05/2010 Class wrap up j no assignment Winner / Loser 11-Jan Nothing
Practice Exam Due
If all goes as planned , an Oxford style debate in the last class
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Success is a question of how to marshal your resources. Be really great in four or five areas. Make some hard choices.
The big challenge is to worry less about your weaknesses and build more on your strengths. Every success in your life will be based on your strengths.
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Email: [email protected] Why did you take this course? :To teach it About you: A long time ago, an American boy came to Belgium, where he met a pretty woman in a Laundromat. They got married a year later and decided to stay in Europe. Since then, Bryan has set up 9 successful business in 7 different countries. Several of which should have never succeeded. Skills: A born marketer and salesman with a proven track of record business start-ups and
business development A Talent for thinking outside the box and finding simple solutions to complex business
issues.
Driven by the challenge of new business initiativesProud to be able to make impossible things to happen. Now in academia, because he enjoys learning and teaching.
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
S imple U nexpected C oncrete C redible E motional S tory Based
Bryan Cassady Guest Professor, [email protected]
A less-than-optimal "configuration" of product or service attributes and benefits is selected.
Lack of a strong sustainable position in the market
Marketers fall in love with a product no one else loves
The marketing plan for the new product or service is not well implemented in the real world.
Marketers assess the marketing climate inadequately. The plan is too complicated
A failure to ask the right questions and a belief that everything is a big idea No Support to get things done
A questionable pricing strategy is implemented. A weak positioning strategy is used.
Cannibalization underestimated The advertising campaign generates an insufficient level of new product/new service awareness.
Over-optimism about the marketing plan leads to a forecast that cannot be sustained in the real world. Too focused on the internal game not enough on the market The Lemming effect
Bryan Cassady Guest Professor, [email protected]
A less-than-optimal "configuration" of product or service attributes and benefits is selected.
Lack of a strong sustainable position in the market
Marketers fall in love with a product no one else loves
The marketing plan for the new product or service is not well implemented in the real world.
Marketers assess the marketing climate inadequately. The plan is too complicated
A failure to ask the right questions and a belief that everything is a big idea No Support to get things done
A questionable pricing strategy is implemented. A weak positioning strategy is used.
Cannibalization underestimated The advertising campaign generates an insufficient level of new product/new service awareness.
Over-optimism about the marketing plan leads to a forecast that cannot be sustained in the real world. Too focused on the internal game not enough on the market The Lemming effect
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Marketing is the management process that identifies, anticipates and satisfies customer
requirements profitably. The Chartered Institute of Marketing
(CIM)
Bryan Cassady Guest Professor, [email protected]
Sometimes you gotta shoot the puppy before he grows up
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
There will always be need for some selling. But the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. Ideally, marketing should result in a customer who is ready to buy. All that should be needed is to make the product or service available. Peter Drucker
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Bryan Cassady Guest Professor, [email protected]
Expected
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Bryan Cassady Guest Professor, [email protected]
Core Benefit Generic Product Expected Product
Augmented Product Potential Product
Q: Why is the iPod a success
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What makes what youre selling Different and desirable
Bryan Cassady Guest Professor, [email protected]
Business analysis Evaluation of ideas Making things happen
3 fundamental roles
Accountable for definition, development, marketing and profits of a product
Defines the business case, gets money, responsible for ROI
Managing a business
A baby CEO
Bryan Cassady Guest Professor, [email protected]
Product Manager
Customer Service
R & D Logistics
Advertising
Top Management
Sales
Purchasing
Marketing Research
Legal
Customers
Finance
Production
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Product management is one of the most common training grounds for senior executives. Many VPs and CEOs were
formerly product managers. The joy (and sometimes pain) of product management is its horizontal nature, working with Sales, Development, Marcom, Finance, Professional Services
and senior Executives. Product management is where we learn to lead through influence rather than mandate.
Barbara Nelson, Pragmatic Marketing
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
You have to keep pulling
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
High
Low High
New product
lines 20%
Improvements to existing products
26%
Additions to existing
product lines 26%
New-to-world products 10%
Repositioning's 7% N
ewne
ss t
o co
mpa
ny
Newness to market
Size of circle denotes number of introductions relative to total
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Apple operating system vs. Windows
This South African Shiraz received 87pts from Rovani, Wine Advocate #155
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Bryan Cassady Guest Professor, [email protected]
people look at what interests them and sometimes its your ad.
Howard Gossage
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1965 1974 1981 1986 1990 1997
34%
24%
13% 12% 8%
?
Percent of adult viewers who could name one or more brands advertised in a TV program they had just watched:
Newspaper Ad Bureau
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More than nine out of ten consumable products launched in the last ten years offered absolutely nothing new to the consumer.
More than eight out of ten new products fail. You dont need to be a statistician to realize theres a correlation between the two numbers.
-- Robert McMath
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Idea Generation
Screening
Concept Development & Testing
Marketing Strategy
Business Analysis
Product Development
Test Marketing
Commercialization
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Ideas, screening Concept, analysis
Prod. devel
Test mktg commercialization
The time to Make mistakes !
Budget
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I think theres a world market for about five computers.
(President of IBM)
TV wont be able to hold on to any market it captures after the first six months. People will soon get tired of staring at a plywood box every night.
(President of 20th Century Fox)
Bryan Cassady Guest Professor, [email protected]
I think theres a world market for about five computers.
(President of IBM)
TV wont be able to hold on to any market it captures after the first six months. People will soon get tired of staring at a plywood box every night.
(President of 20th Century Fox)
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todays business
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Bryan Cassady Guest Professor, [email protected]
Study Test
Do
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Solution
Do more
But in my opinion, almost certainly wrong
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Ready, Aim,Fire
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Concept Development
Implementation
Project Start Concept Freeze Market Introduction
Concept Time Response Time
Total Lead Time
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Post-It-Notes: the super glue that wouldnt stick
Levi jeans: the failed gold digger feeding his family
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Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Ready, Fire, Aim
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Failure = Normal = Good. (Reward excellent failure. Punish mediocre success.)
Fail faster. Succeed sooner.
Fail. Forward
Tom Peters
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Concept Development
Implementation
Project Start Concept Freeze Market Introduction
Concept Time Response Time
Total Lead Time
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Fire, Fire, Fire
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"Life is what happens while youre busy making plans"
--John Lennon
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Bryan Cassady Guest Professor, [email protected]
Exultation
Disenchantment
Confusion
Search for the guilty
Punishment for innocent
Distinction for uninvolved Introduction
Testing/Test MKTG
Screening & Refinement
Idea Generation
Bryan Cassady Guest Professor, [email protected]
Remember Perspective is everything.
Two shoe salesmen... find themselves in backward part of Africa. The first salesman wires back to the head office.... there is no prospect of sales.. Natives do not wear shoes.
The second wires "No one wears shoes here. We can dominate the market. Send all available stock
Plus organization in groups
business ideas
Which puppy(ies) worth saving ?
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Group Number
Pets.com Kosmo Despair.com Etoys.com Petrock.com Flooz WebvanIs there a benefit (real or percieved)People willing to pay (enough)Cost of cut-through acceptablePeople will see the benefit buy again / recommend to othersWill someone hate it
Kill Puppy (0 = kill, 1 = love)
Member Views
Class ID
Pets.com Pet supplies via the
internet
Save big, save time Stay at home
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Kosmo.com Instant delivery of products purchased via the internet in big cities. Order a wide variety of products, from movies to snack food, and get them delivered to your door for free within an hour.
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Despair.com We hate all the senseless, wasted time on employee motivation and un-founded optimism We imagine you do to, buy our products and show your true colors
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Continuous effort is the key to unlocking your potential Winston Churchill
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Etoys.com The new place to buy toys. Find you want on the internet
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Petrock.com Pets take a lot of time and energy. Your kids can have almost as much fun with a pet rock. We even include a care guide
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Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Webvan.com Buying groceries should be easier. With web van you can get all your groceries, so you have time for other things
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Group Number
Pets.com Kosmo Despair.com Etoys.com Petrock.com Flooz WebvanIs there a benefit (real or percieved)People willing to pay (enough)Cost of cut-through acceptablePeople will see the benefit buy again / recommend to othersWill someone hate it
Kill Puppy (0 = kill, 1 = love)
Member Views
Class ID
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Where do big ideas come from ?
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Bryan Cassady Guest Professor, [email protected]
Distinguishing Characteristic: Selecting between given means to achieve pre-determined goals
Sometimes new means may be generated
M1
M2
M3
M5
M4
Given Goals
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E2
E3
E . . .
En
M1 M2 M3
M4 M5
Given Means
Imagined Ends
E1
Distinguishing Characteristic: Imagining possible new ends using a given set of means
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Who is coming What will they like Plan a menu Go Shopping Make the meal Enjoy
Traditional What is in the
Fridge ? What can we do
with that Guess what is for
dinner ? Enjoy ?
Effectual
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Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
?
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Leverage contigencies
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Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Who I am What I know Whom I Know
What can I do? Interact with others
Stakeholder pre-
commitments
New goals
new means
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Bryan Cassady Guest Professor, [email protected]
Causal Logic
(predict)
Visionary Logic
(predict)
Adaptive Logic
(react)
Effectuation Logic
(negotiate) low
hi
gh
low high
Pre
dict
abili
ty
of t
he
futu
re
Controllability of the future
Effectuate under uncertainty in new markets for new products
Bryan Cassady Guest Professor, [email protected]
The quickest easiest way to get started selling a product
Objective: Fast failures and maybe a big success
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Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Concepts are ideas that you think will resonate and mean something to people interested in a product or service. Good concepts are insight based.
You need to think about what are the real benefits consumers are looking for. Concept statements should be written in a manner that stresses the strategic benefits of any given concept vs. creative writing appeal.
While the copywriting should be neither boring nor bland, it is important to distill the idea down to its primary reason-for-being.
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
or
Bryan Cassady Guest Professor, [email protected]
Reciprocity On is more willing to comply with a request for participation to the extent that compliance
constitutes repayment of a perceived gift favour or concession.
Consistency Once an individual has taken a freely chosen stand on an issue, he/ she will exhibit a
tendency to act consistently with this commitment
Social validation Individual commonly decide on appropriate actions for themselves by searching for
information as to how similar other have acted or are acting in a similar situation
Authority People are more likely to participate if a legitimate authority is asking for participation
Scarcity Requests than emphasise the value of making your voice hear or having your opinion
count will be more effective when coupled with information suggesting that such an opportunity is rare.
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
What you need to deliver Group Core Concept + Loans: Home or personal 1 6
Core Concept + Credit Card 2 7
Core Concept + Insurance: Life, Home, Car, Travel 3 8
Core Concept + Telephone/ Internet or Mobile 4 9
Core Concept + Utility: Gas, Electric, Water 5 10
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Accepted beliefs Consumers are getting more and more frustrated with "unwanted mail The mail I send is not junk mail - it just needs to go to the right people There is a shortage of relevant data. Data is often out of date/not updated very regularly
Benefit Select Post gives you the information you need to reach consumers that want your mail
Reason to believe in the product Proven to work in other countries. Response rates 20-400% higher a program being developed with you in mind with the support of the Belgian Post brand
Reassurance Developed in collaboration with leading companies, and industry leaders based on detailed consumer and advertiser testing
Brand Character Always on the look out for win/win/ solutions. Always doing the right thing.... A good listener, willing to learn/open/progressive, well-informed/ever striving
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
A less-than-optimal "configuration" of product or service attributes and benefits is selected.
Lack of a strong sustainable position in the market
Marketers fall in love with a product no one else loves
The marketing plan for the new product or service is not well implemented in the real world.
Marketers assess the marketing climate inadequately. The plan is too complicated
A failure to ask the right questions and a belief that everything is a big idea No Support to get things done
A questionable pricing strategy is implemented. A weak positioning strategy is used.
Cannibalization underestimated The advertising campaign generates an insufficient level of new product/new service awareness.
Over-optimism about the marketing plan leads to a forecast that cannot be sustained in the real world. Too focused on the internal game not enough on the market The Lemming effect
Bryan Cassady Guest Professor, [email protected]
1000 40
1000 30
1000 20
1000 10
5,000
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Paradigms = models, patterns the basic way of perceiving, thinking valuing
A dominant paradigm is seldom if ever stated explicitly; it exists unquestioned transferred through culture
and unspoken business practices William Harmon-
An incomplete guide to the future
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Hot summers Warm winters
Evidence of global warming
Cold summers Cold winters
Evidence of global warming
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I will see it when I believe it vs.
I will believe it when I see it
Too much research is the first type
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We often do research to check our brilliant ideas
SUGGING (Selling under the guise of market research)
Issues
Objective criteria in place before the research starts Is 35% planned purchase good or
bad
Clearly define your biases before you start
Focus on insight (vs. confirmation) Do regular reality checks
Solutions
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The formulation of the problem is often more essential than its solution
Albert Einstein
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Research that Produces Customer Insights Based on a lecture by M. Sawney
(Northwestern University)
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A good product manager Builds, Shares, and uses insights
Chris Start P&G
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Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Example
The consumer isnt a moron. She is your wife.
David Ogilvy
We dont sell cosmetics, we sell hope
Revlon
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todays business
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Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Offering (WHAT)
Process (HOW)
Presence (WHERE)
Customers (WHO)
1
4 2
3
Networking
Brand
Supply Chain
Organization Value Capture
Customer Experience
Platform
Solution
Bryan Cassady Guest Professor, [email protected]
Offering (WHAT)
Process (HOW)
Presence (WHERE)
Customers (WHO)
Networking
Brand
Supply Chain
Value Capture
Customer Experience
Platform
Solution
Organization
Bryan Cassady Guest Professor, [email protected]
Offering (WHAT)
Process (HOW)
Presence (WHERE)
Customers (WHO)
Networking
Brand
Supply Chain
Value Capture
Customer Experience
Platform
Solution
Organization
Bryan Cassady Guest Professor, [email protected]
Offering (WHAT)
Process (HOW)
Presence (WHERE)
Customers (WHO)
Networking
Brand
Supply Chain
Value Capture
Customer Experience
Platform
Solution
Organization
One place all The info
Answers in 30 minutes
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Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Using observation to formulate an idea or theory. Qualitative or Interpretative research draws on inductive reasoning. Sheba cats are part of the family
Inductive Reasoning
Taking a known idea or theory and applying it to a situation (often with the intention of testing whether it is true). Quantitative or positivist research draws on deductive reasoning.
Sheba buyers are 240% more likely to buy pet magazines
Deductive Reasoning
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Qualitative Research Quantitative Research Also Known As interpretative / responsive positivist / deductive
Type of Reasoning (usually) inductive (usually) deductive
Objective Generate insights that lead to hypotheses
Validate insights by testing hypotheses
Outcomes Illuminate a situation to create deeper understanding and insights
Accept or reject a proposed theory, or get specific answers to well - defined questions
Methods Qualitative, eclectic Quantitative, rigorous
Approach to Validity truth seen as subjective and socially constructed
truth seen as objective and universal
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New understanding that is actionable and competitively unique
Interpretation of the research findings
Consider carefully the research objectives.
Data Analysis and Data Reduction
Traditionally, marketing researchers and research
agencies stop here
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Of most value because offers new ways of looking at markets that lead to
competitive advantage
Summarizes the implications of the research for the business
Selected information that is of interest, but lacking in implications
Informs the business about a market, but no indication of relative importance
of different pieces of information
Of little value because it is usually difficult to understand and interpret on
its own.
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Inductive, Qualitative, Exploratory Research
that Produces Insights
Deductive, Quantitative, Confirmatory Research that Validates Insights
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Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
New Products focus
Proactive, Episodic
Reactive, Routine
Validation Research
Exploratory Research
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Customer insights
Ideas from Innovative
Customers and Partners
Patterns in Customer
Transaction Data
Observation of Customer Behavior
in Native Surrounding
Anomalies and Discrepancies
Metaphors and Analogies
Introspection, Intuition and Brainstorming
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Top Management
Product Development
Legal and corporative
affairs
Corporate Marketing
Market Research Product
Marketing
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Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Worst practices Best practices
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Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Source : McKinsey
Finance & Accounting
Marketing
Information Service
Human Resources
Market Research
How useful is the information? Not very 1 2 3 4 5
very
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Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
How do you think the insight was developed ?
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Bryan Cassady Guest Professor, [email protected]
His conclusion the idiots errors cancelled each other out
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Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
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Bryan Cassady Guest Professor, [email protected]
Bringing new members into the organization, even if theyre less experienced and less capable, actually makes the group smarter simply because what little the new members do know is not redundant with what everyone else knows.
(p.31)
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Bryan Cassady Guest Professor, [email protected]
Alpha Group
138
132 135
139
135
137
Diverse Group
121 84 111
75 135 31
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Most of the time the diverse group outperforms the group of the best by a substantial margin.
See Lu Hong and Scott Page Proceedings of the National Academy of Sciences (2002)
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Alpha Group
ABD
ADE BCD
ABC
BCD
ACD
Diverse Group
AHK FD AEG
EZ BCD IL
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Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
collective intelligence increases as the herd mentality decreases and the people in the group express what they genuinely think rather than going along with whatever everyone else is saying.
The more influence a groups members exert on each other, and the more personal contact they have with each other, the less likely it is that the groups decisions will be wise ones.
(p.42)
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Decentralization means everyone in the crowd will try their own approach to the problem rather than having their efforts
directed from the top down.
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Mon Tue Wed
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Mon Tue Wed
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Mon Tue Wed
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Brad: (8-8)2 +(10-12)2 +(10-9)2 = 5
Matt: (10-8)2 +(12-12)2 +(8-9)2 = 5
Crowd: (9-8)2 +(11-12)2 +(9-9)2 = 2
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(Brad-Crowd)2 = 1 + 1 + 1 = 3
(Matt-Crowd)2 = 1 + 1 + 1 = 3
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Implication: Diversity can trump skill
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Bryan Cassady Guest Professor, [email protected]
If a group satisfies those conditions [diversity, independence, decentralization, aggregation] , its judgement is likely to be accurate. Why? At heart, the answer rests on a mathematical truism. If you ask a large enough group of diverse, independent people to make a prediction or estimate a probability, and then average those estimates, the errors each of them makes in coming up with an answer will cancel themselves out. Each persons guess, you might say, has two components: information and error. Subtract the error, and youre left with the information.
James Surowiecki
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Armstrongs seer-sucker theory no matter how much evidence exists than seers do not
exist, suckers will pay for the existence of seers
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Why do we believe in seers
because we get fooled by randomness because we are looking back not looking forwards..
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Why not just hire an expert Because, groups usually do better than experts
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Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Conclusions Cheap crowds Expensive research Greater descrimination between ideas
New Product Concept
Monadic Test With matched samples of 100
in the target market (Top 2 Box Purchase Intent)
Research Market 1* With diverse group of 500
people- *betting (Top 2 Box Purchase Intent)
Significant Differences
A 85 86
B 83 82
C 81 90 +
D 78 91 **
E 74 69
UK Norms (top 2 box) 67 67
F 64 24 ***
G 64 22 ***
H 54 53
I 49 39 ***
J 43 17
Respondent Base Sizes: Monadic = 100 per cell / Research Market *Betting =502
Fig. 1, Top Two Box Purchase Intention Result Research Market 1*
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Bryan Cassady Guest Professor, [email protected]
The best collective decisions are the product of disagreement and contest, not consensus or compromise.
(p.xix)
The best way for a group to be smart is for each person in it to think and act as independently as possible.
(p.xix)
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Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
A less-than-optimal "configuration" of product or service attributes and benefits is selected.
Lack of a strong sustainable position in the market
Marketers fall in love with a product no one else loves
The marketing plan for the new product or service is not well implemented in the real world.
Marketers assess the marketing climate inadequately. The plan is too complicated
A failure to ask the right questions and a belief that everything is a big idea No Support to get things done
A questionable pricing strategy is implemented. A weak positioning strategy is used.
Cannibalization underestimated The advertising campaign generates an insufficient level of new product/new service awareness.
Over-optimism about the marketing plan leads to a forecast that cannot be sustained in the real world. Too focused on the internal game not enough on the market The Lemming effect
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Bryan Cassady Guest Professor, [email protected]
Unfortunately, they lost a few dollars on every customer they served.
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Source: Compustat; Mckinsey analysis
100.0
19.2
68.3
12.5
101.1 13.5
Revenuees Fixed Costs Variable costs Operating profits
1 1
Price increase of 1.0%
Price increase of 8.0%
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2.3
3.3
7.8
11.1%
Fixed cost
Volume
Variable cost
Price
Create Operating Profit Improvement of 1% improvement in...
*Based on average econimics of 2,463 companies in comopustat aggretate
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Bryan Cassady Guest Professor, [email protected]
And most importantly something you think about, not (and I repeat) not something
determined solely by your competition
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Illustrating Price Relationship Price Vol. Rev. Cost Profit
() Unit (m) (m) (m) (m) 1 17 17 27 -10
2 16 32 36 6
3 14 42 24 18
4 9 36 19 17
5 7.5 37.5 17.5 20
6 5 30 13 15
7 3 21 13 8
8 2 16 13 8
9 1 9 11 -2
10 0 0 10 -10
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-15
-10
-5
0
5
10
15
20
25
1 2 3 4 5 6 7 8 9 10
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Bryan Cassady Guest Professor, [email protected]
High Value
Super Value
Mild Value
Economy
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Bryan Cassady Guest Professor, [email protected]
The right price is not objective, but value based
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Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
How much a rational consumer would be willing to pay for your product, if he had a perfect understanding of its actual worth*
John Gourville Harvard Marketing Guru
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$120 $108
$480 $432
$100 $108
Price
Labour Costs
Servicing/Diesel
$700 - $540
- 10%
- 10%
$ 700
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Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
The problem: result = ball dependent Consumers didnt use the ball Worse results, product died
(same idea back as Liquid compact)
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High Price Low Price Price 31 18
Client 60 100
Cost/ Unit 14 10
Net/ unit 17 8
Profit 1020 800
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Bryan Cassady Guest Professor, [email protected]
Our chef's thinking High Price Low Price Likely Best Case
Price 31 18 24.5 54.5
Clients 60 100 80 85
Cost /unit 14 10 12 11.5
Net/ unit 17 8 12.5 13
Profit 1020 800 1000 1105
Differential Pricing High Medium Low Total
Price 31 24.5 16 27.5
Clients 55 25 10 90.0
Cost /unit 11 11 11 11.0
Net/ unit 20 13.5 5 16.5
Profit 1100 337.5 50 1,487.5
Extra points % Increase
Versus likely results 578 63%
Versus maybe scenario 383 26%
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Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Before you start Do you have a product someone wants ? If not, dont waste your time
Bryan Cassady Guest Professor, [email protected]
Facts The new airplane will be competing against Cessnas flagship C172 which has a list price of $300,000. This would be your logical starting price point.
Thoughts Customers look to substitutes for clues on what your product is worth. Even if you have a great product but competitors set their prices unrealistically low, customers will assume your product is worth less.
Substitutes
Competitors
Income
Demand
Environment
Bryan Cassady Guest Professor, [email protected]
Facts Your plane will have a faster cruising speed, a longer cruising range, a faster climb rate and a revolutionary new safety system. Your research suggests these attributes should be worth about $120,000 to purchasers. Your brand, however, is less well known meaning resale value will be affected. Detract $30,000 from the new airplanes value to allow for this.
Thoughts How your product measures up (in terms of attributes) by comparison with your competitors. Customers will look at brand, convenience, quality, service, style and other attributes to evaluate whether your products value is lower or higher. This dictates whether you can charge a premium.
Substitutes
Competitors
Income
Demand
Environment
$300,000
Bryan Cassady Guest Professor, [email protected]
Facts People who purchase your airplanes are able to claim a $25,000 tax break on their federal taxes because this plane features an enhanced safety system.
Thoughts The income level of your products buyers, and whether they have discretionary income or watch every penny. Obviously the higher their income, the more wriggle room you have to increase your margins. Increases in your customers income will also impact their value perceptions
Substitutes
Competitors
Income
Demand
Environment
$300,000
$90,000
Bryan Cassady Guest Professor, [email protected]
Facts To cover increased operational costs, airports have recently raised their landing fees. To compensate for that, most airplane manufacturers are lowering their list prices by $20,000.
Thoughts Changes in the price for related products. For example, the price of gasoline influences the relative value of gas guzzlers. Increases or decreases in the prices of any products which are related to yours will impact noticeably on the perceived value of your product.
Substitutes
Competitors
Income
Demand
Environment
$300,000
$90,000
$25,000
Bryan Cassady Guest Professor, [email protected]
Facts There have recently been some very positive news articles run in major newspapers talking about the benefits of private ownership of airplanes. Its currently considered to be the in thing to do. This should allow you to increase your prices by about $15,000
Thoughts The overall market environment and whether your products value is going to be affected by the arrival of a fad, new information, or other external events beyond your control
Substitutes
Competitors
Income
Demand
Environment
$300,000
$90,000
$25,000
- $20,000
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Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
$5 $6 $7 $8 $9 $10 $11 $12 $13 $14 $15
Potential Price Points
Too Cheap Expensive Too Expensive Bargain
100
Van Westerndorp Output
0
80
60
40
20
Stress Zone
MPC (Marginal Cheap Price) OPP (Optimal Price Point)
IDP (Indifference Price Point)
MEP (Marginal Expensive Price)
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$5 $6 $7 $8 $9 $10 $11 $12 $13 $14 $15
Potential Price Points
40%
20%
0%
Van Westerndorp Output
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Brand A Brand B Brand C
I would not buy any of
these.
Brand A Picture Brand B Picture Brand C Picture No Bells and Whistles Bells and Whistles Bells, no Whistles
Regular Shipping Next Day Delivery Two Day Delivery
No Money Back Guarantee
Money Back Guarantee
Money Back Guarantee
$27.00 $44.00 $35.00
A regression technique - usually multinomial logit -- is used to analyze the model. Even so, a fair amount of analysis can be done using high level data summaries.
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Note: Disguised example. Attributes and measures have been altered.
Select the beverage you would be most likely to purchase at your next visit to a convenience store. If you would not choose any of these, select the none option.
Next
None
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Price
+20%
+15%
+10%
+5%
Current
-5%
-10%
Share of Demand
Elasticity: Rate at which demand falls as price increases.
10% 14% 18% 22% 26% 30% 34% 36%
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Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Consumer surplus Ride 1 at $ 0 price
Price willing to Pay per ride
Demand
0 1 2 3 4 5 6
Number of rides
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Strategic Options Lever Segment Attribute Importance
Price Discount
Smart Consumer
High Income Shopper
Advance Purchase
Smart Consumer
High Income Shopper
Airlines Smart Consumer
High Income Shopper
Restricted Timings
Smart Consumer
High Income Shopper
Magnet
Fence
Proposed Design
Discount Vocation travel Fare
Feature Rationale
50% discount to full fare
Attract price sensitive Smart Consumer segment
1 month advance purchase No ability to
specify airline carriers Weekday
department
Discharge High income Shopper from switching to low price seats
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Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Be Found offers several flexible pricing solutions which are all based on a "no cure no pay" model. For example you may choose to pay for the
qualified visitors who enter your site, a flat fee for every new membership or a percentage of each online sale.
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Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
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Bryan Cassady Guest Professor, [email protected]
One fallacy is the belief that the consumer acts logically in his or her buying decisions.
James P. Nault, Fairmont Foods
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Bryan Cassady Guest Professor, [email protected]
Source: Dickson & Sawyer (1990)
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Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
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Bryan Cassady Guest Professor, [email protected]
$ 9.95 Shipping and handling = their profit Question: Why does it work
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i
iii
ii
iv
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Bryan Cassady Guest Professor, [email protected]
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Bryan Cassady Guest Professor, [email protected]
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I offered to pay 0
They then processed my order
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Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Note Best Selling album in 2008 4 million copies
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Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
A less-than-optimal "configuration" of product or service attributes and benefits is selected.
Lack of a strong sustainable position in the market
Marketers fall in love with a product no one else loves
The marketing plan for the new product or service is not well implemented in the real world.
Marketers assess the marketing climate inadequately. The plan is too complicated
A failure to ask the right questions and a belief that everything is a big idea No Support to get things done
A questionable pricing strategy is implemented. A weak positioning strategy is used.
Cannibalization underestimated The advertising campaign generates an insufficient level of new product/new service awareness.
Over-optimism about the marketing plan leads to a forecast that cannot be sustained in the real world. Too focused on the internal game not enough on the market The Lemming effect
Bryan Cassady Guest Professor, [email protected]
0
1
2
3
4
5
6
7
8
9
10
utilities mortgage credit cards internet pension savings telephone personal loans
insurance
Lowest chance of success
Highest chance of success
Bryan Cassady Guest Professor, [email protected]
0
1
2
3
4
5
6
7
8
9
10
utilities mortgage credit cards internet pension savings telephone personal loans
insurance
Lowest chance of success
Highest chance of success
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Group 2 3 4 5 6 8 9 Total Utilities 55 69 77 106 42 76 49 72
Credit cards 136 149 85 45 52 53 72 86
Mortgage 96 43 44 144 106 101 79 89
Pension 98 79 81 58 111 113 109 94
Internet 67 51 181 96 98 129 93 102
Savings 128 113 111 125 85 102 83 106
Telephone 75 98 135 75 163 105 136 111
Personal loans 114 132 79 141 129 78 144 114
Insurance 133 177 100 109 130 144 136 129
Correlations Group 0.42 0.58 0.50 0.48 0.40 0.40 0.34 0.45
Class 0.17 0.32 0.13 0.12 0.36 0.22 0.35 0.24
Bryan Cassady Guest Professor, [email protected]
Group 2 3 4 5 6 8 9 Total Utilities 55 69 77 106 42 76 49 72
Credit cards 136 149 85 45 52 53 72 86
Mortgage 96 43 44 144 106 101 79 89
Pension 98 79 81 58 111 113 109 94
Internet 67 51 181 96 98 129 93 102
Savings 128 113 111 125 85 102 83 106
Telephone 75 98 135 75 163 105 136 111
Personal loans 114 132 79 141 129 78 144 114
Insurance 133 177 100 109 130 144 136 129
Correlations Group 0.42 0.58 0.50 0.48 0.40 0.40 0.34 0.45
Class 0.17 0.32 0.13 0.12 0.36 0.22 0.35 0.24
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* Not accurate, but for description
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Number of hits on website 1.4
Number of books sold in the U.S. 1.5
Telephone calls received 1.22
Magnitude of earthquakes 2.8
Diameter of moon craters 2.14
Intensity of solar flares 0.8
Intensity of wars 0.8
Net worth of Americans 1.1
Number of persons per family name 1
Population of U.S. cities 1.3
Market moves 3 (or lower)
Company sizes 1.5
Exceedance = breaking point = 250K Exponent = power = 1.5
Num Books Sales
0 16,000,000
0 8,000,000
0 4,000,000
3 2,000,000
A 12 1,000,000
64 500,000
Given 96 250,000
272 125,000
2,172 62,500
B 49,152 31,250
3,145,728 15,625
569,437,594 7,813
291,552,047,998 3,906
Calculations
A 96/((1,000,000/250,000)^-1.5)
B 96* ((250,000/31,250))^1.5)
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Exponent Share of the top 1% Share of the top 20%
1 99.99% 99.99%
1.1 66% 86%
1.2 47% 76%
1.3 34% 69%
1.4 27% 63%
1.5 22% 58%
2 10% 45%
2.5 6% 38%
3 4.6% 34%
* Clearly, you do not observe 100 percent in a finite sample.
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Investment Investment Return ROI Cum invest Cum return Cum ROI 1 100 2000 2000% 100 2000 2000% 2 100 150 150% 200 2150 1075% 3 100 100 100% 300 2250 750% 4 100 100 100% 400 2350 588% 5 100 50 50% 500 2400 480% 6 100 50 50% 600 2450 408% 7 100 25 25% 700 2475 354% 8 100 25 25% 800 2500 313% 9 100 10 10% 900 2510 279% 10 100 10 10% 1000 2520 252% 11 100 5 5% 1100 2525 230% 12 100 4 4% 1200 2529 211% 13 100 3 3% 1300 2532 195% 14 100 2 2% 1400 2534 181% 15 100 1 1% 1500 2535 169% 16 100 1 1% 1600 2536 159% 17 100 1 1% 1700 2537 149% 18 100 0 0% 1800 2537 141% 19 100 0 0% 1900 2537 134% 20 100 0 0% 2000 2537 127%
Totals 2000 2537 127%
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0%
500%
1000%
1500%
2000%
2500%
0%
500%
1000%
1500%
2000%
2500%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Cumulative ROI
ROI
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Output Output Output
20.0% 80.0%
*20%
36.0% 64.0%
*20%
48.8% 51.2%
20.0% 51.2%
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Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
For each of the following ten items, provide a low and high guess such that you are 90 percent sure the correct answer falls between the two. Your challenge is to be neither too narrow (i.e., overconfident) nor too wide (i.e., underconfident). If you successfully meet this challenge you should have 10 percent misses that is, exactly one miss.
Low High Correct
1. Martin Luther King's age at death _________ _________ _________
2. Length of the Nile River (km) _________ _________ _________
3. Number of countries that are members of OPEC _________ _________ _________
4. Number of books in the Old Testament _________ _________ _________
5. Diameter of the moon (km) _________ _________ _________
6. Weight of an empty Boeing 747 (kg) _________ _________ _________
7. Year in which Wolfgang Amadeus Mozart was born _________ _________ _________
8. Gestation period (in days) of an Asian elephant _________ _________ _________
9. Air distance from London to Tokyo _________ _________ _________
10.Deepest (known) point in the ocean (meters) _________ _________ _________
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PERCENTAGE OF MISSES
Type of People Tested Type of Question Asked Ideal Target Actually Observed
Harvard MBAs Trivia facts 2% 46%
Employees of a chemical company
Chemical industry and company - specific facts
10% 50%
50% 79%
Managers of a computer Co. General business facts Company - specific facts 5% 80%
5% 58%
Physicians Probability that a patient has pneumonia 0-20% 82%
Physicists Scientific estimates like the speed of light 32% 41%
(Source: Gary Larson, The Farside Gallery Chronicle Publishing Co.,1980)
What do you mean Your guess is as good as mine? My guess is a hell of a lot better than your guess!
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Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
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Bryan Cassady Guest Professor, [email protected]
2 out of 10 real differences, the rest statistically significant
Yes
Yes
Source: New products what separates winners from losers Cooper & Kleinschmidt
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40
60
50
30
20
10
0
True accuracy
Part 1
Estimated accuracy
Amount of case study read by subjects
Part 2 Part4 Part 3
Per
cent
age
of q
uest
ions
cor
rect
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Items of information available to handicappers
40 5 20 10
40%
20%
10%
30% Confidence Does Increase
Accuracy Does Not Increase
Perf
orm
ance
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Actu
al p
roba
bilit
y
Predicted probability (confidence)
Medical Diagnoses
Weather forecasts
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Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
The British were sinking many German subs.
The assumptions: Codes could not be broken
It must be a leak
The right Q: How could they have broken our code
A false code released just in code could have tested the assumption and might have changed the way
It is now 2 years after the launch, Beatthatquote has failed
Why did it fail
Just asking the question Youll get more ideas (about 50% more on average)
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Be humble 1
2
3 Look at the big picture
4
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For a good introduction see The Fifth Discipline, Peter Senge
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Turn knob Measure Change
Filling a glass of water
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Soviet Arms Threat to Americans Need to Build
US Arms
US Arms Threat to Soviets Need to Build USSR Arms
USSR Arms
Threat To Soviets
US Arms
Need To Build US Arms
Threat To Americas
Need to build USSR ARMS
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Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Number of visits
Experience
Partner sites
Number of leads
Client conversion costs
Quality of Leads
What clients will pay
Type of clients
Repeat Visits
Page visits Trust
Bryan Cassady Guest Professor, [email protected]
Number of visits
Experience
Partner sites
Number of leads
Client conversion costs
Quality of Leads
What clients will pay
Type of clients
Repeat Visits
Page visits Trust
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Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Issues Can we increase
profitability with a new production process?
Sub-Issues Will it reduce our costs?
Sub-Issues Can our organization
implement the changes?
Sub-Issues Will our quality level fall
while making the changeover?
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Bryan Cassady Guest Professor, [email protected]
Events
Patterns
Structures
**Mckinscy&Company
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Bryan Cassady Guest Professor, [email protected]
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Look at the big picture
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Key word_ English UK num
Key_Word_ NL BE num NL num
loan 7.87 4,090,000 lening 7.1 49,500 7.23 90,500
home mortgage 7.31 60,500 hypotheek 6.04 18,100 3.21 260
mortgage 11.72 5,000,000 hypotheek 6.04 18,100 3.21 450,000
Cost per click
Searches per month
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Key word_ English UK num
Key_Word_ NL BE num NL num
loan 7.87 4,090,000 lening 7.1 49,500 7.23 90,500
home mortgage 7.31 60,500 hypotheek 6.04 18,100 3.21 260
mortgage 11.72 5,000,000 hypotheek 6.04 18,100 3.21 450,000
Belgium Netherlands Data from google adwords Are Belgian consumers really less interested ? If yes, why is the price higher than the Netherlands ? Are they searching in a different way (eg. Using google.nl instead of google.be) Do you believe the numbers ?
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Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Secondary source
Data
Calculation Result
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Belgium Mortage New House
Households 4,000,000.00
% Move/ year 0.08
Total Movers 320000
Renters 0.4
Net 192000
% take loan 0.75
Market Size 144000
Re-mortgage
Households 4000000
% second mortage 0.04
Market Size 160000
Total Market 304000
Avg. Value of a new loan 5000
Market Value 1,520,000,000.00
Available market
Total Loans 304,000
% Internet 60%
% would use internet 50%
Available market 91,200
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Registered Minivans Dodge Caravans 120,000
Ford Windstars 20,000 Toyota Sienas 8,000 Total Market Size 148,000
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Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Costs of production Number Fixed Costs First 50 K After 50 K Total Costs Avg. Cost 25,000.00 100,000 150 40 3,850,000 154.0
50,000.00 100,000 150 40 7,600,000 152.0
75,000.00 100,000 150 40 8,600,000 114.7
100,000.00 100,000 150 40 9,600,000 96.0
125,000.00 100,000 150 40 10,600,000 84.8
150,000.00 100,000 150 40 11,600,000 77.3
175,000.00 100,000 150 40 12,600,000 72.0
200,000.00 100,000 150 40 13,600,000 68.0
225,000.00 100,000 150 40 14,600,110 64.9
250,000.00 100,000 150 40 15,600,220 62.4
275,000.00 100,000 150 40 16,600,330 60.4
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At companies like P&G, brand managers are trained hard to stay in touch with their gut feelings
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Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
A less-than-optimal "configuration" of product or service attributes and benefits is selected.
Lack of a strong sustainable position in the market
Marketers fall in love with a product no one else loves
The marketing plan for the new product or service is not well implemented in the real world.
Marketers assess the marketing climate inadequately. The plan is too complicated
A failure to ask the right questions and a belief that everything is a big idea No Support to get things done
A questionable pricing strategy is implemented. A weak positioning strategy is used.
Cannibalization underestimated The advertising campaign generates an insufficient level of new product/new service awareness.
Over-optimism about the marketing plan leads to a forecast that cannot be sustained in the real world. Too focused on the internal game not enough on the market The Lemming effect
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Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
- Startup firm
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Bryan Cassady Guest Professor, [email protected]
Convert the value proposition into a market offering
Inbound Product Development
Outbound Product Marketing
Take the offering and the value message to market
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Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Outbound/Tactical Outbound-heavy role Understanding of product Understanding of vertical markets Less authority and direct influence Ability to manage interfaces Ability to communicate internally
Inbound/Strategic Inbound-heavy role Close interaction with engineering Defining target markets Generating customer wins Broad authority and influence Ability to think strategically
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Market requirements Positioning framework
Product launches List pricing/SKUs
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Product Manager Influence (1-None, 10- Complete)
Defining Product Specifications 7.23 Managing Product Releases 6.96 Product Positioning 6.93 Product Upgrade Decisions 6.28 Managing Launch Events 6.44 Product Pricing 6.28 Product Packaging/SKU Decisions 6.31 Customer Segmentation 5.62 Consumer Promotions 5.48 Channel and Partner Promotions 5.15 Product Advertising 5.26 Channel Selection 4.78 Corporate Branding & Advertising 4.46
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Product Development
Product Conception
Product Launch
Product Sustaining
Responsibilities: Market research Target market definition Competitive analysis Positioning Market Requirement
Forecasts
Interfaces: Customers Research firms Engineering Finance Sales
Responsibilities: Refine market
requirements Customer research Trade-off schedule
vs. features
Interfaces: Engineering Customers Partners
Responsibilities: Product introduction plan Customer demos Refined forecasts Sales training Press kits Trade shows Events
collateral Promotion/Advertising BOM/Inventory
Responsibilities: Sales training Customer promotions Trade promotions Product updates Next version planning
Interfaces: Customers Engineering Tech support Sales Partners
Interfaces: Customers Sales Analysts Press Engineering Finance Tech support
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Bryan Cassady Guest Professor, [email protected]
Yes No Product Revenues 62.2% 37.8%
Product Profitability 61.5% 38.5%
Market Share 46.9% 53.1%
Customer Satisfaction 19.7% 80.3%
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Bryan Cassady Guest Professor, [email protected]
Business Knowledge
Business Knowledge
Business Knowledge
Business Knowledge
Business Knowledge
What it does What it needs to do Product functionality Product roadmap Product architecture Core technology Product bugs/gaps Product usability Complementary products Competing products
Who - Customer segments Why - Customer needs Where End-use scenarios How often Usage levels Why not Usage barriers Who else Customer DMU How Customer DMP Purchase drivers Upgrade drivers Installation experience Usage experience Customization experience Support experience Upgrade experience Partner/VAR experience Unmet needs Known product problems Known service problems Brand/company image Customer satisfaction
Key demand trends (by segment)
Key technology trends Key alliances/partnerships Competitive products Competitors motivations Potential competitors Strengths/weaknesses
(company) Strengths/weaknesses
(product) Strengths/weaknesses
(partners) Strengths/weaknesses
(brand)
Customer insight process MRD development process Product planning process Budgeting process Product development
process Product testing process Product launch process Partner management
process
Company values Company vision/strategy Company image/brand Vision of the business Goals of the business
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Importance (10 point scale) Customer knowledge 8.81
Product knowledge 8.65
Competitor knowledge 8.21
Company business knowledge 8.00
Macro environmental knowledge 7.61
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
+/- 20% 20-30%
+/- 20% +/- 40%
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Important ! What you know dont know might be less important
than what dont know you dont know
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Bryan Cassady Guest Professor, [email protected]
Important: remember we tend to over-estimate our capabilities I wouldnt invest in this business
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Group Group
Prediction Score
Group Size Worse Percentile Number Correct Group
Number Indiv. Avg
9 1 5 4 20% 7 4.4
1 1 9 8 11% 5 3.0
4 2 9 7 22% 5 3.2
10 3 7 4 43% 4 2.8
5 4 8 4 50% 4 3.0
2 4 5 1 80% 4 3.0
7 6 7 1 86% 4 4.4
8 3 8 5 38% 3 1.6
6 5 8 3 63% 3 2.9
3 7 8 1 88% 2 2.6
50%
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Bryan Cassady Guest Professor, [email protected]
Statement of Purpose
An introductory sentence that concisely and succinctly states the reason for the recommendation. Provides a context for the memo as a whole
Background
Factual analysis That connects the purpose of the memo to the strategic objectives of the company or the brand. Also provides facts in relation to the problem recommendation Is supposed to address.
Rationale
The reasons for the recommendation, and the logic by which the recommendation was reached.
Recommandation
The specific proposal on how to solve the problem or exploit the opportunity detailed in the background section.
Discussion
Details of the recommendation, anticipated questions or areas of concern, risk assessment, identification of other alternatives, details of the recommendation.
Next Steps
Who will be following through on the recommendation, what target dates they would be working towards, what actions they would be taking to execute the recommendation
Supporting Exhibits
Other supplementary information as appropriate.
Bryan Cassady Guest Professor, [email protected]
(not looking for an answer but how to find the answer)
Is there a market for high priced (very effective) loan leads in Belgium
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Note; if you want to make this east, think about how an advertisement is put together. Hook, Product (in your case your Reco) Benefit, Reason Why, Next steps.
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