Customer-centric Market Entry of an Innovative Product/Service Pia Kähärä 5.6.2013

Customer-centric Market Entry of an Innovative Product/Service

Pia Kähärä 5.6.2013

© 2013 Sarus Oy / © 2013 facts & figures

Agenda

Innovations – Where to Start?

Productization – Value of Customer Centricity

Going International – Opportunity to Expand Your

Markets

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What prevents Finnish hi-tech companies from succeeding

Finnish Linked in group” Finnish High-Tech Start up –community” defines their main challenges as follows: 1. Lack of marketing thinking, too much emphasis on

engineering knowledge and technology2. Lack of financial capital (resources) to reach the marketing

targets3. Lack of knowledge on international markets: different

habits and cultures4. Finnish cultural deficiencies: cautiousness, unwillingness to

take risks, fear of failure

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“Startups need knowledge and networks often more than funding”

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What is innovation

”Development of new values through solutions

1. that meet new requirements, inarticulate needs or 2. old customer and market needs in value adding

new ways”. - Wikipedia

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Innovation vs. invention

Motivation is the differentiator:

• Innovation = Making money with ideas

• Invention = Making ideas against payment (R&D)

» by Fredrik Hacklin, ETH Corporate Innovation Lab, Zuerich, Switzerland

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Innovativeness and fast commercialization is possible when..

• all staff members work as entrepreneurs• the best effort is given by everyone for

developing an invention to an innovation• networking is extended outside the

organization: dare to take risks– cooperation between startups and large

corporations is enabled

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How to create a fertile environment for innovations?

1. Minimize hierarchies and bureaucracy.2. Dare to fail.3. Step outside your comfort zone.4. Let passion of your staff flourish.5. Be open-minded about who can have

creative ideas e.g.– Senior staff members– Ex-entrepreneurs…

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Involve customers at early development stage

Key Questions:

• Which problem of the customer does your innovation solve? • Do you understand, which factors would make your potential customers to

replace their existing solution to that problem with your solution?

Communicate the REAL VALUE for customer

The potential customer wants to understand, how your solution: 1. saves them money2. makes them money3. takes away their headache

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Ensure the business potential and competitiveness of your solution

Inventor:”I WANT TO

SELL MY INNOVATIVE PRODUCT”

Market Demand, Customer

Needs

Feedback about

technical/service ability of

your innovative product

Customer: ” I HAVE A PROBLEM”


Agile productization

Productization is the process of transitioning an R&D project into a product ready for volume manufacturing.

1. Use simple methods and tools2. Test and adapt to the market response3. Keep it fast & swift 4. Focus on functionality instead of extensive documentation5. Keep the customer involved in the R&D throughout the project6. Concentrate on simple milestones rather than mega long projects 7. Is completed by motivated individuals

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Customer 3

Customer 2

Customer 1

Productization and core product

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Productization

Core Product

PricingFinancing

DistributionPackaging

StoryEasiness to buy

Added value

Why test the market?

To gain…• understanding of your business potential in the

new target market• insight for competiveness of your offering by

direct feedback from potential customers and partners (e.g. your product/service concept and technical features)

• support for your business decisions



Study the market demand

You need to do:• Target market environment analysis• Competitor & partner information gathering• Qualitative interviews with key customer segments and potential

partners

You get important information to build your:• Product/service concept to meet the target market requirements• Positioning strategy• Go-to-market strategy • Service model plan

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Conduct pilot testing

… for analyzing the usability/functionality of an existing product/service You need to do:• Find a pilot testing partner for technical validity of your solution (e.g.

potential customer or unbiased testing authority)• Collect and analyze the results

You get important information to meet the customer needs and technical requirements of your product/service:• Required market entry data to support R&D and usability work• Tools and customer feedback to design/adapt the product/service to

target market

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Case: ERP as a SaaS service for small HVAC, electrician and plumbing companies

Terms:

• ERP = Enterprise Resource Planning System which collects all functions of the company into one operational system in real time: offers, billing, purchasing, customer and project management, book keeping, salaries, material handling, banking information, automated reporting for the management of the company etc.

• HVAC = heating, ventilation, air conditioning

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• Background: – usually ERPs are available for large companies– conventional ERP usage requires experience users and technical

support inside the company – ERPs are too big investments for small companies– Small companies do not have resources either to implement or use

them effectively, but they have many separate systems which do not give them management reports in real time - in project business the profitability information of the projects is calculated afterwards

– Small companies do not have systems that give them good enough reports for making good business decisions

10.2.2013© 2013 Sarus Oy / © 2013 facts & figures


• Solution: – To develop an lighter and modular service with simple and easy-to-use

user interface as SaaS service to meet the need of the targe group (using Microsoft Dynamics Nav as an engine)

– Features and holistic approach that bigger companies get available for even the smallest companies

– Maximum automation of functions, eg.billing, means less work– Access from everywhere, also by mobile phone



• Customer centric-approach for R&D:

Interviews of about 3000 end-customers from different groups by phone simultaneously when developing the features and modules

20 minutes interviews about their operations at the moment: • Different company sizes: from 1-5 people, 6-10, 11-20, 21-50, 50 -• How they operate now in billing, purchasing, project management, reports they get

for steering the business• What is their existing system /which different systems they use• What are their problems with existing systems: which functions does their basic

systems include (sales billing, purcase bills, offers, real time project management, salary management, bookkeeping reports etc.)

• When do they plan to change the system

Joint working: marketing + R&D



• Outcome: in-depth understanding of the customer problems and needs– Possibility to develop a system for the real needs of the end-customers– Possibility to segment the market to sub-groups– Understanding of the competitors– Possibility to concentrate in R&D work for the functions that provide

help for the customers’ most acute problems– Potential customers list for the future work– Possibility to create marketing messages that address the real needs of

the customers:

How we can help you to save money, make money, remove extra work from you…



• Outcome:– Pilot testing companies found and involved in an early

stage od product/service development

Possibility to improve the already existing service better by getting early customer feedback

Faster development process, earlier commercial income



Market entry: Internationalization

Same basic rules apply as in domestic market entry

But, cultures and markets are different e.g.– Communication culture– Political environment– Geographics– Purchasing behaviour and habits

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Requirements for internationalization – general rules

Needed and Must in internationalization:• Product portfolio competitiveness at home territory• Marketing resources (physical, financial, knowledge)• Going abroad decision (strategy, commitment)

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It would be beneficial for exporting company to have had several years of experience in the domestic market. The Products, Systems or Services must be ready for export.

The typical export company has sufficient resources to carry out expanded sales activities in foreign markets and is committed to devoting resources towards the growth of their exports.


Six steps internationalization process (things to study -> decisions to make)

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1. Readiness analysis -> internationalization

2.Environment -> customer segmentation and target groups

3. Customer needs -> demand – supply, support and partner profiles

4. Distribution methods and partners applicability -> strategy, partnerships and logistics

5. Requirement for sales and marketing (demonstration, presentation, promotion) and proposal suggestions -> contract

6. Need for partner/customer support -> continuous support

BRANDING: Integrated marketing

communications

To whom?

With which products/services?

To which markets?

CUSTOMER: Purchasing decision

R&D

Production

Distribution

Marketing communication

Sales, customer service

Which goals?

Resellers/partnersAt which price?

Uni

que

cust

omer

pro

mis

e an

d co

ncep

t

Marketing decisions

© 2013 Sarus Oy / © 2013 facts & figures 10.2.2013


Market Entry: Study Target Market Factors

• Demand / potential• End-user behaviour, preferences • Competition• Sales/distribution channels • Stakeholders• Barriers of entry etc.

Communicate the right things!

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A good company presentation and communication include:

1. Description of a typical problem or the customer's situation, which the product or service is intended to solve

2. A brief description of your solution (what it does). 3. Benefits of your service/product (not only the features, technical

details)4. Proof and examples: why a customer should believe your claims 5. Your service/product price.6. Service/product delivery content. 7. How your service/product can be purchased? 8. Reference(- s) (clients, projects) of previous orders.‐ 9. Illustrative charts or diagrams to support your message.10. Pictures of your product/service.

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Success Factors for international, customer-centric market entry

1. Thoroughly completed market research to support decision making2. Clear goal setting for sales, marketing and distribution channels3. Customer-centric packaging/productization of product or service 4. Branding, which stands out of the mass: be different, be

interesting, be valuable for your customers5. Elevator pitch: crystallization of value-adds for customers6. Focused sales and customer service skills and attitude7. Language skills and culture sensitivity: appreciation and

acceptance of different business culture styles8. Proactivity and systematic end-customer and distributor

cooperation9. Sufficient resources and distribution of tasks and responsibilities

for own staff10. Perseverance no matter what!

Sarus Ltd

• offers sales, marketing and coaching/training services

• works with companies who want to begin exports/achieve growth in Finland and Europe, Kazakhstan, Russia and the other CIS countries.

• uses concrete actions to help companies to build an effective framework for profitable sales



Sarus services: consulting, operational work, coaching, training

• Market test drive (market potential testing)• Pilot test drive (pilot testing)• Partner (investors eg.) and potential customer search• Establishing business in Finland: gateway to Europe• Business culture trainings• Various sales and marketing services

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Sarus staff at Your service:

KIITOS!СПАСИБО!

«Кто ни рискует, тот не пьёт шампанского!»

Contact: Pia Kähärä mob. +358 400 193 333

[email protected]

www.sarus.fi

mailto:[email protected]

mailto:[email protected]

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Customer-centric Market Entry of an Innovative Product/Service Pia Kähärä 5.6.2013