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One of the most useful tools I have found for product introduction is the value chain analysis. A value chain analysis lets you map out all of the steps involved in getting a product to market. The chain starts with suppliers and finishes with the end customer. This tool is incredibly helpful in understanding your channels to market, margins along the chain and potential partnering opportunities.

The value chain shows how your product makes its way to the end customer. Secondly, with a bit of research, you can determine the selling prices and margins along each link in the path. Generally speaking the longer the path to the end customer the more links that will be sharing the same revenue. Therefore you will need to make allowances for sharing margins with your partners along the way. The more direct the path the more margin you will have, however, it will also be more work because you tend to be servicing more clients. Finally you need to understand your capabilities. If you are a small company with only a few sales people working with distributors, VAR’s or system integrators probably makes a whole lot of sense than selling direct.

I recall in the pre bubble burst days much hype about 3G technologies and the massiveness of the wireless service provider market. I remember back in 2000 constructing the value chain. While there was a lot of capacity being built in the networks a key piece of the puzzle was missing. Where were the end users? The availability of full function cell phones and PDA’s at the time did not exist. To take advantage of all the capacity being built you would need end customers with the capacity to drive bandwidth requirements. That capacity exists today but in 2000 it did not.

A properly constructed value chain can give you a good understanding or market dynamics and finding the optimal path to the end customer.

Cheers,

Ian Graham

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Daniel Goleman authored the book “Emotional Intelligence” which describes the human brain, its’ functions and EQ(Emotional Quotient). EQ is similar in many respects to IQ, however, EQ is a better determinant in how successful someone will be over the course of their life in relating to others, building and maintaining relationships.

There is a test in the book called the marshmallow test. The marshmallow test is administered to children of about 4 years of age and has been found to be a remarkable predictor in how successful the children will be at establishing and achieving goals. The test is essentially a way of measuring if the child is capable of understanding consequences and delaying gratification for a future reward.

The test starts with the interviewer and the child sitting at a table. The interviewer offers the child a marshmallow that they can have immediately, or if they can wait for 15 minutes they will be rewarded with an extra marshmallow. The interviewer then gets a call and has to leave the room, again explaining that if the child waits for their return they will be rewarded with a second marshmallow, but they are free to have the marshmallow in front of them at anytime. If they do take the marshmallow in front of them they will not get the second marshmallow, if they wait they will be rewarded with two.

This simple test has been a great predictor in determining how successful children will be in later life. Those children that are able to understand the concept of delayed gratification, and wait for the second marshmallow, tend to be more goal oriented. The Children that act impulsively and eat the first marshmallow tend to be impulsive with less understanding
of future reward.

Cheers,

Ian Graham

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Clash of the Titans Part II (Financial Round)   

As promised I have done some more research regarding the Bell versus Rogers battle. This post will be dedicated to a comparison of how the two fare from 2002 to 2005 on the financial front. Before I start the post I thought it important to declare my bias with respect to the Rogers and Bell. A pet peeve of mine is authors that pretend to be objective, when in fact they are biased. This was particularly troubling during the recent municipal elections. Many authors for the Ottawa Citizen wrote supposedly objective articles about the mayoral candidates while in fact being biased one way or the other. Therefore I wanted to state upfront that I like Rogers as a company and think Bell has to implement some significant changes to remain competitive. That being said I will endeavour to maintain objectivity while letting the facts speak for themselves.    I have also given some thought on how to structure the posts. 1)     Financial comparison 

2)     Subscriber Metrics (Wireless, Internet, Landline, Long Distance, total #, ARPU, OEPU, Churn, Retention) 

3)     Marketing Strategy, spend and results (COA,) 4)     Organizational structure 5)     Other stuff as I think of it   

If you have any topic you would like to see added to this series of posts please feel free to add a comment or send me a note    ian.graham @ klondikeconsulting.com spaces added for anti spam purposes.   Today’s post is related to financial metrics with respect to revenue and efficiency.   

Sales in millions 2002 - 2005 -        

Most of the material you find regarding competitive intelligence is related to how teams from large enterprise can go about monitoring the competition. The tack on this blog is geared more toward the individual entrepreneur or start-up business. The key differences, in my opinion between the entrepreneur and small business versus the large enterprise are; availability of resources (people, money), time and sources of information. Large enterprises typically have teams of people with budgets for procuring information and canned reports, entrepreneurs and small business typically have the founders doing research with very limited financial resources. Large enterprise tend to operate in more mature and slower moving markets, entrepreneurs are investigating opportunities in emerging or niche markets that are time sensitive. The key constraints on the entrepreneur are limited research resources, limited time and limited budget. These posts will take the perspective of the entrepreneur. 

  

It is important to keep in mind that competitive intelligence is a cyclic process of planning, gathering, analysing and communicating information. Establishing time frames for each of the phases in the competitive intelligence cycle is important to a successful project. Once you know how much time you have for the overall process you need to allocate time for the individual phases of the cycle. A recommended allocation of time for the competitive intelligence process follows; Planning 10% - 15%, Gathering 30% - 40%, Analysis 30% - 40% and Communication 10% - 15%. Remember the outcome of the competitive intelligence process is to make an informed decision and possibly a risk assessment based on your original objectives as determined in the planning phase. 

  

The two most common pitfalls in the competitive intelligence process are data overload (stuck in data gathering phase) and paralysis by analysis (stuck in analysis phase). This is why it is so important to put time frames for each phase. One could probably make a career of gathering data or generating new charts and graphs, however, keep in mind that the desired outcome of the process is a decision not reams of data or lots of charts and graphs. The 20/80 rule applies to both data gathering and analysis, you will probably obtain your most valuable information early in the cycle and while continuing to search will yield useful information the value in the decision making process will be minimal. 

  

Before you start gathering information make sure that you have clearly defined objectives. Competitive Intelligence objective include, but are not limited to, competitors business models, competitors pricing information, competitors product technical specifications, competitors distribution model (suppliers, partners, distributors) and the competitors promotional resources. The planning phase should take 10% to 15% of the overall competitive intelligence cycle. Proper planning adds focus to the entire cycle. 

  

My next post will be related to the competitive intelligence data-gathering phase. 

  

Cheers, 

  

Ian Graham

 

 

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A friend and  VP of Sales and Marketing explained his views on marketing collateral and the importance of considering marketing looks in the design process. In my opinion the same principles apply to websites and print ads.
 
A customer looking at an ad, collateral or website will give one to three looks. The three looks are:
 
-         2 second look,  (Attention)
-         20 second look and (Interest)
-         2 minute look (Desire)
 
The 2-second look is a quick glance at the head line picture or whatever and you need to capture the client’s attention. The goal of the 2-second look is to capture the target audience’s attention. If you pass the 2-second look you move on to the 20 second look. If you fail the 2-second look and do not get the attention of the target audience, that’s it, you’re done, game over.
 
The 20-second look should be a bit more detail to capture the target audience interest. Bullet form points are good for this because they can be easily read and quickly convey valuable information. The goal of the 20-second look is to have the target audience interested enough to want to read your copy and learn more about your product or service. Again if you fail the 20-second look and do not create interest that is it, game over, you are done.
 
If you make it to the 2 minute look that is good it means you have gained the target audiences attention and they want to learn more. The 2-minute look is usually some copy that describes at a reasonable level of detail more about your product or service. The goal of the 2-minute look should be to create a call to action for the target audience and generate a lead. The call to action should be how to contact you, an email address, a telephone number, a website URL or your physical location. The more interactive your call to action, the better the opportunity to warm the lead and convert it to a sale.
 
I have found that when you consider the marketing looks it helps you to develop more effective and targeted marketing material.
 
Cheers,
 
Ian Graham