Check out Luckin’s business model (China) and imagine opening coffee shops like this business model in Manhattan.The name of the new coffee shop is “Smart Coffee”, please read the uploaded class file then finish following questions.1.List out your Beachhead Market + End-User Profile. ( already in the word doc)2.Determine your DMU(s) and potential influencers of your product surrounding your beachhead.3.What is your selling process if a customer inquires about your product? Describe the steps.4.List your 15+ sources at the end titled “Bibliography” in MLA(modern language association 8th edition) format.
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Capstone: A Business Plan – Session 6
Jay Taparia, CFA, Integrated Marketing, NYU SPS
Concept Review | The Decision Making Unit (DMU) | The Selling Process
Our Agenda
1. How to Study for Midterm
2. Concept Review
3. The Decision Making Unit (DMU)
4. The Selling Process
2
How to Prepare for Midterm
1. How to Study for Your Midterm Exam
a.
b.
c.
d.
e.
Compile all notes from readings and handouts from NYU Classes.
Find a quiet spot to merge all content together with food and drink supply handy.
As you write and compile, you will naturally learn the content.
Once you have finished, lock yourself in conference room and talk it out loud.
Then potentially get a group of classmates together to talk out content.
2. What to Study for Your Midterm Exam
a.
b.
c.
d.
e.
Learn all the steps of entrepreneurship and market research of a target audience.
Includes segmentation, beachhead, TAM SAM SOM, end-user profile, VP, etc. etc.
Also review life cycle, proposition statements, and competitive analysis concepts.
Don’t forget about industry analysis.
Review how do you position your product and design your business model.
3
I. Concept Review
A review of key concepts and what we have learned so far!
Design Everything Around the Customer
Push Marketing
Pull Marketing
Promotion
Promotion
Customer
Customer
Product
Product
5
The million dollar question is:
who is your customer?
6
Calculate Total Addressable Market
1. Figure out the size of the total
industry or total demand for the
product and its growth rate. This is
your TAM.
2. The TAM is the amount of annual
revenue, expressed in dollars per
year, your business would earn if you
achieved 100% market share.
3. Use the End User Profile which is
your beachhead market to
determine the size of your SAM.
4. Your SOM is the target market
share you wish to acquire by year
3. This will eventually be reflected in
your financial forecast.
7
Think about the Customer’s Lifestyle
1. Where are the customer’s senses being used?
a.
b.
c.
d.
e.
What do they read?
Where do they hangout?
What are their hobbies?
What do they wear?
What are their favorite foods?
2. Where is the customer when they think of your product?
a.
b.
c.
d.
This is why you see every product ad on the subway, right?
If you are marketing to older people, do not use social media!
If you are marketing to kids, then focus on what parents go through.
If you are marketing to Gen Y and Z, good luck! They are fickle!
3. Build marketing plan around touch points.
a. Example: Sports Travel Agency.
b. Example: Financial Services Industry.
8
Create Full Life Cycle Flowchart
1. Also known as Customer Discovery, the full life cycle asks:
a.
b.
c.
d.
e.
f.
g.
How end users will decide they have a need for your product.
How they will find out about your product.
How they will analyze your product.
How they will acquire your product.
How they will use your product.
How they will receive support for your product.
How they will buy more product and/or spread awareness.
2. Create a visual representation (a long outline of each step or
big boxes in a large flowchart) of the full life cycle of your
product to see how the product will fit into the customer’s
needs and what barriers to purchase might arise.
9
Create Your Value Proposition
1. Positioning Statement: To [ audience ], [ your brand ] is the brand
of [category ] that offers them [ benefit ] because [ vision ].
2. A more useful definition of value proposition is “a believable
collection of the most persuasive reasons people should notice you
and take the action you’re asking for.”
10
What Is Industry Analysis?
1. A process involving several frameworks of analysis to help
gauge the state of the industry and its growth rate.
2. Gives analysts benchmarks of what to expect as industry
changes, grows, evolves, or transforms.
3. Helps extract a growth rate for financial statement forecasting
on the companies within that industry.
4. Helps understand current and future competitors of the
industry.
11
The Industry Life Cycle
12
Other Influences on Industry
Technological
Influences
• The Internet
• Digital imaging
Demographic
Influences
• Baby Boomer generation
• Aging populations
Governmental
Influences
• Tax issues / government spending
• Regulation
Social Influences
• Changes in tobacco consumption
• Women in the workforce
13
Porter’s 5 Competitive Forces
14
Identifying Competitors
1. Firms not in the industry but who could overcome entry
barriers particularly cheaply
2. Firms for whom there is obvious synergy from being in the
industry
3. Firms for whom competing in the industry is an obvious
extension of the corporate strategy
4. Customers or suppliers who may integrate backward or
forward
15
Defining Your Core
1. Your Core is defined as the skills and strengths that you have,
but your competitors do not. These skills / strengths are what
you will protect no matter what, and will continually develop and
enhance over time.
2. Once you agree on a Core, it should not change without a great
deal of thought; instead, you should continually make your Core
stronger. If it changes often, this is a bad sign because it means
you are likely not building it effectively.
3. Examples:
a.
b.
c.
d.
Network Effect – easily spreads via word-of-mouth – WeChat
Customer Service – induces huge satisfaction – Nordstrom
Lowest Cost – very efficient operations – Wal-Mart
User Experience – enjoying / easy to operate – BMW, Apple
16
Example #1 of Competitive Position
17
II. The Decision-Making Unit (DMU)
Who is the final decision-maker or influencer in buying decision?
Determine the Customer’s DMU
1. Your target customer always has a decision-making unit
(DMU) of one or more persons.
a. If you target children / teenagers, your DMU are their parents.
b. If you target corporations, then your DMU is the CFO.
c. If you target government, your DMU is a committee.
2. DMU’s can influence, veto, or be the ones receiving your
goods or service. They are your allies in the sales process.
To successfully sell the product to the customer, you will need to
understand who makes the ultimate decision to purchase, as
well as who influences that decision.
19
Every Beachhead has a DMU
1. Your target customer almost surely has a decision-making group
of more than one person.
2. Understanding this group and explicitly mapping out each
person’s role and interest is of critical importance not just for
the sale, but also much earlier in the process when you are
developing the product and all of the attributes.
20
Primary Roles of the DMU
1. Champion: The champion is the person who wants the customer
to purchase the product, typically but necessarily your end user.
2. End User: This is the person who will actually use the product to
create the value.
3. Primary Economic Buyer: This is the primary decision maker, as
everyone else looks to this person to sign off on spending money
to purchase your product.
21
Additional Roles of the DMU
1. Primary and Secondary Influencers: These individuals often
have a depth of experience in the subject matter, and can
influence the rest of the DMU, including the champion and end
user.
2. Person with Veto Power: These individuals have the ability to
reject a purchase for any reason.
3. Purchasing Department: The department handles the logistics
of the purchase.
22
Decision Making Units for B2B and B2C
1. For B2B
a. Your DMU’s role will be more formal and corporate in nature.
b. Roles tend to be by job title, so definitely know your customer.
c. Degree of influence might be affected by strength of personality.
2. For B2C
a.
b.
c.
d.
Your DMU’s role tends to be more informal.
Many roles played by one person.
Your DMU sometimes associated with family or friends.
The DMU typically has influence over kids, teens, and college kids.
23
To successfully sell the product to the customer, you will need
to understand who makes the ultimate decision to
purchase, as well as who influences that decision.
24
DMU Example Process
1. Boyfriend buying perfume for girlfriend on Christmas,
Valentine’s Day or Alibaba’s Single Day.
2. Who is Buyer?
3. Who are Influencers?
4. Who is User?
25
III. The Sales Process
How do you encourage the buy decision for the customer?
Mapping the Sales Process
1. After knowing who will make the decision, it is critical to
know how they will make the decision and what is involved in
each step so that you can design your product to optimize for
this process.
a. Understand the length of the sales cycle
b. Figure out how much you will spend to acquire the customer
c. Identify hidden obstacles that will inhibit your ability to sell your
product and get paid (and make cost to acquire high!)
d. Be able to show your potential leaders and / or investors that you
understand the customer’s buying process, which for many is
prerequisite to investing in your business.
27
Use Full Life Cycle Flowchart as Starting Point
1. How end users will decide they have a need for your product.
2. How they will find out about your product.
3. How they will analyze your product.
4. How they will acquire your product.
5. How they will use your product.
6. How they will receive support for your product.
7. How they will buy more product and/or spread awareness.
28
Mapping the Sales Process
1. For each part of the Life Cycle Process, ask:
a.
b.
c.
d.
e.
Who are the key players from the DMU that will be involved?
What is their influence on the process?
What is their budget authority?
How long will it take to complete each component you identify?
What are the inputs and outputs of this step?
29
Use Full Life Cycle Flowchart as Starting Point
1. How end users will decide they have a need for your product.
2. How they will find out about your product.
3. How they will analyze your product.
4. How they will acquire your product.
5. How they will use your product.
6. How they will receive support for your product.
How does
the DMU
influence
each step of
customer’s
decision?
7. How they will buy more product and/or spread awareness.
Each step requires a separate strategy to appeal to the
customer’s needs and wants. What kind of salesperson? What
kind of training? What key phrases required to say?
30
31
Determining the Process to Acquire a Paying Customer defines
how the DMU decides to buy the product and identifies
obstacles that may hinder your ability to sell your product.
This step makes sure you have identified all of the potential
pitfalls in the sales process.
32
Beachhead Market
The viable market segment for the Smart Coffee firm will be the individuals from the middle and highincome social class. This segment comprises of the people who love coffee and require convenient
service. The target business segment will again get divided into age, gender, and location.
End-User profile
The customers’ profile will include the following;
Gender
Male and Female
Age
18-65 years
Income
$50000-$200000 annually
Education background
High school, Undergraduates, Postgraduate and PHD
Geographic Location
Manhattan
Motivation
Optimization of well-being
Fear
Losing employment
Hero
Technological legendis
Vacation
Hanging out and traveling
Reason for purchasing the product
Help them in blood moving and also make
them feel energized.
Life story
Hardworking backgrounds
Decision making unit
Consumers or Buyers
Value proposition
The coffee store brand would be called “Smart Coffee.” The smart coffee business will help in
addressing the customers’ satisfaction, performance, and convenience towards accessing the refreshment shops.
The company aims to provide quality products that keep the customers’ well-being and performance within the
public domain. It will also increase the consumers’ convenience towards accessing the refreshment shops by
making the products available near the social, learning, and refreshment areas. Excellent coffee products,
favorable prices, convenient service, and excellent locations will be the reasons for customers to choose smart
coffee.
II). Industry Analysis
Based on the Life Cycle Model analysis, Smart Coffee firm is playing in a growth stage with regards to
the available market size alongside the conventional business forces. According to the market size available for
the company performance, the firm experiences a low rivalry since most businesses having the same product
majors their operations within the commercial surroundings. The little competition experienced by the Smart
Coffee firm is due to its establishment within the local settings such as near to the learning institutions, and
social places. The firm is also experiencing high growth since it has several branches within the strategic areas
where the targeted customers can get accessed to the product. However, the buyers of the company product still
get considered weak since the targeted clients are always of low income. They cannot, therefore, purchase the
products in large quantities.
Furthermore, the customers only buy the product for refreshment and brain activation; hence, they
cannot make their purchase frequently. The firm also enjoys low entry barriers to the market since it targets
small and middle-income individuals. It is also because the company product is for refreshment and brain
stimulation; therefore, no restriction provided there is capital available for the start-up. The smart Coffee firm
considers growth ability as the key objective for its performance. Consequently, it gets dedicated to addressing
the customers’ needs and achieving a competitive advantage.
Porter’s 5 Competitive Forces
Porter’s 5 Competitive Forces include industry rivalry, threats of the substitutes, potential entrants,
suppliers, and buyers’ power. Apart from Porter’s 5 Competitive Forces, quality production is another factor to
be considered by the firm. Based on the rivalry among the existing competitors, Smart Coffee firm experiences
a low competition. It is because several companies have not reviewed their establishment within the learning
institutions or social places. Various companies selling coffee products consider their operations within
commercial areas to attract a large group of customers. Based on the threat of new entrants, Smart Coffee firm
is likely to experience higher threats from the new entrants in the long-run. The more top risk gets expected to
occur since there are low entry barriers for the organizations operating within the social and learning
environments. The requirement is only starting capital and a small amount for the government tax.
The smart Coffee firm is likely to experience a threat from the substitute products. Most targeted
customers might consider consuming tea or cocoa as a substitute for coffee, depending on the cost and quality
provided. Therefore, the firm should incorporate both products in the long-run to maintain its customers and
attract more consumers as well. The firm can also experience a threat from the bargaining buyers more so when
coffee substitutes are available within the market. This aspect can force the firm to reduce its product prizes to
maintain the customers.
The bargaining power of the suppliers can also directly influence the firm, especially when the costs of
inputs get increased. The increment can force the firm also to increase the value of its products, which cannot be
well taken by regular clients. However, when Smart Coffee firm maintains its prices despite the increased cost
of inputs, it might experience higher risks of losses on its revenues. Nevertheless, Smart Coffee firm operations
can also become influenced by the quality of products produced for the customers. The competition feature that
is installed by the other market peers determines the quality of the product that the firm should provide.
Two Key Criteria
The two primary criteria to assist Smart Coffee firm in maintaining its beachhead customers are overall
cost leadership and focus. Based on the total cost leadership strategy, the firm practices cost minimization on
product sales and frequent customers. Reducing the cost of coffee products to regular customers helps the firm
in keeping them despite the rising competition and commodity substitutes. The strategy also defends the
company against potential buyers who might consider becoming clients of other competitors. The focus criteria
enable Smart Coffee firm to target low and middle-income individuals within the social and learning places.
The strategy allows the firm to serve its target group more efficiently than the competitors operating broadly
within the commercial settings.
Key Potential and Future Competitors
The critical potential and future competitors of Smart Coffee firm include Starbucks, McDonald’s,
Dunkin’ Donuts, Caribou Coffee, and Peet’s Coffee firm. Starbucks’ company is the next competitor for Smart
Coffee Company due to its established brand and strategies involved in product development. McDonald’s is
also a potential threat to the firm due to its improved coffee quality and growth strategy penetration within the
market. Dunkin’ Donuts’ firm poses a strategical threat based on product differentiation and cost reduction to
attract more customers. The Caribou Coffee firm is a future threat for Smart Coffee Company due to its fresh
and quality coffee products in the market. Peet’s Coffee is also a potential and next competitor for Smart Coffee
firm based on its dedication to maintaining a product-price-value equation for the market improvement.
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6
6
4
4
2
1.8
2
0
-8
-6
-4
-2
0
2
4
6
-2
-4
-6
-4
-6
-8
Competitors’ position graph
6 represent Starbucks Company
2 represent McDonald’s
1.8 represents Caribou Coffee
-4 represent Smart Coffee firm
-6 represent Peets’ Coffee firm
-4 represent Dunkin’ Donuts coffee firm
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8
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Turner, Susan, …
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