Welcome to week two of the Programme!
We hope you enjoyed the first week, and we look forward to moving into our section important topic: the market. You will be learning about how to estimate the size and scope of the market; both valuable tools to be used when developing new businesses and new products. Additionally, you will be using this information to consider the availability and cost of related solutions.
As you go through this process, please speak with your mentor about what you are learning. Your mentor brings considerable experience in their industry, and this should be an important resource to you. Additionally, please continue to utilize the resources available on the platform. We invite you to discuss any challenges you find or insights you may have with the other Programme participants.
Read the Glossary this week to understand terminologies!
Project To-Dos
Second Survey
Surveying the Market
Survey the market using a variety of means that may or may not be available to you, including but not limited to: internet search engine, library, chamber of commerce, local business development agency, local startup support networks, and/or individuals you know who are part of the market already and can provide some input. Use these methods to identify existing solutions
Considering the User
Consider the stereotypical user that you identified during the previous module. Think about that stereotypical individual and think about how they might be able to solve their problems with available products or services.
Considering Solutions
Consider the range of existing solutions with your mentor. Discuss the findings of your research with them, and ask for their feedback. With their assistance, identify which solutions are most popular in your local area.
Identifying Popular Solutions
Select the most popular solutions in your local area. How widely used are these products or services?
Complete "Market Segmentation Survey"
Read the article "How to Segment a Market"
Complete "Market Segmentation Worksheet"
Identify what segment represents the largest proportion of customers
Estimate the total number of customers by local, regional, national, and continental area
Draft a hypothesis about the common problem that applies to your customer segment
Read "Customer Feedback Article"
Complete at least three Customer Interview Forms
Consider how your assumptions about a stereotypical customer matched with and/or differed from the actual opinions of potential customers that you interviewed.
Carry out a market survey to identify the market cost of existing solutions
Estimate the average (mean) cost of existing solutions in your local area
Considering variation in solutions
Consider the more expensive and less expensive solutions in your local area. How much additional value does a customer receive by choosing a more expensive solution, and how much value does a customer lose by selecting a less expensive solution? Where within this spectrum would you like your product to be?
Watch Empathy Video
Identify competitors in your local area
Complete Top Three Competitors Worksheet
Review and edit the Value Prop, Key Activities, Customer Segments of your first Business Model Canvas
Fill out the Customer Relationships and Delivery sections of your first Business Model Canvas
Complete the One-Pager Worksheet
Glossary of Terms
Market sizeA market refers to customers in some way, either the number of customers or the amount of money that they spend to solve a particular problem. The size of the market, often called the Total Addressable Market or TAM, is the monetary value of the customers that a company could realistically expect to serve.
Revenue
Revenue is money that a company receives for the solution it provides to customers. These can take a variety of forms such as paid advertising, subscription fees, licenses, usage fees, and rental fees.
Key Partners
Key partners are persons or organizations that help the company develop its product or service. They generally provide complementary services such as distribution or marketing. That lets the company focus on the core elements of the solution that it is building for the customer’s problem.
Investors
An investor is a person or organization that gives business money. Usually, they demand some percentage of the company in return, or possibly some other kind of arrangement where they receive money as the company grows. The important thing to remember is that an investor always looks for a return on their investment, so the business has to quickly grow in value.
Customer
A customer is a person or organization that pays you to solve a problem.
Chamber of Commerce
A chamber of commerce is a network of businesses, usually local. The chamber of commerce exists to advocate on behalf of the business community, and to support its members.
Market Segmentation
Market Segmentation is the practice of determining groups of customers who share a problem that you can solve. Segments of customers tend to share a lot of characteristics, which means that they value your solution in a similar way. This helps you determine the price of a product and also how to market your solution to them in an appealing way.
Customer Relationships
Customer relationships are specific to each customer segment. They are created to reinforce the connection with the customer and the problem, ranging from automated services to on-demand personal assistance.
Delivery
Delivery is the way your customer receives the solution to their problem. It may be downloaded from a website, or sent by mail, or taken directly from a store.
One-pager
A one-pager is a single page document, usually in a Microsoft Word or PDF format, that clearly explains the basics of your business. It is usually used when discussing a deal with potential investors, partners, or customers.
Hypothesis
A hypothesis is an assumption being made with the intent of testing it through further experimentation.
Read How to Segment A Market Article
[Resource from WikiHow]Market Segmentation Worksheet
In this worksheet, you will consider the available market to which you can sell your product or service. This exercise should be inspired by your earlier work on problems in which you considered individuals who faced the types of problems you are seeking to solve, and the Market Segmentation Worksheet.
Identifying these individuals is the first step to developing a better solution to the problem that your customer faces. However, it is also important to understand the size of the market, in order to assure both the impact and sustainability of your business.
When answering to these questions, consider:
a. the existing market size for current companies seeking to provide a solution to the identified problems
b. the potential market size that is currently not being reached by competitors, and which you believe that you can reach with your own product or service
As you go through this exercise, not every question may have an immediate and obvious answer. Assumptions may enable you to come closer to an answer, but be sure to note places where you may not be sure of the answer. These will become opportunities for further research and discussion with your mentor, other entrepreneurs, and local customers.
What is the geographic extent of your market? Is this a local product or service that can only be provided locally, or is it transportable? Is your product or service intended for only those individuals who live in your local area, or would you like to sell more broadly?
PREP is a globally relevant solution. I will start from my immediate base and extend my reach in due course.
Within this anticipated geographic extent, how many potential customers are there? Consider demographic information where possible: gender, ethnicity, religion, age, job, etc.
15,000
What percentage of potential customers do you believe will initially purchase your product or service?
0.5%
How many products is each potential customer likely to purchase? (Is this a product or service that is likely to be purchased once, or something that can be purchased in greater numbers?)
Single Subscriptions in the meantime
How often are potential customers likely to purchase your product or service? (Is this a product or service that is likely to be purchased once, or something that will likely be purchased at regular intervals of time?)
Single Subscriptions in the meantime
At what cost do you expect to sell your product or service?
N150,000.00
What is the expected level of growth for:
Geographic market (spread of product over time)?
2% annual geographical expansion
Number of potential customers (ideally based off of demographic data)?
5% annual geographical expansion
Number of products or services purchased at a time by customers?
10% annual geographical expansion
Frequency of purchases?
10% annual geographical expansion
Changes in price?
Expected to be fairly constant
Segmenting a market is not just an exercise. It is a critical skill that you must have as an entrepreneur. Later in the programme you will learn about pricing products or services. This is where segmentation becomes valuable. Customers are people, so their tastes vary. That means some of them will like you product a lot, while some will not. You must target groups that value your solution because it solves their problem. In the example above, only the first three groups of customers - A, B, and C - would purchase the product. D and E do not value the solution as high as the price, so they would select another solution.
Customer Feedback Article
Entrepreneurs cannot perfect a business inside their head. You must be able to get outside and talk to customers if you want to improve your value proposition, your set of features, your marketing, and other critical aspects of the company. That is why the programme emphasizes constant interaction with actual customers. Remember this as you are interviewing people.
Customer Interview Form
Interviewing customers is a great way to test assumptions about their problem, which should give you insight into the best possible solution. Asking simple questions can help you understand people’s needs, behaviors, and desires. That makes it easier to build products and services that directly address them.
Here are some of the best tips when interviewing customers, many adapted from Stanford’s d.school.
Don’t ask “Yes/no” questions. It is much better to get the person to speak at length, which can help you better dive into their reasoning.
Encourage stories. Narratives often reveal a lot about a person, and how they think about the world. Listen carefully for them.
Watch body language. People can tell you a lot by how they behave, not just how they speak.
Ask “Why?” This is a simple way to make sure that you understand exactly what the person is saying. Ask this as many times as necessary to get insight into the problem.
Here are some sample questions that should help you:
Who else do you know that shares [the problem they have]?
How many other people do you think share [the problem they have]? Why?
What is the best [solution] out there right now? Why?
NIPR & PRAcademy
What makes the [solution] so good for you? Why?
Saves time, affordable,
On a scale from 1 to 10, how would you rate [current solution they use]? Why?
6
What would make [current solution they use] better? Why?
Affordability, convenience, support, social learning, easy access, one-on-one tutorial.
Is PR Valuable?
Do people understand the value of PR?
What makes a quality PR training?
Why are some PR Training vendors preferred to others?
Watch Empathy Video
[From Cleveland Clinic]Competitors Identification Worksheet
Existing businesses already attempt to solve the same problem that your product or service is addressing. By identifying these competitors, you can improve your ability to respond to the problem, recognize the existing solutions that you must be more capable than, and recognize the challenges and opportunities available within the market. Most importantly, identifying competitors helps set the value of your product or service, helping to determine your business’ long-term viability.
How much do customers currently pay for similar products or services? Compare your product to the most popular alternatives available in your local market.
Between N100,000 to N150,000
If there is a difference in price between related products or services, what is the cause of this price difference?
More conducive learning environment.
How much additional value do customers receive by purchasing a more expensive solution?
More conducive learning environment.
Estimate the average (mean) cost of your competitors’ products or services.
Between N40,000 to N200,000
Improve Your [BMC] Business Model Canvass
[At LEANSTACK]One-Pager Worksheet
Basic Company InfoWhat are you calling the company? Public Relations College
Do you have a URL or other web presence? Yes
When was the company founded? The year 2019
A one-sentence summary of the product or service
What does your company do?
We sell Public Relations Education
Customer & Need
Who exactly is the customer?
Undergraduates of Private Universities
What is their problem?
PR Information gap
How are they solving the problem right now?
Through some University, NIPR, and Tuition Centres
Market size (in both local currency and U.S. dollars)
How many customers are there out there?
How much money is spent in this industry?
Solution
What do you propose to do that solves the customer’s problem?
Online content Delivery
What is new and/or different about your solution?
Lifetime Support
Competitors
Who solves the customer’s problem right now?
How many of them operate in your area?
What will be their response to your solution?
Team members
Who is working on your solution?
Who is funding your solution?
What sort of relevant qualifications and skills do you have?
Current status
Do you have any revenue?
No!
Do you have any partners?
No!
Do you have any investors?
No!
Financials & Timetable
How long until the first (or next) version of your solution is released?
Not Determined Yet
How much is it going to cost to develop this version?
Not Determined Yet
Second [Week 2] Survey
Please rate yourself between 1 (weakest) and 5 (strongest) on Industry/Competitive Analysis
1- No Experience
2- Minimal Experience
3- Some Experience
4- Good Experience
5- Strong Experience
Answer: 1- No Experience
What type of customer do you have familiarity with? (select all that are applicable)
No Experience
Individuals (consumers)
Businesses
Governments
Answer: Individuals (consumers)
Market Segmentation Survey
You have learnt the basics of segmenting a market. The helps you to narrow down to your ideal customer, then estimate how large that market could be in a realistic way. This connects to the work you have done understanding the customer's problem and your solution. Segmenting is important because everyone values things differently. You may be willing to pay one price for tickets to a football game, but someone else may be willing to pay twice as much as you did if they are a big fan of one of the teams. So segmenting is important because it allows you to charge more for people who value your solution, and (for now at least) ignore people who do not. The following exercises take you through a normal segmenting process. Later on you will do this with your own business, but for now, you have to practice.You are selling athletic shoes meant for fans and players of football in South Africa. There are 53,000,000 people in South Africa, and 21% of them identify as football fans. What is the total number of potential customers for your shoes?
a. 21,060,000 people
b. 15,500,000 people
c. 11,130,000 people
d. 8,770,000 people
Answer: c. 11,130,000 people
You are selling fertilizer to female farmers in Ghana. There are 22,600,000 people in Ghana, and 60% are of working age. Within that working age group, women account for 53%. Of the working age females, 42% of them are employed in farming. What is the total number of potential customers for your fertilizer?
a. 7,180,000 women
b. 3,018,000 women
c. 2,506,000 women
d. 1,120,000 women
Answer: b. 3,018,000 women
You are selling portable charging devices for mobile phones in Kenyan cities. Kenya has a population of 45,000,000 people, with about 21% living in urban areas. At least 75% of Kenyans own a mobile phone, but that figure is higher in urban areas. The biggest cause of Kenyans wanting to charge their mobile phones during the day is using the internet. About 25% of Kenyans with mobile phones use the internet. What is the best estimate of the range of potential customers for your charging device?
a. 7,000,000 to 7,500,000
b. 5,000,000 to 5,500,000
c. 1,800,000 to 2,300,000
d. 1,300,000 to 1,800,000
Type answer here
Answer: a. 7,000,000 to 7,500,000
You are building a processing plant for one of several crops in Zimbabwe. After doing research into the agriculture sector, you find this government census data for the last three years, which includes the number of farms, the crop volume, and the value of the crops: Which crop would you select for your processing facility, assuming the cost of building and running the plant remained the same, and each trend continues?
a. Ground-nuts
b. Sunflowers
e. Nyimo(Ndlubu)
c. Soyabeans
d. PopCorn
f. Sweet potatoes
Answer: d. PopCorn
