Opportunity Assessment: Is There A Market For Your Product? Prepared for CCET – August 17, 2006

1. Opportunity Assessment: Is There A Market For Your Product? Prepared for CCET – August 17, 2006

2. Opportunity Assessment: Concept to Business Case Most technologists have one favorite key question: Technology Can we make it work? Note: Key concepts throughout developed by Lynne Galligan of Hilltop Innovation.

3. Opportunity Assessment: Concept to Business Case Opportunity Assessment asks key questions to make a business case: - Does a market need exists for the technology? - Can a profitable economic model can be devised? - Can we make an attractive product/offering? Customer Is there an unmet need? Technology Can we make it? Economics Can we make money?

4. Opportunity Assessment “Need, Succeed and Greed” “Need”: What is the unmet need? Customer “Succeed”: What are you offering to meet that need? Can you pull it off? Technology Economics “Greed”: How big is market? How much profit potential?

5. Based on the OA model Use hypotheses to guide the work - Scientific approach Confirm the unmet need and rule out “fatal flaws” - Interviews - Secondary research - Data analysis Determine market potential <Identify alternate technical solutions, assess feasibility> <Identify competitive advantage and opening> Opportunity Assessment Approach UNMET NEED is primary focus: your mission is prove there is one, that you can meet it, and make money doing so

6. Unmet Market Need How is the basic function your technology addresses being met now, and at what cost? What improvements are needed, and where are current customers’ pain points with the current solution? Measurement and Market Trends What is impacting the need for change? Competition Why is your proposed solution better, and how will it beat other current or proposed solutions? Opportunity What is your proposed solution, and how does it meet the unmet need you have identified? What is the market size, and what share can you reasonably address and capture? Capture Your Concept—Six Starter Questions

7. Unmet Market Need What is the unmet need? Who has this problem? Why does the problem exist? How is the basic function your technology addresses being met now, and at what cost? What improvements are needed, and where are current customers’ pain points with the current solution? Measurement and Market Trends How will your customer/user measure the value of your improved solution? What is impacting the need for change? Competition Who will you compete against (companies, in-house solutions, alternate technologies)? What is the competitive opening for your solution? Why is your proposed solution better, and how will it beat other current or proposed solutions? Opportunity What is your proposed solution, and how does it meet the unmet need you have identified? What are the strengths and advantages of your solution? What are the barriers to adoption for your solution? (market, competitive, practice, technological etc.) What is the market size, and what share can you reasonably address and capture? How much can you sell and at what price point? Expanding the Key Questions

8. Your idea will evolve as you ask and answer key questions: You redefine the need after talking to real potential customers and learning what the real problem is You discover the market is smaller than expected, or your chosen target segment already has a workable solution Broad, vague concepts are narrowed down No opportunity exists, or if it does, you cannot capture it: Someone else has the product, or a significantly greater competitive advantage There turns out to be no UNMET need—existing solutions are meeting customer needs adequately Emerging technology will eliminate the need The technology is not feasible for your chosen application Developing Your Concept Concept Hypotheses Interviews and Research Analysis Of Findings Reiterate until your concept makes business sense

9. Market Segmentation: Helps you identify your initial target segments “highest value” customers (early adopters who need it badly and will pay nearly anything to get it) “highest volume” customers (the mass/mainstream market big enough to justify investment in your concept) Market Channel Diagrams: Helps you understand how to reach your target segments Channels vary by segment Barriers to entry vary by channel—you need to explain how you will overcome these barriers Forces you to talk to and understand players in the market “ecosystem” you propose to enter, deepening your understanding of the market and your hypothesized unmet need Hypothesis Generation and Testing Key Tools

10. Sample Segmentation-- Indium High volume/ high growth/ lower quality segment High value/ high quality segment Explosive growth in displays (and therefore ITO thin film coatings) drives indium demand, while high purity applications in electronics and semiconductors drive quality and innovation improvements. Other potential indium applications are in early R&D. Source: U.S. Geological Survey, literature review, Roskill report 2004

11. Play with different segmentation schemes at first By application By market By function By technology By channel As your understanding of your market grows: Settle on a segmentation that helps you clearly identify customers with similar functional requirements (to help drive product development choices) Attempt to size each segment of interest, to justify your focus on selected segments. If you cannot size your target segments, you cannot prove your opportunity exists. Identify your “high value” and “high volume” target segments and focus your research on customers in these groups—one proves your concept feasibility, the other justifies investment Identify other segments of interest for later development (but don’t tell—you will be accused of being unfocused by would-be investors) Segmentation 101

12. Market Channel Analysis 101 • Through your interviews and research, dig into the nitty-gritty of your chosen market segment, tracing the market channel for each segment you intend to address. You need to know: • where in this “value chain” your customer lives (needs, trends) • who else serves that customer (competition) • how that customer is reached (distribution) • barriers to adoption of your solution Typical Market-Channel Elements (your mileage may vary) Raw materials suppliers component manufacturer converter Assembler OEM wholesaler distributor retailer consumer Re-use consumer recycled use disposal

13. Brainstorm hypotheses about your market. No data necessary--just bound your research by stating what you need to know to prove your business case. Develop hypotheses in six key areas: Market needs (what the unmet need is and why it exists) Target market (what the optimal initial target market(s) are and what their needs are) Market trends (market trends that validate the need) Competitive analysis (who competes, why there is an opening for your offering, and how you can sustain an advantage against incumbents, new entrants and in-house competition for your offering) Product offering (what the ideal product offering for your target market is and why it meets unmet needs) Economic potential (revenue and profit potential, growth rates, ability to sustain margins) Then identify gaps in your knowledge needed to prove or disprove your hypotheses. Carefully structured hypotheses will limit the amount of research you have to do to prove your business case. Brainstorm a list of the data you need, and the sources (primary interviews, secondary research) you can use to find the information you seek. Hypothesis Generation and Testing

14. Primary research interviews: what is happening now, freshest information, fastest way to understand key issues: barriers, competition, trends. Talk to: Potential customers (test unmet need hypothesis) Competitors (assess their positioning vs. your offering) Potential distributors (test distribution plan hypothesis, build relationships for later) Industry experts/analysts (build understanding of market trends and dynamics) Other technologists (identify competing approaches not yet in the market) Process Tools Yes. This sounds suspiciously like a lot of very hard work. It is.

15. Secondary research: recent industry overviews articles specialized industry portal/association data published industry roadmaps table of contents for (expensive) industry reports competitor advertising industry overviews found in stock recommendation reports government reports/research/white papers Use online research, but also pick up a telephone and contact industry experts and ask for their reports and recommendations. An interested interviewer is often showered with useful documents by an ignored and underappreciated scholar or researcher. Process Tools Yes. This also sounds suspiciously like a lot of very hard work. It is.

16. Online research is an amazing tool, and Google and other search engines are improving every minute in their ability to find data. But remember to go “beyond the Google gate” of fast key word search and reach the “hidden” Web. Sign up for free, but password-protected, sites that ask for a bit of personal data in return for access to their content Search within a site of interest; don’t just depend on Google Get to know government sites and search within them—vast resources that don’t always show up on Google Identify and use specialized search engines to research your industry or issue Identify and use industry portals and industry association sites when researching your market Spend a few hundred dollars on short term access to specialized article search services or journals in your chosen field; buy single charts of data from the big research houses for $5-$20 per. (Good for finding market size data). “Find It Online” by Alan Schlein is an excellent guide to advanced internet search techniques that is updated annually. Beyond The Google Gate

17. You are done assessing your opportunity when one of two things has happened: You found a fatal flaw: no unmet need, terrible barriers to entry, fierce and overwhelming competition, technology doesn’t work, no access to distribution…and with regret, you kill the concept OR You are able to concisely state the following: A clearly defined and unmet MARKET NEED Large enough TARGET MARKET SEGMENT(S) to justify investment Several positive SUPPORTING TRENDS and no insurmountable negative trends/barriers/obstacles A positive COMPETITIVE ANALYSIS (you can enter, grow and stay profitable in your chosen market) A clearly defined potential PRODUCT OFFERING, including feasibility assessment, closely linked to unmet customer needs An estimate of ECONOMIC POTENTIAL (how big, how capturable and how profitable your opportunity is) Making the Business Case

18. Opportunity Assessment Customer Customer will buy it We can make it Technology Economics It is profitable

19. Practice Pitch Exercise An exercise for your drive home… • Prepare a three minute “pitch” of your concept, • focusing on “Need, Succeed and Greed.” • Include: • A one-sentence definition of your concept • Need: What is the target customer’s unmet need? • Greed: How big is the market you target? • How much profit potential do you see? • Succeed: How will your offering meet that • unmet need (technology, product, • features, service offering)?