University of California Smart Coffee Business Plan Paper Check out Luckin’s business model (China) and imagine opening coffee shops like this business mod

University of California Smart Coffee Business Plan Paper 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.

2.Build a well designed Excel spreadsheet model to document your startup’s TAM, SAM, and SOM.

3.Copy and Paste Special this well-designed data table as a PDF into a Word document.

4.Write an analysis in Word to discuss your TAM, SAM and SOM conclusions. Document sources of data points within spreadsheet as footnotes in your Word document.

5.List your 15+ sources at the end titled “Bibliography” in MLA format.

you dont need to write 2 pages. Capstone: A Business Plan – Session 3
Jay Taparia, CFA, Integrated Marketing, NYU SPS
Concept Review | TAM, SAM, and SOM | Creating the Persona
Our Agenda
1. Concept Review
2. TAM, SAM and SOM
3. Creating the Persona
4. Spreadsheet Example
5. Article Discussion
2
I. Concept Review
A review of key concepts and what we have learned so far!
Get Out of the Building
1. Taking a new path is often shrouded in uncertainty, fear, and
doubt. Think big! Investors demand that.
2. Winners recognize their startup is a series of untested
hypotheses (small firms, Silicon Valley).
3. Losers blindly execute a rigid product management and
introduction methodology (typical of large firms, MBAs).
4. Founders get out of the building to gain deep, personal, firsthand
understanding of their potential customers’ needs before locking
into a specific path.
5. There are no facts inside your building, so go outside. You
have to socialize and say hello to people and potential partners.
4
A business model describes the rationale of how an
organization creates, delivers, and captures value.
5
The scariest part of your marketing plan or startup efforts is:
will your customer (human nature) purchase your product?
In other words, have you targeted the right customer with the right product for the
right emotional need using the right marketing efforts that produces the right return
on investment to you, your founders, and your investors?
6
Design Everything Around the Customer
Push Marketing
Pull Marketing
Promotion
Promotion
Customer
Customer
Product
Product
7
The Customer 1st, The Product 2nd
Build backwards to make easier to pivot – in other words,
know your customer first to make product design easier.
Avoid building product first… build what customer wants!
A business model (canvas) describes the rationale of how an
organization creates, delivers, and captures value.
8
The million dollar question is:
who is your customer?
9
4 Steps to Market Segmentation
1. Brainstorm – List all potential target segments
a. Talk with your network / potential customers about your idea
b. Which industries / customers would benefit?
c. Ask why the consumer would purchase the product in each target market
2. Narrow – List 6-12 segments for your product identifying a) the end
user and b) their application of your offering.
a.
b.
c.
d.
e.
f.
g.
Is the target customer well-funded?
Is the target customer accessible to your salesforce?
Does the target customer have a compelling reason to buy?
Can you today, with the help of partners, deliver the product?
Is there entrenched competition that could block you?
If you win this segment, can you use it to enter new segments?
Is the market consistent with the values, passions, and goals of founding
team?
10
4 Steps to Market Segmentation
3. Talk with Audience – Gather market research directly from
customers to find out what they want and their “pain points.”
a.
b.
c.
d.
e.
f.
g.
h.
i.
Do not ask “what do you think of this idea?” or “would you buy this?”
Ask instead about customer’s last experience with that product.
Ask questions that start with words like who, what, why and how.
Ask questions on price and how much they think is reasonable.
Provide product and get customer’s observations.
Observe the customer live making the actual purchase decisions.
Interview target market, go to conferences, and get referrals.
Ask for advice without selling, and do interviews in person.
Drill down with answers you get; confirm answers along the way
11
4 Steps to Market Segmentation
4. Categorize Research – By each end-user and their needs.
a.
b.
c.
d.
e.
f.
g.
h.
i.
End-User – who would use your product or service?
Application – what customer tasks are improved with new venture?
Benefits – what is the actual monetary profit or savings to end-user?
Lead Customers – who are influential customers (“early adopters”)?
Market – for each segment what helps or hurts product adoption?
Partners / Players – who will improve your product offering?
Size of Market – # of customers if 100% market penetration?
Competition – who is in that market segment already?
Complementary Assets Required – what else needed for customer
use?
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Select a Beachhead Market
1. Choose your #1 viable market segment out of the top 6-12
opportunities in your market segmentation process to pursue
initial marketing efforts.
2. Choose the market you can excel in higher market share,
cash flow, and word-of-mouth.
a.
b.
c.
d.
e.
f.
g.
Start with a small segment to “master” your offering.
It is like learning a new sport.
Divide your beachhead market into smaller segments.
Customers should all buy similar products.
Customers should have similar sales cycle and
Customers should expect same benefit of product.
Make sure there is “word of mouth” – marketing costs cheaper!
13
Build an End-User Profile
1. You are putting more detail to your target segment with
characteristics of your audience (choose most applicable):
a.
b.
c.
d.
e.
f.
g.
h.
i.
What is their gender (breakdown?)
What is their age range? Income? Education background?
What is their geographic location?
What motivates them (psychologically)?
What do they fear most?
Who is their hero? What do they do for vacation?
What is the general reason for buying your product?
What is their story in life and what makes them special?
Who is the decision-making unit (DMU) to decide purchase?
14
II. TAM, SAM and SOM
Quantifying the size of your target or beachhead audience
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.
16
Airbnb – TAM, SAM, and SOM
17
Salesforce – TAM, SAM, and SOM
18
Citrix – TAM, SAM, and SOM
19
NYC Dog Walking – TAM, SAM, and SOM
20
Food App – TAM, SAM, and SOM
21
How to Calculate TAM, SAM, SOM
1. Bottoms-Up Analysis – Determine how many end users
(customers) exist that fit your End User Profile using a bottom-up
analysis based on primary market research. “Count Noses.”
(e.g., customer lists, trade associations)
2. Top-Down Analysis – Starts by using secondary market
research, such as market analysis reports, to determine how
many end users meet different characteristics.
3. Do both… the more research you do, the better the number you
will have, and less likely for failure!
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How to Calculate TAM, SAM, SOM
1. Calculate annual revenue per individual end user
a.
b.
c.
d.
e.
f.
Revenue / end user x # of users = TAM as dollars per year.
Make assumptions a customer is willing to pay per end user.
Review the budgets of the potential customers you have identified.
How much are they spending today to accomplish what you offer?
How much have they paid in the past for other new products?
How much value does your product create for them?
2. What should my SAM be?
a. If < $5 million, your investors will say there is not enough room for your share to grow or their investments to grow. b. If > $1 billion, you might have overstated your assumptions.
c. A SAM between $20 – $100 million is a good credible target.
3. Estimate your potential max share of the total market (SAM) and
come up with what you think you can capture (SOM).
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III. Create the Persona
Find a customer in your beachhead to actually ”talk” to!
Profile the Persona for Beachhead Market
1. Choose one end user from one potential customer to be your
Persona. Build a detailed description of that real person.
a. Make the Persona visible to all in the new venture so that it gets
referenced on an ongoing basis.
b. The Persona is a person who best represents the primary customer
for the beachhead market.
2. List the Persona’s Purchasing Criteria in Prioritized Order:
a. These priorities dictate what decisions the Persona makes.
b. The #1 priority is what keeps the Persona awake at night or fears or
gets excited about. It is the priority that gets your customer hired,
promoted or fired.
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Profile the Persona for Beachhead Market
1. The Persona should become a touch point for future
decision-making and minimizes misunderstandings among
team members! It also help you decide:
a.
b.
c.
d.
e.
f.
g.
What features should you prioritize? Drop?
How should you allocate resources?
Who should you hire to sell the product?
What should your message be?
Who should you partner with?
Where do you go to meet your customers?
Who is influencing your customer’s mindset on your product?
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Create Persona of Target Customer
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Create Persona of Target Customer
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Create Persona of Target Customer
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