Hello. My goal isn't to tell you what you can find in books, you can take any good book you want refering to marketing, you will find there the essential. My goal is to give you, to show you, to point out what could be a problem in the evaluation of an opportunity to create a high tech company. Being able to make a difference between industry and market is my first point, and probably the most important to remember. Here is an example. There is a laser industry. People who know how to make lasers have a laser competence. However, there is no laser market. There is a welding market, a cutting market, there is also a market for the organisation of auditoriums. These three markets represent the use of lasers. So, from one technique or even a patent, a technical knowledge, there is only one industry. So if you say that you are engaged in a company working on lasers it isn't entirely true. You don't work on laser market but on laser industry. This applies to many other fields. All the more so when the patent concerns a complicated sofware with an incomprehensible acronym which doesn't represent its use. What other crucial point do you need once you understood the difference between industry and market? Market, costumers and business, of course. Let's take a look at those three terms to understand them better. First, market: if you studied economics you will say that market is the place where the price balances supply and demand. It is indeed certainly true. But it is not directly useful for a person who develops a company unless it is a very big company. But it is not appropriate for the creator. And you can clearly see it when you evaluate your position on the market; it is only about ridiculous percentages and quite hideous evaluations. Thers are billion dollar markets and we try to reach 300 000 euros or dollars. This is the reason why we are going to follow Derek Abell's analysis as he says this very simple thing: there is a certain amount of uses, fonctions, even desires which are satisfied by the offer. For example, the desire for clean hair is a hygienic desire, but the desire to be beautiful which probably requires shampoo as well isn't of the same kind. A good shampoo will accomplish both. A shampoo which only accomplishes the first idea - to clean hair - doesn't have a great value, is not expensive, it is classical chemistry. A shampoo that makes you beautiful is almost from the myths of Faust and is worth a fortune. Then comes the target entity: who can afford the desire to be beautiful? This is when comes the question of the use and the desire and the group or segmentation as we say in marketing. What substitutes can take part of this? You will start from your invention, your industry, you will transform it into use, desire and then watch what the segmentations are and you will wonder: who could be a subsitute? You won't wonder: who could be a competitor, who does the same as me? A substitute doesn't have to do the same, he replaces you. Here is an example. The first substitute to shampoo isn't necessarily another shampoo. It is "I don't wash my hair", that's it, I don't do anything. This is what we call a shadow competitor. So you must decide between a market with many shadow competitors, or many real identified competitors. This is a key element. A market can at first seem very narrow and in the end appear not to be explored. If your invention is an innovation you have chances to create the market and to open it up. Surprising examples can be used. Let's say I am a car salesman. My substitute, appart from other car salesmen, are holiday commercials. Why? Because we are competitors in the family budget, people have the choice between buying a new car and having cheap holidays, or, on the contrary, having expensive holidays and keeping the old car and just changing the break pads. So in a company situation you would sell your invention to the company. You are not necessarily facing a competitor, you must ask yourself: is it really necessary? Are we good in this field? Once I identified all the compitotors as substitutes, I realise there are plenty of examples. For example, in the future, banks and telecoms will probably be competitors. They deal more or less with the same people, they will both have rich information. So if your invention is in telecoms take a look at what bankers do and vice versa. Here is an example that should make you feel optimistic as competition is no limited in the conceptual field of technology. This conceptual field of technology leads us to marketing and observation based on three new criteria. The first one is, of course, the value of our offer. Value isn't a technological dimension, it is the translation of the use in this technological dimension. You don't evaluate the value, the costumer does. You only give him/her the opportunity to evaluate it. So reverse the language: look at the value of the costumer's point of view and don't convince yourself that he/she will find the value exceptional. The absence of value doesn't prevent from selling, because you pay attention to value, the existence of a risk does. If you are a small company with an exceptional invention, such as a software, your value is not a problem, the problem is the possibility that you will not exist more than two years and that the company working with you will be in midstrem and you won't be able to follow its development as you wouldn't exist anymore. Maybe a less technological company, less efficient but more perennial, would be better. So take a look at the possible risks for your costumer and try to reassure him. Be sure that you work at the same rythm as your costumer, canvass at the right time, find the moment when his need is important, don't lose your time as many entrepreneurs do while you wish to have more costumers in very big companies of CAC 40 who will accept to receive you because they like what you do and say but will change the meeting into a subliminal or implicit training for their teams. You will explain what you do but you won't necessarily get a contract. So there are two driving forces. First, technology. And you should know that most of the technology will not come from your line of business. The convergence is clear in information technologies between computer science and telecoms. At first it was really seperated now it's hard to say where it belongs. And the second thing is our role as marketing people; what we call intimacy of costumer, of consumer. Don't get intimacy and physical proximicy mixed up such as "I know him well because we studied together", this is not very important. What we call intimicy of costumer is the answer to this very simple question: Does the costumer see me the way I want him to see me? This is a crucial question if you are a new company because you often have no image. How do you want to be seen? Do you want people to think of you as a giant or as a clever, reliable company? Work on this and check that your image matches your intention. You will work with a costumer who is an industry. What will happen between you and this costumer on the market is called the trade market. It is a trade: you are going to sell something which is good, you will earn money. Great. The end. The value of this trade is operated downstream. This is called the market for value. You don't have access to this market. But this is where value is, where it is realised, where it becomes visible. Get knowledge of this downstream market. Not to be arrogant in front of your costumer, but simply to have a synchronous language. These are pragmatic pieces of advice which come from experience and you must always have them in mind. You can also have self-regulation process. Five rules have been fixed. The first one is that there must be a bilateral exchange and benefit. This is true for negotiations, also for transactions which are a form of negotiation. If you feel that your costumer doesn't find any particular benifit in the transaction but he still buys your offer, it means that he is taken hostage, he needs it and he will probably blame you one day or another. Be sure he is aware of the value of your offer. This is not in relation to your vision as offeror, but to his vision as buyer. Secondly, you understood, market isn't linked to technique, it is linked to use. For example, if I sell agricultural chemistry phytosanitary product or fertilizer, when do I put these products in the fields? You understand that the use isn't the same according to the time of the year (if harvest is soon or if plants just sarted growing). The third rule is the most difficult for new comapnies: know yourself. It is very difficult because people are often very enthousiastic, almost under the command of their invention, they become easily irritable, insufferable, people change, and the company has the status of "baby" not child, "baby". It means the company can't live without you and in one way or another you can't live without her. No, know yourself. What distance do you need to put, it is about company, money and personal realisation which is very good, but it mustn't hinder the development of the business. Know yourself. Know yourself but also know your costumer. Who is he/she? Check who is prescriber, who is an influencial actor. If I sell fertilizer am I contacting international institutions, big agriculture or agro-business? The three of them. And finally, don't overestimate your market potential. Too many business plans have a geometric optimism, and suddenly revenues grow exceptionally up to a margin of 80%. No. Do not overestimate. So, how not to overestimate? There are two rules. The first one is to avoid making a high estimate an average one, a low one, make a good estimate and give sensitivity. The second rule has no scientific basis. Multiply the costs times three and increase timeframes by multiplying them times three. So I use the pi squared rule. If with a pi squared coefficient, which equals almost 10, your company keeps going, it means it is relatively optimistic and strong. At this moment, marketing has phenomenal tools that you can find in books, mix marketing, prices, products, promotions, places, so distribution. I am not giving you much details, the books are very well done and you must read them, it is the key to marketing. You will place your product with this, with four main positions. A position for innovation, another one for imitation, one for adaptation and one where you exist but you reposition yourself again. This is not perennial. It can change through time. But what is the main axis today? Everyone has its advantage, for example, once your value has been settled higher than the price, the costumer makes benefits, you can decide to be on low-end, high tech innovaters hate this, they always want to be on the Moon, on March now, but maybe they could first go to Royan, for example, it would be a start, in Charente-Maritime, they can check if there is business to do there. I have nothing against Royan, I go there of course. They can also work in high-end, in luxury, but it is often obstructed. It is important not to be between low and high end, because it is desert there. You must increase the value and lower the price. This is very complicated. You are not prepared for this so don't venture into it. Choose a clear position, either low-end or high-end. Then build your business line from that. What advantages do you have as a pioneer? Either a tecnological advantage, or a scarce asset, or your consumers are with you and waiting for you. You need at least one of these conditions. If you don't hava any you can't be a pioneer so you should follow the way of imitation. Technological leadership isn't a patent. Technological leadership is also having experience. Then scarce assets. Well this is physical, if I possess 70% of the world's reserves of phosphate, I am a leader in phosphate whatever happens. The consumer's behaviour is luxury, costumers want this luxurious brand and not another, which is not your case if you create, even if it is your deepest desire. For this you also have the possibility to be follower, it might be less glorious but to be follower you must be able to be opportunistic. Very big companies recently decided to confirm that they had an opportunistic strategy and their market value increased. The world is so unstable than opportunism is also a way to reduce uncertainty. But this isn't that easy, you must show that you are flexible and that you can adapt. You also have the possibility to simply adapt, make the product differ a little bit from your first idea. Don't make footballs for world championships, but if your idea is to make balls, you can target supermarkets maybe which is good for a start. What are the sources for adaptation and do we have them? Don't wait for THE commercial director. There are methods you can find in many articles and books which are based on the properties of your offer. You can also make a range but don't do it too early. Try to differentiate yourself, low-end, high-end. This différentiation can be spatial (geographic), or it can be in perception, which means that you only need to change a few things, for the costumer to perceive a real difference, maybe in esthetic, security, or energy saving. Which criteria are the most interesting to change? This way I can find the right distribution, the right costumer relationship. To conclude, if you want to diffenrenciate yourself and look credible, you need three rules. The first one is to be comprehensible, it must be significant for the buyer, it must create something good for him/her; either less risks or more value, or the right time. So it must be significant. It must have the possibility to gain value from the company on its value market, so check how the costumer valorises. And finally, it must be opposable to competition, it must defend against competition, so that it brings something difficult to imitate and it can be the position of your own brand. So what is the general advice that I can give you in this branch? Well, don't be attached to your invention if you really want to protect it and make it last, be attached to the company which will create this invention. But being attached to a company also means to consider giving it away to someone else one day, who will be more competent than you at the right moment, you will have gone on a first part of the way and you can later take other ways. You can also stay in your company and I wish you to, of course. But there is no rule for this. Your invention, your technology temporarily belongs to you, it is your role to develop it, to take a step back and to apply all or some of the principles I suggested you today. Good bye.
