Analysis
The value curves
To understand our product’s position in the competitive marketplace we have done an analysis of the Tempbox’s attributes. We look into which attributes in our Tempbox the customers appreciate the most, and how we are compared to our fiercest competitors. This analysis is called the value curve. Underneath we will present our analysis.
Value curves:
Firstly we will talk a little about the attributes. We chose the attributes based on an analysis of our product benefits, the competitors product benefits, and the customers’ problems. Following, we had a discussion among us based on the information we have been able to retrieve so far in this course in addition to some new information concerning our competitors. The result of the discussion where the attributes we believe to differentiate us from our three main competitors: Compleat, Tupperware and the Indirect competitors (restaurants, cafés, kiosks, and canteens).
We had 15 attributes on the table, but as we should only choose the ones we believe to be most important to our customers, we ended up with nine.
The resulting attributes are: Price, Heat-ability, Multi plug-ability, design, Flexivity, Dish-washer safety, Environmental, Variation in selection of boxes, and Food community. These attributes are developed based on the assumption that these are the ones where we are most different from our main competitors, and which we believe our customer segments emphasize and appreciate.
In the following sections we will describe each attribute and scale them and compare them for us and the competitors.
The Heat-Able Lunch box/ Tempbox:
As we can see from the chart we expect the Heat-Able Lunch Box to be comparatively less preferable regarding price. It will be more expensive due to the technology of heating and plugging, and also the design. As we have the heating and plugging system which we expect to be the major selling points due to the solving of important customer issues, we score the highest on these. We have plans for the design to be sleek and stylish and fit our customers’ needs and expectations. In our opinion the need for a lunch box to be dish-washer safe is an important attribute, hence ours will be. Further we are not confident yet that we are able to make the material sustainable and we are not planning on making several selection variations of the lunch-box. However, we are planning on making a community around the box. There will be an internet web-page to sign up to where the customers will find recipes for suitable lunch box meals, the opportunity to cooperate on making the food if working at the same place, forums for feedback on the product, customer service etc.
Competitors:
Compleat:
Compleat is the company which sells lunch boxes like Foodskin, Foodbag, Gourmet etc. These are boxes which have really neat designs for every need. They are mostly flexible, environmental and Compleat delivers a broad range of products for different needs. They also claim to have the world’s most flexible lunchbox. They are comparatively expensive, but will probably have a lower price than us. They do not have a food community surrounding their products.
Heat-Able vs. Compleat:
Tupperware:
Tupperware is a solid brand most people know. They make everything from potato peelers to boxes to different uses. In their assortment they also have lunch boxes. As we noticed after making the chart on Tupperware they have some few advantages compared to us which is of course the brand name, but when coming to the attributes: price and variation.
Heat-able vs. Tupperware
Indirect (Restaurants, cafes, kiosk, canteens etc).
In this value curve analysis we faced some problems. Restaurants and similar places are not directly comparable to the heat-able lunch box. However, we will use the same attributes for comparison reasons, and then we will explain the line of thought.
As we can see from the red line the indirect competitors score quite high on many attributes. However they also have a few disadvantages. In addition to the more expensive service, the are often not so attractive on “design” like the appearance of canteens and kiosks, and on the environmental side. In addition, not shown by this chart is the inconvenience presented by waiting time for the food or in lines, and the reduced opportunity to self-selection. For the attribute regarding heating we have given them the highest score due to the food being prepared at the purchasing time. Plug-ability is rather low due to the inconvenience of having to leave your car, work-place, the building etc. to get access to warm food. High scores are given to flexivity, dish washer, and variation due to respectively not having to carry and prepare food in a box, no need to dish wash and the variety surrounding a work-place can be quite extensive if one have time to go there.
The concluding curves:
In conclusion
To conclude we see that the Tempbox is fairly good positioned in the market compared to the competitors. Our main strengths are the attributes linked to the innovative function of being able to heat the food. The other attributes like sleek and stylish design and the flexibility are attributes we score high on, but relative to the competitors they are not too impressive. Our main weakness is the price aspects. However, we believe the ability to heat and plug will offset the higher price.
Empathy map, Personas and Interview Debrief
So, as promised in the post about learnings from session 5, we managed to get to know our potential customers better.
We have interviewed 20 people to test and validate the hypothesis. We are happy to say that our value propostiton is mostly confirmed. There are some changes to be made so please stay tuned. They will come later!
Here is our presentation on our customers:
The TAM, SAM and SOM
1. Segmentation and market sizing
We are starting a business that aims at giving people on the move the freedom to choose what and when to eat. Since people on the move have access to restaurants, cafes, bars, with more, our option must address those that are tired of one or more aspects by having to buy their meal. They want to eat meals of their own choice, having free access to preferred meals: either it is because of budget, diet, allergies, and/or other preferences. Or they might be tired of standing in line, using their spare time to wait for food.
è Heat-able lunchbox with multiple opportunities to plug helps solving these problems.
1.1 Total Available Market (TAM):
The total available market, which is also sometimes called the Total Addressable market can be seen as the market you would serve in a world with no constraints and competitors. Meaning that in established markets it would be the total sales in that market if the company was a global reaching monopoly (Technotes 2013)
1.1.1 Top Down method:
To find the TAM there are two different methods which are commonly used. The first is the top down which we will use. Here we start with the population in the world and work ourselves down to our market size.
Our Total Available Market is the population on the planet moving away from their home during the day, especially those in relation to work or school. We envision our TAM as in addition to be everyone with a lunchbox today, also as the entire work/school force of the planet which is searching for a better alternative to buying lunch out.
The total world population is the starting point, however it is not our market. Since the density of people on the move (especially students and workers) is largest in developed urban areas, and further the amount of people standing in lines to buy food, is on a diet, has special preferences etc. is probably higher in developed urban areas (do to a more consumption oriented economy), we use this as the first filter in our top down method:
In 2009, people living in urban areas is 3, 42 billion, which is slightly over half of the earth’s population (United Nations 2013).
Approximately 67% of these are in the workable age from 15 to 64 (Eurostat 2012): 3,42*0.67 = 2.29 billion people in urban areas in the workable age.
In general, looking at numbers from the US and EU, 60% of people in the workable age 15-64 is actually working (Eurostat 2013): 2.29*0.6 = 1.37 billion people.
As our numbers are based on mere estimations and show an unrealistic best case scenario, we will be cautious and reduce it and round it down to approximately 1 billion people:
Around 1 billion people in the world live and go to school in urban areas. Out of these people many will not be interested due to not having a problem with cues or budget, or they might have good and easy access at their work/school-place. That takes us to the SAM, which makes us able to apply the opposite approach.
1.2 SAM and SOM using the bottom up approach
The bottom up approach gives us a more realistic assumption of the market. Here we take constraints, competitors and demand into account. Here we identify customer segments and what we want to achieve.
1.2.1 Serviceable Addressable Market (SAM):
SAM is the part of the market we will target, meaning the part of TAM we are actually planning to focus on. When targeting a market it must be segmented first. In addition, calculations of actual capacity must be taken into account. We have done a rough segmentation when making the Business Model 1.0 where we chose the market: People on the move, for instance workers and students.
Segmentation: As the whole working urban world is a highly visionary market (similar to TAM) due to the assumption that all these people have the problem we are trying to address. Hence, we need to segment the market further:
Capacity: We are only four members of the team. However we are outsourcing the production and distribution of the lunchbox and we are able to distribute to urban areas of Portugal just by ordering more from the selected outsourced production facilities. The most important aspect for us is to calculate the costs and prices we will face to be able to calculate the quantum we are able to sell at what price. Our hypothesis testing will enable us to dig deeper into this matter.
However, our knowledge of the market will be highly based on hypothesis tested by surveys and interviews made in Portugal. In addition, our company will be based in Portugal. Hence, starting with Portugal as the target market seems reasonable.
We have decided to divide the SAM into different stages of success. It goes from 1, which is the starting point, and if successful, we imagine taking the lunch-box out of Portugal also.
Different stages of SAM:
1.stage SAM: All of urban Portugal. In Portugal in 2010 61% of the population lived in urban areas. As Portugal has approximately 11.8 million people, 11.8*0.6 = 7.08 million people live in urban areas,
2. stage SAM: more urban parts in countries in Europe
3. stage SAM: Core segment. Students and workers in urban developed areas, 70% of people in developed urban areas (English Online 2011)
1.2.2 Serviceable Obtainable Market (SOM):
The SOM is the realistic share of the market taken competitors, demand, segmentation, and capacity into account. This means that it is a portion of the SAM as described over.
We have decided to also divide the SOM into stages due to the fact that a start-up SOM will look very different from a launched business SOM.
1. Stage SOM: Students and workers in Lisbon and Porto: We have chosen to focus on one country (Portugal) because of distribution, channels, and knowledge as explained in SAM. Further the capital which also is the biggest city is chosen as a starting point. This is due to the fact that the market is biggest. Due to its economic output, standard of living and market size the Greater Lisbon sub region is one of the major financial and economic centers of the Iberian Peninsula. It is also the political center of the country, the seat of the government and residence of the Head of State (IEPM School 2013). In addition, we live and go to school in Lisbon ourselves and the knowledge about the area will be an advantage when starting up.
There are 150.000 students in Lisbon (Portugal Global 2013).
Population: Lisbon 2.808 million: (Portugal Global 2013).Of these are approximately 67% in the workable age = 1,88 mill, and of these approximately 60% is actually working: = 1.12 million people.
Hence our SOM before taking constraints into account is 1, 27 million people .
When the geographical segment is calculated it is important to keep in mind the other segments based on demographics and psychographics. In addition we have to look at the threats from competition (this is done separately in a SWOT analysis). The three major constraints are:
– Customer need and demand
– Substitutes and competitors
– Resource constraints
2. Stage SOM: Students and workers in Porto in addition to Lisbon.
and 73.000 students in Porto = 223000 students in total
Porto 1.344 million (2009) = 4.152 million people
Total = 1 699 000 + 223 000 = 1 922 000 million people in our geographical segment.
3.Stage SOM: Further into European big cities.
2. In conclusion:
TAM = 1 Billion people
SAM stage 1 = 7, 1 Million people
SOM stage 1 = 1, 27 Million people
3. References (alphabetical)
English Online (2011). “World population.” Retrieved 10.10, 2013, from http://www.english-online.at/geography/world-population/urban-areas.html
Eurostat (2012). “Population Structure and Agening.” Retrieved 9.10, 2013, from http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Population_structure_and_ageing.
Eurostat (2013). Employment Rates. epp.eurostat.uc.
IEPM School (2013). “Lisbon.” Retrieved 10.10, 2013, from http://iepm.ibs.iscte.pt/?pt=Summer_School_Lisbon.
Portugal Global (2013). “Invest in Portugal.” Retrieved 10.10, 2013, from www.portugalglobal.pt/EN/InvestInPortugal/WhyPortugal
Technotes (2013). “Marketing explaining TAM SAM and SOM.” Retrieved 10.10, 2013, from http://technotes.tostaky.biz/2012/11/marketing-explain-tam-sam-and-som.
United Nations (2013). Population in urban areas. UN. un.org.
The Lean Explorers 