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Segmentation Marketing Strategy for Nokia

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Segmentation Marketing Strategy for Nokia Powered By Docstoc
					    Software Best Practices
    3 Practical Strategies for Increasing Revenue




    Daniel Greenberg
    VP Worldwide Marketing
    Macrovision


The Leader in Software Value Management   Page 1
                                                        Value Pricing


 Best Practices                                          Feature
                                                       Segmentation


                                                      Piracy Prevention




               •   Overview of 3 Revenue Strategies
               •   Strategy 1: Value Pricing
               •   Strategy 2: Feature Segmentation
               •   Strategy 3: Piracy Prevention
               •   Summary




The Leader in Software Value Management   Page 2
                                                                                                   Value Pricing


 “Pricing is the Biggest Lever Affecting Profitability.”                                             Feature
                                                                                                   Segmentation


                                                                                                 Piracy Prevention




        Raising price               …increases
         by 1%…                     profit by 7%


          101                           15


                                        14

                                    Operating
                                                            “ 1% effective increase in
                              26
                              26
                                     Profit                   pricing delivers an additional
                                                              7% increase in earnings on
         100
         100
                             COGS                             average.”
                                                                                McKinsey & Co., Oct. 2003

                        59




        Sales Fixed Costs*
       Average economics for ISVs between
        $100 million and $10 billion in sales


The Leader in Software Value Management            Page 3
                                                                                  Value Pricing

If You Can’t Raise Your Price….                                                    Feature
                                                                                 Segmentation
Raise Your Deal Size …Or Market Potential
                                                                                Piracy Prevention




        Raising price
          by 1%…                                            Piracy Prevention

          101

                                                                Value Pricing


                                                        Feature Segmentation

         100




                            Current Revenues

       Sales



The Leader in Software Value Management        Page 4
                                                                                            Value Pricing

 Increase Your Revenue Potential                                                             Feature
                                                                                           Segmentation
 Throughout Your Product’s Lifecycle
                                                                                          Piracy Prevention




                                                           Early      Late
                Introduction              Growth          Maturity   Maturity   Decline



                                                                                          + Protect
                                                                                            Against
                                                                                            Piracy
                                                                                          + Offer
                                                                                            Feature
    $ Revenue




                                                                                            Bundles
                                                                                          + Offer
                                                                                            Value
                                                                                            Pricing
                                                                                          + Your
                                                                                            Current
                                                                                            Revenue
                                                                                            Line




                                          Time or Product Maturity




The Leader in Software Value Management              Page 5
                                                        Value Pricing


 Best Practices                                          Feature
                                                       Segmentation


                                                      Piracy Prevention




               •   Overview of 3 Revenue Strategies
               •   Strategy 1: Value Pricing
               •   Strategy 2: Feature Segmentation
               •   Strategy 3: Piracy Prevention
               •   Summary




The Leader in Software Value Management   Page 6
                                                                                          Value Pricing

 Many Companies Set Pricing for One                                                        Feature
                                                                                         Segmentation
 Market Segment .… & Leave Significant $ Behind
                                                                                        Piracy Prevention




                           Potential revenue




   $ Revenue

                           Current revenue




                                          Heavy Usage      Medium Usage   Light Usage




The Leader in Software Value Management           Page 7
                                                                                        Value Pricing

 Many Companies Set Pricing for One                                                       Feature
                                                                                        Segmentation
 Market Segment .… & Leave Significant $ Behind
                                                                                    Piracy Prevention




                                          Heavy Usage      Medium Usage   Light Usage




The Leader in Software Value Management           Page 8
                                                               Value Pricing

 Many Companies Set Pricing for One                             Feature
                                                              Segmentation
 Market Segment .… & Leave Significant $ Behind
                                                             Piracy Prevention




                                              Light Usage
                                              Medium Usage
                                              Heavy Usage

The Leader in Software Value Management   Page 9
                                                                 Value Pricing

                                                                  Feature
 Are You Leaving Money on the Table?                            Segmentation


                                                               Piracy Prevention




                                                Light Usage
                                    extra
                                                Medium Usage
                                                Heavy Usage

The Leader in Software Value Management     Page 10
                                                                 Value Pricing

 Does Your Pricing Enable You to                                  Feature
                                                                Segmentation
 Penetrate All Customer Segments?
                                                               Piracy Prevention




                                                Light Usage
                                    extra
                                                Medium Usage
                                                Heavy Usage

The Leader in Software Value Management     Page 11
                                                                         Value Pricing

 Does Your Pricing Enable You to                                          Feature
                                                                        Segmentation
 Penetrate All Customer Segments?
                                                                       Piracy Prevention




        100%




       Usage




         10%

                            Heavy             Medium           Light
                                                Light Usage
                                    extra
                                                Medium Usage
                                                Heavy Usage

The Leader in Software Value Management     Page 12
                                                               Value Pricing


 Different Users Have Different Usage                           Feature
                                                              Segmentation


                                                             Piracy Prevention




        100%




       Usage




         10%

                            Heavy           Medium   Light




The Leader in Software Value Management   Page 13
                                                                                    Value Pricing

Offer Different Prices for Different Usage Patterns…                                 Feature
                                                                                   Segmentation
and Your Customers Will Buy More
                                                                                  Piracy Prevention




                                                Licensing

        100%            Locked                   Floating             Usage




       Usage




         10%

                            Heavy                  Medium           Light

                     $100/pc/year         $300/floating user/year   $5/user-day
                                                  Pricing


The Leader in Software Value Management          Page 14
                                                                                             Value Pricing


 Pricing Case Study                                                                            Feature
                                                                                             Segmentation


                                                                                           Piracy Prevention




                  Challenge                                          Solution
     • Customers don’t want to pay large                • Introduced FLEXnet Utility Pricing
       upfront fees for software.                       • Customers pay for the time they use
     • Customer don’t know exactly how                    the product.
       many seats are required in a given               • Customers have flexibility to deploy
       quarter (demand is hard to forecast)               on as many seats as required
                                                          without publisher intervention


     “ FLEXnet is helping us to remain competitive in the market,
       and we can now relate and adapt to our customers’ needs more
       quickly and effectively.”
                                                                           Gary Dransfield
                                                                       Commercial Manager
                                                                         Aveva Engineering



The Leader in Software Value Management       Page 15
                                                       Value Pricing


 Best Practices                                          Feature
                                                       Segmentation

                                                      Piracy Prevention




               •   Overview of 3 Revenue Strategies
               •   Strategy 1: Value Pricing
               •   Strategy 2: Feature Segmentation
               •   Strategy 3: Piracy Prevention
               •   Summary




The Leader in Software Value Management   Page 16
                                                                            Value Pricing

 Many Companies Build Products for One Market                                 Feature
                                                                            Segmentation
 Segment.… And Leave Significant $ Behind                                  Piracy Prevention




                           Potential revenue




   $ Revenue

                           Current revenue                          Lite



                                                         Standard




                                     Premium


The Leader in Software Value Management        Page 17
                                                               Value Pricing


 Example: Studio Artware                                         Feature
                                                               Segmentation

                                                              Piracy Prevention




    Market
    • Many Potential Users
         –   Novice 4 Professional
         –   Lite User 4 Heavy User
         –   Consumer 4 Corporate User
         –   Price Sensitive 4 Price Indifferent
    • Only 1 User Buys Today
    Product
    • Many Features
         –   Oils
         –   Watercolors
         –   Acrylics
         –   Canvas size
         –   # of Colors supported
         –   # of Paintings that can be worked on at a time
    • All Features Available in 1 Package Today




The Leader in Software Value Management             Page 18
                                                                           Value Pricing


 Example: Studio Artware                                                     Feature
                                                                           Segmentation

                                                                          Piracy Prevention




                                            Studio Artware




                                          “Software for all
                                           your graphics
                                              needs”




                                          License by Product Components

The Leader in Software Value Management             Page 19
                                                                                             Value Pricing


 Example: Studio Artware                                                                       Feature
                                                                                             Segmentation

                                                                                            Piracy Prevention




                                                           Studio Artware


                                                             “Pro” Edition



                                          “Standard” Edition



                                           “Jr”
                                          Edition
                                            Fingerpaints



                                                                 Watercolors



                                                                                     Oils




                                               License by Product Components

The Leader in Software Value Management                                        Page 20
                                                                                                                  Value Pricing


 Example: Studio Artware                                                                                            Feature
                                                                                                                  Segmentation

                                                                                                                 Piracy Prevention




                                                           Studio Artware                    Related Products


                                                             “Pro” Edition



                                          “Standard” Edition



                                           “Jr”                                             Sketch      Sculpt
                                          Edition
                                            Fingerpaints



                                                                 Watercolors



                                                                                     Oils




                                               License by Product Components

The Leader in Software Value Management                                        Page 21
                                                                                                                                                        Value Pricing


 Example: Studio Artware                                                                                                                                  Feature
                                                                                                                                                        Segmentation

                                                                                                                                                       Piracy Prevention




                        Canvas Size




                                                                                                 Studio Artware                    Related Products
                                      # of Colors


                                                    # of Concurrent Paintings




                                                                                                   “Pro” Edition



                                                                                “Standard” Edition



                                                                                 “Jr”                                             Sketch      Sculpt
                                                                                Edition
                                                                                  Fingerpaints



                                                                                                       Watercolors




                License by
               Usage Metrics
                                                                                                                           Oils




                                                                                     License by Product Components

The Leader in Software Value Management                                                                              Page 22
                                                                                                                                                              Value Pricing


 Example: Studio Artware                                                                                                                                        Feature
                                                                                                                                                              Segmentation

                                                                                                                                                             Piracy Prevention




                                                                                License by User
                                                                                                   Site License

                                                                                   Disconnected Network User

                                                                                                          Networked User

                                                                                                                          Single User
                        Canvas Size




                                                                                                    Studio Artware                       Related Products
                                      # of Colors


                                                    # of Concurrent Paintings




                                                                                                      “Pro” Edition



                                                                                  “Standard” Edition



                                                                                   “Jr”                                                 Sketch      Sculpt
                                                                                  Edition
                                                                                    Fingerpaints



                                                                                                          Watercolors




                License by
               Usage Metrics
                                                                                                                              Oils




                                                                                       License by Product Components

The Leader in Software Value Management                                                                                 Page 23
                                                                                        Value Pricing


 Feature Segmentation Case Study                                                          Feature
                                                                                        Segmentation

                                                                                       Piracy Prevention




                   Challenge                                     Solution
     • Different customers needed                   • Using flexible licensing Nokia
       different feature sets
                                                      “turns on & off” features for
     • Too expensive to stock multiple                different customer segments
       versions of products




     “We’re now maximizing revenue through flexible, feature-driven
      pricing and packaging. Thanks to the FLEXnet platform we’ve
      been able to create a license model that closely matches how our
      customers perceive the value of our products.”
                                                                     Chandra Shekar
                                                                      Program Manager
                                                                     Software Licensing
                                                                                  Nokia


The Leader in Software Value Management   Page 24
                                                        Value Pricing


 Best Practices                                          Feature
                                                       Segmentation


                                                      Piracy Prevention




               •   Overview of 3 Revenue Strategies
               •   Strategy 1: Value Pricing
               •   Strategy 2: Feature Segmentation
               •   Strategy 3: Piracy Prevention
               •   Summary




The Leader in Software Value Management   Page 25
                                                                               Value Pricing

 Prevent Unlicensed Use….                                                       Feature
                                                                              Segmentation

      …And Convert Into Paying Customers                                     Piracy Prevention




                           Potential revenue




   $ Revenue

                           Current revenue
                                                                 Executive
                                                         Admin




                          Manager




The Leader in Software Value Management        Page 26
                                                                                                 Value Pricing

 $30 Billion of Software Is “Pirated”                                                             Feature
                                                                                                Segmentation
 (IDC & BSA)
                                                                                               Piracy Prevention




                                       Worldwide Piracy Rate = 33%


             Middle East/Africa                                            56%


                 Latin America                                                   63%


                   Asia Pacific                                           53%


               Eastern Europe                                                          71%


              Western Europe                                  36%


                North America                      23%


                                  0%   10%   20%    30%       40%   50%    60%    70%    80%




The Leader in Software Value Management             Page 27
                                                                                             Value Pricing

 Most Enterprises Are Not                                                                     Feature
                                                                                            Segmentation
 Tracking License Compliance
                                                                                           Piracy Prevention




                               “Do you track software compliance?”




            No                                                                      96%




                      4%
           Yes



                 0%               20%                40%                60%   80%   100%


                   N = 99
                   Source: IDC’s Future of Software Licensing Study, 2004


The Leader in Software Value Management                       Page 28
                                                                 Value Pricing

                                                                  Feature
                                                                Segmentation


                                                               Piracy Prevention




                                                    Anti-piracy:
                                                    Easy Way to Grow
                                                    Revenues




The Leader in Software Value Management   Page 29
                                                        Value Pricing


 Best Practices                                          Feature
                                                       Segmentation


                                                      Piracy Prevention




               •   Overview of 3 Revenue Strategies
               •   Strategy 1: Value Pricing
               •   Strategy 2: Feature Segmentation
               •   Strategy 3: Piracy Prevention
               •   Summary




The Leader in Software Value Management   Page 30
                                                                                             Value Pricing

 Increase Your Revenue Potential                                                              Feature
                                                                                            Segmentation
 Throughout Your Product’s Lifecycle
                                                                                           Piracy Prevention




                                                            Early      Late
                Introductio               Growth           Maturity   Maturity   Decline
                     n


                                                                                           + Protect
                                                                                             Against
                                                                                             Piracy
                                                                                           + Offer
                                                                                             Feature
    $ Revenue




                                                                                             Bundles
                                                                                           + Offer
                                                                                             Value
                                                                                             Pricing
                                                                                           + Your
                                                                                             Current
                                                                                             Revenue
                                                                                             Line




                                          Time or Product Maturity




The Leader in Software Value Management              Page 31
                                                                                                Value Pricing


 Next Steps: Executing on the 3 Strategies                                                        Feature
                                                                                                Segmentation


                                                                                            Piracy Prevention




                             1.   Prioritize your strategies
                             2.   Identify key team members
                             3.   Add FLEXnet to your application
                             4.   Collect revenue!

      Your Application                    FLEXnet                         Sales     Operations
                                        Functionality
                                                                        New Sales


              +
                                  •   Piracy Protection
                                  •   Creative Pricing                   Current      Current
                                                                          Sales
                                  •   Flexible Packaging                               Costs
                                  •   Streamlined Operations
                                  •   Automated Updating
                                                                                     New Costs
                                  •   End User Mgt. Tools & Reporting



The Leader in Software Value Management              Page 32
                                                                                                 Value Pricing

 Key to Implementation: Separate Your Business                                                    Feature
                                                                                                Segmentation
 Model From Your Application
                                                                                               Piracy Prevention




                                                                Early      Late
                Introduction              Growth               Maturity   Maturity   Decline




                                                                                               + Protect
                                                                                                 Against
                                                                                                 Piracy
                                                                                               + Create
                                                                                                 Feature
                                                                                                 Bundles
    $ Revenue




                          Pricing &
                    Pricing &                                                                  + Offer
                                                        Applications + Modules
                                                   Applications + Modules                        Value
                          Licensing
                    Licensing                                                                    Pricing
                                                                                               + Your
                                                                                                 Current
                                                                                                 Revenue
                                                                                                 Line




                                          Time or Product Maturity




The Leader in Software Value Management              Page 33
                                                                                            Value Pricing


 QUESTIONS?                                                                                   Feature
                                                                                            Segmentation


                                                                                          Piracy Prevention




                               danielg@macrovision.com



                                          Make your software smarter


                                              • On 500,000,000 desktops … 90%+ of market
                                              • 100 of top 100 ISV’s use our technology
                                              • 70,000+ customers
                                              • 700+ patents worldwide in licensing & DRM




The Leader in Software Value Management            Page 34
BACKGROUND ON MACROVISION
    Macrovision FLEXnet Publisher™ enables software and hardware vendors to
    increase revenue and reduce operational costs by flexibly pricing, packaging,
    protecting, and updating their product offerings. It is a core element of FLEXnet,
    the industry’s only Software Value Management (SVM) platform. SVM solutions
    bridge the gap between pricing and packaging software on the developer side
    and purchasing and managing that software on the enterprise side. Over 50,000
    software publishers and hundreds of Fortune 1000 companies use Macrovision
    technologies for Software Value Management, which include FLEXnet license
    management and software updating solutions and the InstallShield® suite of
    software installation and application packaging tools.




The Leader in Software Value Management   Page 36
 Partial List of Macrovision’s 70,000 Customers




The Leader in Software Value Management   Page 37
 OUR CORE COMPETENCY:
 Get a Great Return on Our Investment



    Our Core Competency                   R&D
                                          • $110 million invested in R&D
    Industry Standard                     • 580 person-years invested
    Platform Benefits                     • 15 years of development
    Extreme Flexibility                   Proprietary Technology
                                          • 700+ Patents Worldwide in Licensing & DRM
                                          • Patent for Concurrent Licensing & Borrowing
                                          Proven in Real World
                                          • Battle-tested on millions of desktops
                                          • 4 FLEXenabled apps launched every second




The Leader in Software Value Management         Page 38
 INDUSTRY STANDARD:
 Our Market Leadership Secures Your Future



    Our Core Competency                                                               +
    Industry Standard                     • Major corporations require their software to be
                                            “FLEXenabled”
    Platform Benefits
    Extreme Flexibility
                                          • Launching new chip (Prescott) in Spring ’04
                                          • Pre-production version not compliant with
                                            Macrovision licensing
                                          • Intel, at great expense, changed chip



                                          • Sun ships new OS, Solaris 9.0, in 2002
                                          • Not compliant with previous versions of
                                            Macrovision licensing
                                          • Sun changes operating system

The Leader in Software Value Management         Page 39
 PLATFORM BENEFITS:
 Freedom to Choose the Best Options



    Our Core Competency                   Broadest possible range of capabilities
                                          •   “One-stop shopping" for all needed capabilities
    Industry Standard                     •   Large community of FLEXnet providers
    Platform Benefits                     •   More than could be provided by any one vendor
                                          •   Much more than you could build yourself!
    Extreme Flexibility
                                          The safest choice: Lowest risk to implement
                                          • Certification program ensures that "everything
                                            just works"
                                          • Modular platform architecture means new
                                            capabilities can easily be added whenever
                                            needed
                                          • Platform standards ensure that systems will
                                            interoperate seamlessly now and in the future




The Leader in Software Value Management          Page 40
 EXTREME FLEXIBILITY:
 Unparalleled Market Agility



    Our Core Competency                   • Change pricing, licensing & packaging at any
                                            time, without changing your software
    Industry Standard
                                          • 1000’s of license models supported
    Platform Benefits                     • 25+ platforms (Windows, UNIX, Mac, Java, etc.)
    Extreme Flexibility                   • Supports the entire software license lifecycle:
                                              –     Demo and Evaluation
                                              –     Initial purchase
                                              –     Incremental purchases (through multiple
                                                    channels)
                                              –     Version upgrades
                                          • Licenses can be sent via multiple means
                                              –     Web, email, phone, FAX or paper certificate
                                              –     Also using automated license installation
                                                    technology




The Leader in Software Value Management           Page 41

				
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Description: Segmentation Marketing Strategy for Nokia document sample