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Chapter 5
Concept & Development of Entrepreneurship
Entrepreneurial Decision Process
Types of Start-up Ventures
Entrepreneurship & Economic Development
Ethics and Social Responsibility
Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-1
The Nature & Importance of Entrepreneurs
Chapter 5
Concept & Development of Entrepreneurship
Entrepreneurial Decision Process
Types of Start-up Ventures
Entrepreneurship & Economic Development
Ethics and Social Responsibility
Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-2
Chapter Learning Objectives
1. To understand the relevance of industry and competitive analysis to the market planning process.
2. To describe the role of marketing research in determining marketing strategy for the marketing plan.
3. To illustrate an effective and feasible procedure for the entrepreneur to follow in engaging in a market research study.
4. To define the steps in preparing the marketing plan.5. To explain the marketing system and its key
components.6. To illustrate different creative strategies that may be
used to differentiate or position the new venture’s products or services.
Chapter 5
Concept & Development of Entrepreneurship
Entrepreneurial Decision Process
Types of Start-up Ventures
Entrepreneurship & Economic Development
Ethics and Social Responsibility
Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-3
Chapter Opening Profile
• Spin Master Ltd.• www.spinmaster.com• Ronnen Harary, Anton Rabie,
Ben Varadi– 30-something Canadians– North American toy market
• Earth Buddy, Mighty Beanz
• Started 10 years ago• Rely on public relations,
unconventional marketing methods, and self-promotion
• Air Hogs– Built a suitcase filled with the
plane, a plastic airline cup, a bag of peanuts, and a barf bag
– Hired college kids to travel to air shows demonstrating the product to airplane enthusiasts
– Appearances on NBC’s Today show and Rosie O’Donnell’s talk show
Chapter 5
Concept & Development of Entrepreneurship
Entrepreneurial Decision Process
Types of Start-up Ventures
Entrepreneurship & Economic Development
Ethics and Social Responsibility
Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-4
Industry/Competitor Analysis
• Industry analysis completed as part of the business plan (covered in Chapter 6)
• Assessment of environmental/industry trends• Porter’s Five Forces Model
• Competitor analysis– Gather information from
different sources– Use figure 5.1 (over)– Use the information to
determine market positioning for the new venture
• Information sources:– Newspaper, magazine
articles– Internet– Catalogues, brochures– Distributors, suppliers– Corporate annual reports– Trade publications
Chapter 5
Concept & Development of Entrepreneurship
Entrepreneurial Decision Process
Types of Start-up Ventures
Entrepreneurship & Economic Development
Ethics and Social Responsibility
Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-5
Competitor Analysis
Chapter 5
Concept & Development of Entrepreneurship
Entrepreneurial Decision Process
Types of Start-up Ventures
Entrepreneurship & Economic Development
Ethics and Social Responsibility
Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-6
Marketing Research for the New Venture
• Gathering information to determine:– Who will buy the product or service?– What is the size of the potential market?– What price should be charged?
Steps in the marketing research process:
1. Define the purpose
2. Gather data from secondary sources
3. Gather information from primary sources
4. Analyze and interpret results
– What is the most appropriate distribution channel?
– What is the most effective promotion strategy to inform and reach potential customers?
Chapter 5
Concept & Development of Entrepreneurship
Entrepreneurial Decision Process
Types of Start-up Ventures
Entrepreneurship & Economic Development
Ethics and Social Responsibility
Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-7
Understanding the Marketing Plan
Establishes how the entrepreneur will effectively compete and operate in the marketplace
Designed to provide answers to 3 basic questions• Where have we been – background• Where do we want to go• How do we get there
• Characteristics of a marketing plan:– Provides a strategy to achieve
mission/goals– Based on facts and valid
assumptions– Appropriate organization– Provides for continuity– Simple and short– Flexibility built-in– Specific performance criteria to
be monitored
Chapter 5
Concept & Development of Entrepreneurship
Entrepreneurial Decision Process
Types of Start-up Ventures
Entrepreneurship & Economic Development
Ethics and Social Responsibility
Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-8
Marketing Research (continued)
• Defining the purpose or objectives:– What marketing decisions are being made? – What information is needed?– Look to the four P’s of marketing strategy
• Gathering data from secondary sources:
– Use free information that has already been gathered by someone else first
– Publicly available information– Commercial sources
• Information sources:
– Statistics Canada– Industry Canada– Departments of labour– Business/economic
development agencies– Local chambers of commerce– Local media
Chapter 5
Concept & Development of Entrepreneurship
Entrepreneurial Decision Process
Types of Start-up Ventures
Entrepreneurship & Economic Development
Ethics and Social Responsibility
Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-9
Marketing Research (continued)
• Gathering data from primary sources:– Collecting information directly from the source– Different methods for different purposes– Can be expensive and time consuming
• Analyzing and interpreting the results:
– What does the data collected mean?
– Compare to research objectives– Use to make better marketing
decisions
• Data collection methods:– Observation– Networking– Focus group discussions– Surveys– Experimentation
Chapter 5
Concept & Development of Entrepreneurship
Entrepreneurial Decision Process
Types of Start-up Ventures
Entrepreneurship & Economic Development
Ethics and Social Responsibility
Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-10
Marketing Plan for a Consumer Products Company
Chapter 5
Concept & Development of Entrepreneurship
Entrepreneurial Decision Process
Types of Start-up Ventures
Entrepreneurship & Economic Development
Ethics and Social Responsibility
Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-11
Marketing Plan for a Consumer Products Company
Chapter 5
Concept & Development of Entrepreneurship
Entrepreneurial Decision Process
Types of Start-up Ventures
Entrepreneurship & Economic Development
Ethics and Social Responsibility
Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-12
Marketing Plan for a Consumer Products Company
Chapter 5
Concept & Development of Entrepreneurship
Entrepreneurial Decision Process
Types of Start-up Ventures
Entrepreneurship & Economic Development
Ethics and Social Responsibility
Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-13
Marketing Plan for a Business-to-Business Company
Chapter 5
Concept & Development of Entrepreneurship
Entrepreneurial Decision Process
Types of Start-up Ventures
Entrepreneurship & Economic Development
Ethics and Social Responsibility
Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-14
Marketing Plan for a Business-to-Business Company
Chapter 5
Concept & Development of Entrepreneurship
Entrepreneurial Decision Process
Types of Start-up Ventures
Entrepreneurship & Economic Development
Ethics and Social Responsibility
Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-15
Marketing Plan for a Service Company
Chapter 5
Concept & Development of Entrepreneurship
Entrepreneurial Decision Process
Types of Start-up Ventures
Entrepreneurship & Economic Development
Ethics and Social Responsibility
Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-16
Marketing Plan for a Service Company
Chapter 5
Concept & Development of Entrepreneurship
Entrepreneurial Decision Process
Types of Start-up Ventures
Entrepreneurship & Economic Development
Ethics and Social Responsibility
Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-17
Characteristics of a Marketing Plan
The marketing plan should be designed to meet certain criteria
• A strategy for accomplishing the company goal and objectives
• Based on facts
• An appropriate organization must be described to implement the marketing plan
• Provide for continuity
• Short and simple
• Flexibility
• Specify performance criteria
Chapter 5
Concept & Development of Entrepreneurship
Entrepreneurial Decision Process
Types of Start-up Ventures
Entrepreneurship & Economic Development
Ethics and Social Responsibility
Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-18
Facts Needed for Market Planning
Chapter 5
Concept & Development of Entrepreneurship
Entrepreneurial Decision Process
Types of Start-up Ventures
Entrepreneurship & Economic Development
Ethics and Social Responsibility
Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-19
Steps in Preparing the Marketing Plan
• Marketing mix (definition): combination of product, price, promotion, and distribution and other marketing activities needed to meet marketing objectives
Chapter 5
Concept & Development of Entrepreneurship
Entrepreneurial Decision Process
Types of Start-up Ventures
Entrepreneurship & Economic Development
Ethics and Social Responsibility
Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-20
Market Segmentation & Targeting
• Breaking a marketplace down into categories of buyers who share similar characteristics
• 5 characteristics of useful segmentation:
– Meaningful– Mutually exclusive
– Measurable– Substantial– Actionable
• Target market: specific group of potential customers toward which the venture aims its marketing plan
• Customer profile:– Demographic variables– Attitudes on price/quality– Where currently shops– Influence of advertising– Quantities and frequency of
purchasing– Why customers buy
Chapter 5
Concept & Development of Entrepreneurship
Entrepreneurial Decision Process
Types of Start-up Ventures
Entrepreneurship & Economic Development
Ethics and Social Responsibility
Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-21
Relationship Marketing
• Building a relationship with the firm’s most profitable customers
• 70% to 80% of profits come from small minority of customers
• Challenge to figure out who they are
• Use of database technology to identify and track
• Communication is key
• Allocation of selling effort to focus on them
• Firing unprofitable customers?
Chapter 5
Concept & Development of Entrepreneurship
Entrepreneurial Decision Process
Types of Start-up Ventures
Entrepreneurship & Economic Development
Ethics and Social Responsibility
Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-22
Marketing Strategy
• Considering Strengths and Weaknesses• Establish goals and objectives for venture• Marketing strategy decisions:• Product or service:
– Physical product
• Pricing: – Costs – Markups or
margins – Competition
– Packaging– Brand– Image– Warranty– Service– Delivery time– Features– Style
Chapter 5
Concept & Development of Entrepreneurship
Entrepreneurial Decision Process
Types of Start-up Ventures
Entrepreneurship & Economic Development
Ethics and Social Responsibility
Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-23
EthicsStealth Marketing
Chapter 5
Concept & Development of Entrepreneurship
Entrepreneurial Decision Process
Types of Start-up Ventures
Entrepreneurship & Economic Development
Ethics and Social Responsibility
Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-24
Major Considerations in Channel Selection
Chapter 5
Concept & Development of Entrepreneurship
Entrepreneurial Decision Process
Types of Start-up Ventures
Entrepreneurship & Economic Development
Ethics and Social Responsibility
Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-25
Promotion
• Promotional campaigns should consist of:
– Determine objectives
– Define customers
– Determine benchmarks
– Profile your target group
– Get the message out
– Develop the message
– Cost it out
– Implement the plan
– Evaluate the plan
• Guerilla marketing:– Pursuing traditional goals of profit
and revenue through unconventional means
– Most bang for buck– Needs creative thinking
• Public relations:– Press kit, events– Speaking opportunities
Chapter 5
Concept & Development of Entrepreneurship
Entrepreneurial Decision Process
Types of Start-up Ventures
Entrepreneurship & Economic Development
Ethics and Social Responsibility
Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-26
Promotion
Get on TV• Know your story• Think Visually• Find the right show• E-mail, don’t call• Consider your timing• Be available
Chapter 5
Concept & Development of Entrepreneurship
Entrepreneurial Decision Process
Types of Start-up Ventures
Entrepreneurship & Economic Development
Ethics and Social Responsibility
Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-27
• Internet strategy:
– Company website
– Blogs
– Direct e-mail
– Banner advertisements
– Affiliate programs
– Participate in online forums or chat groups
– Registration with search engines
• SEO Search Engine Optimization
• Website issues:– Website objective– Website construction– Content– Promotion– Communication– Registration– Purchase and delivery
mechanism– Security– Metrics
Promotion
Chapter 5
Concept & Development of Entrepreneurship
Entrepreneurial Decision Process
Types of Start-up Ventures
Entrepreneurship & Economic Development
Ethics and Social Responsibility
Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-28
Business-to-Business Markets
• Require a different approach than consumer markets
• Products are more expensive, customized, specialized, larger in quantity, and riskier to purchase
• Relies on:
– More direct channel of distribution
– Personal selling
– Trade publications
– Trade shows
Chapter 5
Concept & Development of Entrepreneurship
Entrepreneurial Decision Process
Types of Start-up Ventures
Entrepreneurship & Economic Development
Ethics and Social Responsibility
Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-29
Final Steps
• Budgeting the marketing strategy
• Implementation of the marketing plan
• Why some marketing plans fail:– Lack of a real plan– Lack of an adequate situation
analysis– Unrealistic goals– Unanticipated events
• Monitoring progress of marketing actions
• Contingency planning
Chapter 5
Concept & Development of Entrepreneurship
Entrepreneurial Decision Process
Types of Start-up Ventures
Entrepreneurship & Economic Development
Ethics and Social Responsibility
Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-30
Chapter Closing Comments
1. To understand the relevance of industry and competitive analysis to the market planning process.
2. To describe the role of marketing research in determining marketing strategy for the marketing plan.
3. To illustrate an effective and feasible procedure for the entrepreneur to follow in engaging in a market research study.
4. To define the steps in preparing the marketing plan.5. To explain the marketing system and its key components.6. To illustrate different creative strategies that may be used to
differentiate or position the new venture’s products or services.