ENTREPRENEURIAL MARKETING Chapter 5 - …site.iugaza.edu.ps/kdahleez/files/.../EntrepreneurialMarketingPPTs.pdf · ENTREPRENEURIAL MARKETING Chapter 5 1 Bygrave & Zacharakis,Entrepreneurship,New

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Bygrave & Zacharakis, Entrepreneurship, New York: Wiley, 2014 ©

ENTREPRENEURIALMARKETING

Chapter 5

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Marketing defined…

An organizational function and a set ofprocesses for creating, communicating, anddelivering value to customers and for managingcustomer relationships in ways that benefit theorganization and its stake holders.

- American Marketing Association

Marketing practices vary depending on the type of companyand the products and services it sells.

Marketing practices vary depending on the type of companyand the products and services it sells.

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Marketing is Critical

Establishes a customer market Differentiates product or service to customers Gains customer acceptance, trust and loyalty Incites trial and usage

Companies must be able to switch marketing gearsquickly to attract new customer segmentsCompanies must be able to switch marketing gearsquickly to attract new customer segments


Entrepreneurs face uniquemarketing challenges Limited by:

Financial and managerial resources Time Market information

Muddling decision-making with personal biasesand beliefs

Establishes poor relations with multipleaudiences

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Entrepreneurs must acquiremarket data & information Four main categories:

Product attributes important to customers Customer behavior indicating a willingness to pay Trends Customer preference locations

Two main types: Secondary – economical, already published Primary – collected directly for specific purposes

Groups, survey’s, & experiments


Understand the customerchoice process

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Marketing strategy meansaligning ends, ways, & means

ENDS

MEANS

WAYS

MarketingStrategyGap orRisk

An entrepreneurs’ resources & capabilities (means), andobjectives (ends) differ from those of established companies,therefore they must employ different strategies (ways)

Strategic VariablesStrategic Variables


Segmentation, Targeting, andPositioning frame strategic‘ends’

Detectcustomersegments inyour market

Decide whichprofitablesegments totarget

Position youroffering in theminds of yourtarget segments

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Position youroffering in theminds of yourtarget segments





Position youroffering in theminds of yourtargetsegments


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Marketing mix = Ways youemploy Means to achieve Ends

The 4-P’s are derived fromyour choice of targetsegment & positioning

All 4 variables areinterdependent…a changeto one, may require achange to the others.


Product Strategy - Important Issues

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•The core product & the augmented product• The former is the essential good or service and the latter is the set ofattributes peripherally related to it; i.e., iPod and iTunes

•Good & services• The line between products and services has been eroding for sometime; a large part of the gross national product and new job creation are tiedto services.

- Customer value proposition (CVP)- Product differentiation- Product life cycle- Product diffusion

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Product StrategyCustomer value proposition (CVP)

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•When developing any new product, your company must ensurethat it is truly addressing an “unmet consumer need”

•Customer value, the difference between total customer benefitsand total customer costs, which are both monetary and non-monetary; a product attribute is not a benefit until consumers buyin to the advantage.•Any positioning statement has four elements:

(1) Target group and need(2) Brand(3) Concept and(4) Point of difference. The formula is straightforward.


Product Strategy

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Product differentiation•To make product unique to build a distinctive image for the brand.

Product life cycle• The stages of the product life cycle are introduction, growth, maturity, anddecline.• Because new products have varying levels of newness to both the companyand the marketplace, entrepreneurs must make different kinds of risk-returntrade-offs.

Product diffusion• Consumer willingness to adopt a new product is a major factor in the realmof technology products.• The product diffusion curve captures adoption behavior graphically,showing customer segments called innovators, early adopters, early majority,late majority, and laggards.• To involve the customer in the design process to learn exactly what theclient expects.

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Be attentive to consumeradoption behavior

Particularly applies to innovative products Adoption rate can vary (i.e. slower for complex

products)

Product Diffusion CurveProduct Diffusion Curve


Pricing Strategy

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Entrepreneurs incur many costs in starting a venture.• fixed costs, which do not change with the volume of production (such as facilities,equipment, and salaries).•variable costs, which do change with the volume of production (such as raw materials,hourly labor, and sales commissions).

To operate successfully, anentrepreneurial venturemust not only recover bothfixed costs (point B) andvariable costs (point A) butalso make a reasonableprofit (point C).

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Pricing Strategy

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1. “Get-big-fast” strategy: aggressively selling their products belowcost. (very dangerous)

2. Cost-based : marking up a product based on its cost plus adesired profit margin (point C in Figure 5.7).

3. Competitive pricing.A common problem with these methods is that they allow entrepreneurs toprice too low, thereby ‘‘leaving money on the table.’’ Pricing too low canhurt the long-term profitability of the venture.

4. Perceived value pricing: is especially viable for pricing a new orinnovative product or service.

5. Price skimming sets high margins; you can expect to gain limitedmarket share because your prices will be relatively high.

6. Penetration pricing aims to gain high market share with lowermargins and relatively lower prices.


Pricing Strategy - Representation

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We can represent price in a variety of ways.1. Price points (also called price levels) for products,

which are standardized or fixed.2. Price promotion, a tool by which marketers can

achieve specific goals, such as introducing a product toa new customer market.

3. Price discrimination means company charges differentprices to different customer segments.

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Guerilla Marketing

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Guerrilla marketing is marketing activities that arenon-traditional, grassroots, and captivating – thatgain consumers’ attention and build awareness ofthe company.

•Types of Guerrilla Marketing•Word-of-Mouth marketing: “Giving people a reason to talk aboutyour services, and making it easier for that conversation to takeplace.”• Buzz marketing: “Using high-profile entertainment or news toget people to brand.”•Viral Marketing: “Creating entertaining or informative messagesthat are passed along in an exponential fashion, oftenelectronically or by e-mail.”


Guerilla Marketing

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•Issues in Guerrilla Marketing•Identify challenges and develop creative solutions•Find the “inherent drama” in your offerings andtranslate that into a meaningful•Get people’s attention and get a “foot-in-the-door”(generating first sale)•Create “buzz” once you get in the door (word-of-mouth marketing)

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Guerilla marketing is oftenused by entrepreneurs

Why? - Fewer resourcesrequire each effort to yieldout-sized impact.

It is non-traditional,grassroots, captivating, &viral

It creates word-of mouth &buzz

Think this got anyone’s attention?


Skills for Managing Growth

Understanding and listening to the customer• Obtain information to understand customer

behavior and expectations related to the 4P’s Building the brand

• Awareness – ability to recall brand upon cue• Equity – effect of brand awareness on

customer

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Recap: Marketing is a delicatebalance of art and science.

Have a solid,consistent strategy

Adapt your tactics asconditions change(scale)

Focus on thefundamentals

ART

SCIENCE

Documents

ENTREPRENEURIAL MARKETING Chapter 5 - …site.iugaza.edu.ps/kdahleez/files/.../EntrepreneurialMarketingPPTs.pdf · ENTREPRENEURIAL MARKETING Chapter 5 1 Bygrave & Zacharakis,Entrepreneurship,New