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Marketing for Entreprenuers: Creating Markets

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    Notes on slide 1

    Clayton Christiansen (page 254) refers to new technology that gets it start away from the mainstream of a market and then as its functionality improves over time invades the main market. Established companies are often aware of the new technology but do not invest in it because they listen to their customer and their customer do not want it. This happens because new technology is early is its development at the beginning of the S curve. Once the performance of the new technology improves customers do want it but by this time new entrants have accumulated the knowledge required to bring the new technology into the mass market. Other reasons established companies have trouble adopting disruptive technology. Initially they serve a niche market. Required a new business model to exploit the opportunity. New network of suppliers and distributors grows up around the new entrants.

    Opportunity must be shaped by taking action Outcome of entrepreneurial action is not ideas but change, new value creation, innovation

    Pg 89

    Brainstorming is used to generate a number of ideas quickly. It is not used for analysis or decision making. The ideas generated during a brainstorming session need to be filtered an analyzed later. One person shares an idea, another person reacts to it and so on. The main objective is to create an atmosphere of enthusiasm and originality where lots of ideas are generated. Four rules of brainstorming are: No criticism allowed, Freewheeling: carefree expression of ideas, the session should move quickly and leapfrogging is encouraged. Leapfrogging is using one idea as a means of jumping forward quickly to other ideas. A focus group is a gathering of 5 to 10 people who are selected because of their relationship to the issue being discussed. The strength of focus groups is that they help companies uncover what’s on their customers’ minds. This market research technique can be vary effective but it has some drawbacks. The Gap used focus groups too extensively to determine fashion trends. The problem with this in fashion is that consumers rarely know what they want. Rather designers must be allowed to lead with creative designs. This was one of the key strategic mistakes that led to declining same store sales and the ouster of the high level managers including the CEO. A survey is a method of gathering information from a sample of individuals. Some firms set up customer advisory boards or request customer feedback on blogs. Boeing did this during the development of the 787. Anthropological Research is gaining popularity as a way for companies to understand actual customer experience. The Boston Consulting Group used this technique when McDonalds executives were required to “ride-along” with moms and screaming kids through the drive-thru window. They also ate meals with the mom and kids and discovered that the moms were not eating because they didn’t like McDonalds food. This research led McDonalds to develop new products such as salads and chicken sandwiches that moms could enjoy while their children ate happy meals and played in the play land.

    Roughly 50-90 percent of new ideas originate from a present work environment or prior industry experience. Most entrepreneurs get their ideas while working for companies in the same industry in which they start their new venture. Secondary Sources is the second most common source of ideas. This category includes a broad range of sources and include such things as social networks, trade publications and creative approaches such as brainstorming. Improving an existing technology, product or service is the third most common source of ideas As you can see from the chart another sources of ideas is titled vision of opportunity. This is linked with the idea of entrepreneurial alertness, which is formally defined as the ability to notice things without engaging in a deliberate search. Some entrepreneurs are good at sizing up the marketplace and inferring the likely implications.

    An opportunity is a favorable set circumstances that creates a need for a new product, service or business. An opportunity is different than an idea. An idea is a thought, an impression or a notion. An idea may or may not meet the criteria of an opportunity. This is a critical point because many ventures fail because there was not real opportunity to fill a need and the idea did not meet the following four qualities of an opportunity. An opportunity has four essential qualities: It is Attractive, Durable, Timely and Anchored in a product, service or business that creates or adds value for its buyer or end user.

    Opportunity Gap is a gap between what is currently on the market and the possibility for a new or significantly improved product, service or business that results from emerging trends For an entrepreneur to capitalize on an opportunity, its window of opportunity must be open. Window of Opportunity is a term that describes the time period in which a firm can realistically enter a new market. Furthermore an opportunity cannot be taken until it is recognized. Opportunity recognition refers to the process of perceiving the possibility of a profitable new business or a new product or service. A WSU Alumnus who is a successful entrepreneur starts his new venture with a customer need. In the past, when an individual expresses a need for a product (as diverse as personalized pens and wind energy towers) then the entrepreneur sees an opportunity to start a new venture to meet that need. This way he already has a customer in hand and it is easier to acquire resources.

    There are three ways to identify opportunities. The first way is to observe trends and study how they create opportunities. This equates with the question “What might we do?” in the Opportunity Analysis Framework. The four main environmental trends are economic forces, social forces, technological advances and political and regulatory changes. Economic forces affect opportunities in part because economic forces affect consumers’ level of disposable income. When incomes are high, people are more willing and able to buy products and services that enhance their lives. For example, a drop in interest rates typically leads to an increase in new home construction and furniture sales. Another economic trend is pressure on firms to improve their economic performance. Because cost control is a priority for most firms, opportunities exist for entrepreneurs who can develop products or services that save other businesses money. Social forces are things like family and work patterns (the number of two-income households and the number of single-parents), the ageing of the population, increasing diversity in the workplace, focus on health and fitness etc… Advances in technology frequently fit with economic and social change to create opportunities. The technology is often an enabler of the product or service innovation. Political and Regulatory changes provide the basis for opportunities. New laws provide opportunities for entrepreneurs to help companies comply with the laws. Global political instability and terrorism have increased the need for security. Companies need products and services to protect their employees and their information.

    The second way to identify opportunities is to recognize a problem (your idea generation notebook calls this a “point of pain”) and develop a product or service that solves that problem. Radar Golf is an example of a product that was developed to solve the problem of lost golf balls. The golf balls are embedded with a a tracking chip the size of a rice grain which enables the golfer to find the lost ball using a handheld unit. The third approach to identifying opportunities is to recognize a customer need that is not currently being satisfied by companies large or small. Although a number of successful companies have been founded based on this approach, it also warrants caution. Recently the Gap determined that the needs of 30-50 year old women were not being met by the current retailers and so they developed the Fourth & Towne brand. After a short 14 months, the retailer closed the brand at a cost of 40 million dollars. They overestimated the need in the marketplace and underestimated how well their competitors such as Ann Taylor and Chico's were doing to meet the clothing needs of this market.

    Sources of innovation internal to a company: 1. unexpected occurrences 2. Incongruities within the logic or rhythm of a process / incongruities between economic realities/ incongruities between expectations and results process needs 3. industry and market changes Sources of innovation outside a company: Social and intellectual environment: Demographic changes are the most reliable and predictable, most rewarding and least risky, because they have a timeline (aging baby boomers) (number of people, age distribution, education, occupation and geographic location changes in perception, mood rather than fact (talk about the current economy here…real estate) new knowledge knowledge-based innovations require many kinds of knowledge, long lead-times and a convergence among types of knowledge. More market driven than any other kind of knowledge Dependent upon the context, sources have different importance at different times. Analyze all opportunity sources. Innovation is both conceptual and perceptual. Look, ask and listen. Study expectations, needs and values of users. Simple and focused. Only do one thing otherwise it confuses people. Effective innovations start small. Aim for leadership from the start. Practice of systematic innovation Page 91 textbook Re-thinking marketing.

    Another way to identify opportunities is to learn about yourself. You can ask yourself “What am I really passionate about?” “ What am I genetically encoded for? What am I good at?” and “What can I contribute that is of value and people will pay me for?” Asking these three questions will not only help you identify entrepreneurial opportunities but they will help you make decisions about career choices. Corridor principle. Once you walk down the corridor you are more likely to notice the open doors the next time…Ronstadt R.

    Create chart on the board as a way to summarize the chapter. Opportunity creation (in the land of possibilities…unarticulated need and no value-creating solution) Uncertainty in both the demand and supply the future is largely unpredictable. Opportunity discovery Opportunity recognition

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    Marketing for Entreprenuers: Creating Markets - Presentation Transcript

    1. Creating Markets and Leading Customers Opportunities that arise as a result of change…
    2. Sony
      • “We don’t serve markets. We make markets.”
    3. Three company challenges
      • Anticipate and respond to change
      • Leverage core competencies to exploit new market realities
      • Learn faster and innovate better to explore new territory
    4. Creative Destruction
      • New replaces the old: the entrepreneur creates change by breaking free from the existing competitive dynamics to carve out a competitive advantage in a new marketspace.
    5. Disruptive Innovations
      • When new technologies emerge that
        • Revolutionize the structure of the industry
        • Dramatically alter the nature of competition
        • Require companies to adopt new strategies to survive
      • Paradigm shifts are more likely to occur when
        • The established technology in the industry is mature and approaching its natural limit
        • A new disruptive technology is taking root in niches that are poorly served by incumbent companies
      Disruptive technology often causes the decline of established companies.
    6. Three types of entrepreneurial creativity
      • Origination or the act of pure invention
      • Synthesis, or the creative act of joining together two previously unrelated things
      • Modification, which occurs when a thing or process is improved or gains a new application
    7. Seven outcomes of Entrepreneurial Creativity Wealth Employment Growth New Ventures Change New Markets Innovation (products, services, processes) Value
    8. Idea
      • A thought, impression or notion. It may or may not meet the criteria of an opportunity.
      • Like a dream- they last forever, they are free, everybody has them and they don’t need customers to survive.
    9. Techniques for Generating Ideas
      • Brainstorming
        • No criticism allowed
        • Freewheeling: carefree expression of ideas
        • Session moves quickly
        • Leapfrogging is encouraged
      • Focus Groups
      • Surveys
      • Customer Advisory Boards
      • Anthropological Research
    10. Where Ideas for Opportunities Originate
    11. Six most common sources of high value ideas for new ventures
      • Customers
      • Employees
      • Suppliers
      • Professional networks
      • Trade Publications
      • Magazines/Newspapers
    12. Opportunit y
      • Perishable
      • Require effort (they must be identified, evaluated and exploited)
      • Only some people are interested in pursuing them
      • They are directed at creating markets and products/services for customers
    13. Opportunity
      • Opportunity is a favorable set of
      • circumstances that creates a need for a
      • new product, service or business.
      • Four essential qualities
        • Attractive (profit making potential)
        • Durable (sustainable over a period of time)
        • Timely (as determined by window of opp.)
        • Anchored in a product, service or business that creates or adds value for its buyer or end user.
    14. Entrepreneurial Opportunities
      • Opportunities to act in the creation of value.
      • Ideas, beliefs and actions that enable the creation of value.
    15. Opportunity Terms
      • Opportunity Gap is a gap between what is currently on the market and the possibility for a new or significantly improved product, service or business that results from emerging trends
      • Window of Opportunity describes the optimal time period during which to pursue an opportunity with a given business concept.
      • Opportunity Recognition refers to the process of perceiving the possibility of a profitable new business or a new product or service.
    16. Ways to Identify an Opportunity
      • 1. Environmental Trends
        • Observe and interpret trends
        • Market research
        • Most instrumental in creating business opportunities
          • Economic Forces
          • Social Forces
          • Technological Advances (existing and emerging technologies and potential applications)
          • Political and Regulatory Changes
    17. Ways to Identify an Opportunity
      • 2. Solving a Problem
        • Recognize a problem and find ways to solve it.
      • 3. Finding Gaps in the Marketplace
        • Recognize a need that customers have that is not being satisfied by current companies.
      • 4. Personal experience
    18. Discipline of Innovation Peter Drucker
        • Sources of innovation internal to the company
          • Unexpected occurrences, success, failures
          • Incongruities
        • Sources of innovation external to the company
          • Industry and market changes
          • Demographics
          • Changes in perception
          • New knowledge
          • Changes in process needs
    19. Review: Converting an Idea into an Opportunity
      • Questions:
      • What might we do? (Environmental)
      • What do we do best? (Distinctive competencies)
      • What must we do? (Success Requirements)
    20. Improving Opportunity Identification
      • Learn about Yourself
      • What are you really passionate about?
      • What am I genetically encoded for? What am I good at?
      • What can I contribute that is of value and people will pay me for?
      • Access information from your own network
    21. Attractive Opportunities
      • Create or add significant value to a customer or end user.
      • Solve a significant problem or meet a significant need/want for which someone is willing to pay a premium
      • Promise robust market, margin and money making characteristics
      • Match founders’ experiences and background
      • Balance risk and reward
    22. Business Concept
      • A unique combination that is a specific, value creating method for capitalizing on the opportunity
        • Modifications to existing business
        • Licensing
        • Franchise
        • Innovation (new product, service or process)
        • An existing product altered to fit the needs of a particular market segment (or niche)
        • New packaging solution
        • New distribution approach
    23. Successful business concepts
      • Solve a problem
      • Fill an important need in a unserved or underserved market
      • Take advantage of an environmental trend that creates the opportunity for a new business idea.
    24. Three Views of Entrepreneurial Opportunity How opportunities come into existence
      • Opportunity creation (in the land of possibilities…unarticulated need and no value-creating solution)
      • Opportunity discovery (in the hot spots, articulated need but no value-creating solution or an existing solution but unarticulated needs)
      • Opportunity recognition (in the cool places, an articulated need and a novel value-creating solution)

    + Ben AcklesBen Ackles, 1 month ago

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