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Marketing for Entreprenuers: Rethinking Marketing

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    Notes on slide 1

    Why does a business exist? To do functions that an individual cannot. Solution/Product Consumer(Market) Marketing Concept:The firm shall organize all it’s activities to meet the needs of it’s target market and meet it’s profit objectives. Marketing Orientation: The implementation of the marketing concept   A business perspective that makes the customer the focal point of a company’s total operations committed to the continuous creation of superior customer value. Market orientation involves obtaining information about customer, competitors and markets. It is a culture committed to customer value and a process of continually creating and providing a superior value for customers. Customer-centric: Every decision in the organization is made from the perspective of what impact it has on a firm’s customers and markets. The customer is at the center of the business model.

    Managerial implications of market definition Focus is on buyers: Dictates how products are acquired, consumed/used and disposed of. Highlight buyers willingness and ability to purchase a product introduces the concept of effective demand. Does a market exist? Buyer ability is like the treadle pump in Malawi Offering focuses on value or benefit of product or service. Charles Revson from Revlon selling hope? Overall market “coffee for example” can be broken down into multiple markets Caffeine, Decaf, instant, flavored etc… Try to bring it up from mini-market. Market Share is the sales of firm, product or brand divided by the sales of the “market.” If a company has a high share of the served market then a market penetration strategy will be difficult. Could pursue market development. If served market share is low then product development or a market penetration might be pursued to increase market share. For Frito Lay you will need to determine market segments and then share of those segments.

    The kind of product, service or idea The way it will be communicated to buyers (promotion) personal selling, advertising, sales promotion and public relations inform and assure buers that the offering will meet their needs. The method for distributing the offering to buyers (place) Marketing channels satisfy the buyers’ shopping patterns and purchase requirements in terms of point-of-purchase information and offering availability. The amount buyers will pay for the offering (price) Value or benefit provide by the offering to the buyers Questions: 1. Is the marketing mix internally consistent? 2. Buyers are more sensitive to some marketing mix activities than others. 3. What are the costs of performing the marketing mix activities and the cost of attracting and retaining buyers? 4. Is the marketing mix properly timed? Are communications scheduled to coincide with product availability?

    Focus can be on a business, product, or brand Time Dimension can be short-run (typically one year) or long-run (multi-year)

    Innovativeness refers to seeking of creative, unusual or novel solutions to problems and needs. Calculated risk-taking involves the willingness to commit significant resources to opportunities that have a reasonable change of costly failure, but it also includes creative attempts to mitigate, leverage or share the various risks. Proactiveness is making things happen through whatever means are necessary.

    What might we do? Environmental opportunity: unmet or changing consumer needs, unsatisfied buyer groups, new means or technology for delivering value (Schwab and online brokerages.. Sharebuilder, Senior transition, gyms for overweight kids, gourmet salads) What do we do best? Distinctive competencies…. SKILLS, TECHNOLOGIES OR RESOURCES.. In order for a core competency to become a strategic competitive advantage the the competency must be: Valuable, Rare, costly to imitate and non-substitutable (no structural equivalents), provides superior value to customers. What must we do? ( Basic tasks that an organization must perform in an industry or market to compete successfully) Reverse mortgages (government insurance… senior endorsement) (distribution and inventory cosmetics) (safety juvenile products) Don’t get involved where you don’t have the skills

    Corporate Entrepreneurship is an established firm with an orientation to behave entrepreneurially. Such firms are typically proactive innovators and are not adverse to risk. You will notice when we discuss the entrepreneurial attitude that these firms exhibit the same characteristics of innovation, risk-taking and action.

    A business model is a plan for how a firm competes, uses its resources, structures its relationships, interfaces with customers and creates value to sustain itself on the basis of the profits it generates.

    A business plan is a written document that describes all the aspects of a business venture in a concise manner. It is necessary to have a written business plan to raise money and attract high-quality partners.

    Proactive: marketer attempts to redefine external conditions in ways that reduce uncertainty and lessen the firm’s dependency and vulnerability. Marketing variables are used to both create change and adapt to change. Obsession with Opportunity: “escape the tyranny of the served market” Customer Intimacy: innovative approaches to creating new relationships or using existing relationships to create new markets. Visceral relationships with the firms customer base. Innovation: discontinuous and dynamically continuous initiatives that lead the customer in addition to incremental improvements and line extensions. Calculated risk taking: redefine elements of the external environment in ways that reduce environmental uncertainty, lessen the firm’s dependency and vulnerability and/or modify the task environment in which the firm operates. Collaborative marketing programs with other firms, joint development projects, creative test market experiments, staged product roll-outs, working with lead customers, strategic alliances , outsourcing etc. Role of a risk manager. In contrast to traditional role of reducing risk through a focus on increasing sales of existing products within existing markets with priority given to aggressive advertising and promotional tactics. Resource leveraging: doing more with less.

    Players are those in the value chain. Brandenburger and Nalebuff call players all those in the value net: customers, suppliers, substitutors and complementors. (competitors, suppliers, distributors) Do not eliminate or modify the roles of current players The competitive battleground often focuses on changing customers’ perceptions of the focal firm’s offering versus competitors’offerings on attributes known to be considered important by customers (e.g., persuading potential students that teaching quality is superior at Harvard Versus Stanford). The term market driven refers to learning, understanding, and responding to stakeholder perceptions and behaviors within a given market structure.

    Proactively changing the players the composition of players In contrast, shaping market behavior entails getting customers to focus on attributes previously unconsidered by customers (e.g., flexibility to take classes in the evening) or providing new-to-the-world offerings (e.g., a program using both Harvard and Stanford faculty members). In contrast, the term driving markets refers to changing the composition and/or roles of players in a market and/or the behavior(s) of players in the market (see Figure 1). More important, driving markets is a multiplicative function of two key dimensions: (1) the number of changes effected in a market and (2) the magnitude of those changes. Another point that is important to note is that markets may be driven by a single organization or jointly by several organizations.

    Both? Barnes and Noble (online/brick and mortar) EA (online and console) Furthermore, it is important to keep in mind that a given organization can both drive markets and be market driven. Thus, these approaches are complementary, not substitute, approaches. This is most easily observed when an organization is simultaneously attempting to protect a cashgenerating old technology and attempting to build a business for the future with a new technology. Abell (1993) termed this challenge a “dual strategy” because organizations are often confronted with balancing the need to manage the present business opportunities while concomitantly planning for the future (see Hamel and Prahalad 1994 for a discussion).

    Important to note that changes in market structure and behavior are intended to improve customer value or performance of the focal firm.

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    Marketing for Entreprenuers: Rethinking Marketing - Presentation Transcript

    1. Entrepreneurial Marketing
    2. What is Marketing?
    3. Marketing Definition AMA
      • “An organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.”
    4. Marketing Review
      • Marketing concept?
        • The firm shall organize all its activities to meet the needs of it’s target market and it’s profit objectives
    5. Market
      • Prospective buyers, individuals or organizations, willing and able to purchase the organizations existing or potential offering.
        • Composite of mini-markets
        • Market share: sales/market
        • Served or addressable market: market in which the company/product/brand competes for targeted customers.
    6. The Marketing Mix (4 P’s) Customer Channel Strategy Product Strategy Price Strategy Communications Strategy
    7. 4 P’s to 4 C’s
      • Product to Co-created solutions/experiences
      • Promotion to communication with communities
      • Price to customizable personal value
      • Place to choice and convenience.
    8. Marketing Plan
      • A formal written document that describes the context and scope of an organization’s marketing effort to achieve defined goals or objectives within a specified future time period
    9. What is Entrepreneurship?
    10. Attitude or Organizational Orientation of Entrepreneurship
      • An attitude about business and life that emphasizes creative approaches to problem solving
      • Combines innovation, calculated risk taking and action.
    11. The Process of Entrepreneurship
      • Process of creating value by organizing resources to exploit opportunities
        • In an organizational context
        • May include new ventures, products, services, processes, markets, and technologies
      • Process by which individuals pursue opportunities without regard to resources they currently control.
    12. The Process of Entrepreneurship
      • Identify Opportunity
      • Define a business concept
      • Assess and Acquire Resources
      • Manage and Harvest the Venture
    13. Identifying Organizational Opportunities
      • What might we do? (Environmental)
      • What do we do best? (Distinctive competencies)
      • What must we do? (Success Requirements)
    14. Corporate Entrepreneurship
      • Corporate Entrepreneurship is an established firm with an orientation to behave entrepreneurially.
        • Such firms are typically proactive innovators and are not adverse to risk
    15. Creative Destruction
      • The process by which new products and technologies developed by entrepreneurs over time make existing products and technologies obsolete.
    16. Business Model
      • A business model is a plan for how a firm competes, uses its resources, structures its relationships, interfaces with customers and creates value to sustain itself on the basis of the profits it generates.
        • Margin, Volume, Burn
        • Cost structure
    17. Business Plan
      • A business plan is a written document that describes all the aspects of a business venture in a concise manner.
      • It is necessary to have a written business plan to raise money and attract high-quality partners.
    18. Entrepreneurial Marketing
      • The proactive identification, evaluation and exploitation of opportunities for acquiring and retaining profitable customers through innovative approaches to risk management, resource leveraging and value creation.
    19. Entrepreneurial Marketing : Seven dimensions
      • Proactive
      • Obsession with Opportunity
      • Customer Intimacy
      • Innovation
      • Calculated risk taking
      • Resource Leveraging
      • Exceptional Value Creation
    20. “ Market-driven behavior” vs. “Market-driving behavior.”
      • Market-Driven
      • Learn, understand and react to preferences and behaviors within established market structures
      • Position your product against existing competitive offerings: key to success is being better on things customers say they value
      • Firm develops skills at market sensing and adapting internal capabilities to meet customer demands.
      • “ Hear” the Voice of the Customer
    21. “ Market-driven behavior” vs. “Market-driving behavior.”
      • Driving Markets
      • Influence the structure of the market and/or behaviors / preferences in a direction that enhances the competitive position of the firm
      • Focus on creating new benefits /solutions/ preferences and convincing customers why they are important
      • “Shape/Influence” the Voice of the Customer
    22. “ Market-driven behavior” vs. “Market-driving behavior.”
      • The most successful firms are able to balance both market driven and driving market.
      • Manage both structure and behavior change.
    23. Market Driving: Shape Market Structure
      • Deconstruction: eliminate players in value chain
        • Channel (e.g. Dell)
        • Competitors (acquire, merge, or partner with)
        • Suppliers (move up the chain)
      • Construction: new / modified set of players
        • Build a new web/network of players (e.g. music)
        • Establish new industry standards
        • Add complementary products / component firms
      • Functional Modification: change the role of players
        • Forward / backward integration
    24. Market Driving: Shape Market Behavior
      • Direct Influences
        • Introduce customer and competitor constraints
        • Remove customer and competitor constraints
      • Indirect Influences
        • Create new/reverse existing customer preferences
          • Introduce new customer benefits for existing products
        • Create new/reverse existing competitor preferences
        • Reshape perceptions of categories
    25. Summary of Market Driving vs. Market-Driven Market Driving Market Driven Opportunities are Constructed based on firm’s skills, contacts, resources Discovered through market research and being responsive Markets and value propositions are Market ownership Create and reshape markets. Market leadership Served, nurtured, and enhanced/Respond to market demand Industry standards and conventions are Emerging Breakthrough revolutionary innovation Established Incremental innovation Brand Identifier (name, logo, slogan and awareness) Experience provider (engagement of customer) Research Analytical eclectic
    26. Elevator Pitches
      • Students will be given 30 seconds to introduce themselves to the class and “pitch” themselves to other students for inclusion on teams.
      • Following the elevator pitches, students will be given time to network with other students and form teams.

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