Alex Pavlenko “Entering to new niches from the scratch”


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Alex Pavlenko “Entering to new niches from the scratch”

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Alex Pavlenko “Entering to new niches from the scratch”

  1. 1. Entry StrategiesAlex Pavlenko, Lviv 2013
  2. 2. About me Alex Pavlenko is the CEO and founder of Zeus Electronics Company. He has a rich background in science and marketing, with over 10 years of “field” experience in such areas as mobile applications, embedded solutions for telecom, multimedia and automotive industries, new product launching, holding degrees in applied mathematics, marketing and finance. ….. Start-up team member of launching Luxoft operations in Ukraine Establishment of embedded line of business for Luxoft Start-up of Baymark, one of remarkable players of embedded market with offices in Odessa and Kiev, which later was acquired by Luxoft. Start-up of Zeus, mobile apps and mobile based solution company, which successfully delivered more than 500 apps to market Start-up of ZeRadio, mobile multimedia system with 1M users worldwide.
  3. 3. General View Many factors need to be considered, including: an idea’s market potential, the competition, financial resources, and one’s skills and interests Why would a consumer choose to buy products or services from this new firm? One important factor is the uniqueness of the idea It is best to avoid an entry strategy based on low cost alone 3
  4. 4. General View Successful entrepreneurs often distinguish their ventures through differentiation, niche specification, and innovation 4
  5. 5. Diffrentiation (anti comodity) When differentiation is successful, the new product or service is relatively less sensitive to price fluctuations because customers value the quality that makes the product unique (anti comodity) 5
  6. 6. Niche Product Niche specification is an attempt to provide a product or service that fulfills the needs of a specific subset of consumers By focusing on a fairly narrow market sector, a new venture may satisfy customer needs better than larger competitors can 6
  7. 7. Principles of Innovation Begin with analysis of opportunities Innovation as conceptual and perceptual Simple and focused Start small Aims at leadership
  8. 8. Innovation Visionary business expert Peter F. Drucker explained innovation as “change that creates a new dimension of performance” There are two main types of product innovation  Pioneeringor radical innovation  Incremental innovations 8
  9. 9. Closure ;) Entrepreneurs in less-developed countries often innovate by imitating and adapting products created in developed countries Drucker called this process “creative imitation”  Creative imitation takes place whenever the imitators understand how an innovation can be applied, used, or sold in their particular market better than the original creators do Innovation, differentiation, and/or market specification are effective strategies to help a new venture to attract customers and start making sales 9
  10. 10. Market AnalysisCuriosity is a key
  11. 11. Market Analysis
  12. 12. Market Position
  13. 13. Market Position Market Niche – small part of an existing market Market Leader – maintain dominant position in the market? Market Follower – Follow the lead of the market leader – pricing, product development, etc. Market Challenger – Seek to adopt strategies to challenge market leader’s position
  14. 14. Market Objectives
  15. 15. Market Objectives Will involve/determine some or all of the following:  Market Penetration  New Product Development  Branding  Diversification  SWOT Analysis  Product Portfolio – Product Life Cycle, Boston Matrix
  16. 16. Market Segments
  17. 17. Which Segment?
  18. 18. Market Structure
  19. 19. Focus Strategies Focus strategy based on low-cost  Concentrate on a narrow customer segment beating the competition on lower cost Focus strategy based on differentiation  Offering niche customers a product customized to their needs Overall objective of both focus strategies is to do a better job of serving a niche target market than competitors Keys to success  Choose a niche were customers have a distinctive preference, unique needs or special requirements  Develop a unique ability to serve the needs of a niche target market
  20. 20. What Makes a Niche Attractive? Large enough to be profitable Good growth potential Not critical to the success of major competitors Organization has the resources to effectively serve the niche Organization can defend itself against challengers through a superior ability to serve the niche No competitors are focusing on the niche
  21. 21. Strengths and Risks of Focus Strategies Strengths  Competitors don’t have the motivation to meet specialized needs of the niche  Organization’s competitive advantage could be seen as a barrier to entry  Organization’s competitive advantage provides an obstacle for substitutes  Organization’s ability to meet the needs of customers in the niche can reduce the bargaining power of large niche buyers Risks  Broad differentiated competitors may find effective ways to enter the niche  Niche customers’ preferences may move toward the product attributes desired by a larger market segment  Profitability may be limited if too many competitors enter the niche
  22. 22. Diversification Use when entering new industries  Acquire an existing company in the target industry  Start a new company internally  Form a joint venture
  23. 23. Thanks! Questions?