Chapter 10 discusses marketing challenges for entrepreneurial ventures, highlighting various tactics for effective market research including guerrilla marketing, customer observation, web-based surveys, and focus groups. It emphasizes the importance of integrating marketing philosophy, market segmentation, and consumer behavior into a comprehensive marketing plan, while also addressing the influence of competitive pressure and an entrepreneur's background on marketing strategy choice. Additionally, it outlines a structured approach for developing marketing plans, pricing strategies, and revenue models adapted for the social media age.

1. Chapter 10
Marketing Challenges
for Entrepreneurial Ventures
Prepared by: Junna Rose S. Apales

2. Entrepreneurial tactics in Market Research
• Guerrilla Marketing
- The use of nonconventional tactics and
unorthodox practices applied to marketing
research. Realizing that there are an
unlimited number of ways in which to collect
information regarding a given question, the
entrepreneur must thrive on tapping into
unutilized sources of information and
collecting information in very creative ways.

3. • Insights in Ordinary Patterns
- The entrepreneur needs to understand that patterns
emerge over time, so identifying and tracking them is
invaluable. Here are a few of the identifiable trends:
-Potential customers buying at certain times of the year.
-Questions that customers ask employees at similar
stores.
-Information sources customers rely on for different types
of purchases.
-Patterns in the characteristics of repeat users of similar
products.
-Methods that potential customers rely on to reduce risk
when they are purchasing.

4. • Technological Tools
- Today technology can be extremely valuable to
entrepreneurs and their research efforts. Tracking
software to see exactly how a visitor to the firm's
website behaves, what features are examined, and
how long they remain on the site, may be a viable
tool. Technology that facilitates surveys, such as
Survey Monkey, could prove helpful. The emergence
of smartphones that allow customers to take pictures
of things that interest them represents another
research tool with rich potential. Tools to track
response rates to advertisements or promotions
placed in certain media, especially the Internet, are
also valuable.

5. • Customer Observation
- Insights can be gained from observing situations as
they occur. Observational approaches can take many
creative forms. They can be obtrusive, where the subject
is aware that he or she is being observed, or
unobtrusive, where he or she is not aware. An example
of the obtrusive approach would be having potential
customers use their smartphones to identify preferences
and questions as they peruse their choices.
-An unobtrusive example would be when the
entrepreneur counts cars or people that pass a given
location at certain times of the day. Either method can
be a systematic means of capturing market information.

6. • Web-Based Surveys
-As we mentioned in the technological tools
earlier, Survey Monkey is an example of the
easy-to-use tools for creating online surveys.
These services help an entrepreneur to design
a survey, drop it into an established online
questionnaire format, and post it on a secure
website. These web-based services will format
the data and provide the statistical analysis as
well. Web-based surveys are inexpensive and
can reach very large numbers of people in a
short period of time.

7. • Focus Groups
- Gathering small groups of potential
customers (usually 6-10) for an in-depth
discussion about the new venture the
entrepreneur is proposing may be a valuable
source of insights. Participants elaborate on
their feelings, beliefs, perceptions, and
experiences with this new venture. Because
they are small and less representative of entire
market segments, focus groups are valuable
ways for getting preliminary insights that are
relevant to a particular venture decision.

8. • Lead User Research
- Find lead users in the marketplace or in particular
industries of people who have needs for which no
solution exists and who often have ideas for effective
products that have not yet been developed. They
sometimes are experimenting with prototype solutions
that, with modification, have the potential for addressing
the lead user's needs. Lead users are often experienced
in a particular field of endeavor and are driven to seek a
solution to a problem they recognize. These prototype
experiments do not produce satisfactory solutions, which
creates the opportunity for innovation. The lead user
approach would allow the entrepreneur to take pieces of
information from these experts about the future and
combining them in novel ways.

9. • Blog Monitoring
- Blog sites have produced a new source of
market research insights. A blog is a website that
includes user-generated content, typically on some
focused topic where anyone can post opinions or
information allowing for interactive discussions.
Photos, videos, audio inputs, and links to other
websites can also be posted. Simple content
analysis can be applied to identify prominent terms
or themes that appear in blog discussions. Today
there are technologies that foster linguistic
observation and social network analysis as well.

10. • Archival Research
- Archives are a collection of records that have
been created or accumulated over time. These
records might be written documents, magazines,
videos, computer files, online databases, patent
records, and so forth. Access to most archives is
free and the information is objective. They are a type
of secondary information that can reveal important
insights to the creative researcher. For example, the
historical records of Country Business Patterns from
the Bureau of the Census can reveal growth patterns
for certain industries in different regions of the
country. As we discussed in the section on
secondary research, there are numerous files and

11. THE COMPONENTS OF EFFECTIVE MARKETING
• Effective marketing is based on three key
elements: marketing philosophy, market
segmentation and consumer behavior. A
new venture must integrate all three
elements when developing its marketing
concept and its approach to the market.
This approach helps set the stage for how
the firm will seek to market its goods and
services.

12. 1. Marketing Philosophy
• Three distinct types of marketing philosophies exist among new ventures:
production driven, sales driven, and consumer driven.
a. The production-driven philosophy is based on the belief you must
produce efficiently and worry about sales later. Production is the main
emphasis; sales follow in the wake of production. New ventures that
produce high-tech, state-of-the-art output sometimes use a production-
driven philosophy.
b. A sales-driven philosophy focuses on personal selling and ad- vertising
to persuade customers to buy the company's output. This philosophy often
surfaces when an overabundance of supply occurs in the market. New
auto dealers, for example, rely heavily on a sales-driven philosophy.
c. A consumer-driven philosophy relies on research to discover consumer
preferences, desires, and needs before production actually begins. This
philosophy stresses the need for marketing research to better understand
where or who a market is and to develop a strategy targeted toward that
group. Of the three philosophies, a consumer-driven orientation is often
most effective, although many ventures do not adopt it.

13. Three major factors influence the choice of a marketing philosophy:
• 1. Competitive pressure.
- The intensity of the competition will many
times dictate a new venture's philosophy. For
example, strong competition will force many
entrepreneurs to develop a consumer
orientation in order to gain an edge over
competitors. If, on the other hand, little
competition exists, the entrepreneur may
remain with a production orientation in the
belief that what is produced will be sold.

14. • 2. Entrepreneur's background.
- The range of skills and abilities
entrepreneurs possess variesgreatly.
Whereas some have a sales and marketing
background, others possess production and
operations experience. The entrepreneur's
strengths will influence the choice of a
market philosophy.

15. • 3. Short-term focus.
- Sometimes a sales-driven philosophy may
be preferred due to a short- term focus on
moving the merchandise" and generating
sales. Although this focus appears to
increase sales (which is why many
entrepreneurs pursue this philosophy), it
also can develop into a hard-selling
approach that soon ignores customer
preferences and contributes to long-range
dissatisfaction.

16. 2. Market Segmentation
• Market segmentation is the process of identifying a
specific set of characteristics that differentiates one
group of consumers from the rest.
• For example, although many people eat ice cream,
the market for ice cream can be segmented based
on taste and price. Some individuals prefer high-
quality ice cream made with real sugar and cream
because of its taste; many others cannot tell the
difference between high-quality and average-quality
ingredients and, based solely on taste, are indifferent
between the two types. The price is higher for high-
quality ice cream such as Häagen-Dazs or Ben &
Jerry's, so the market niche is smaller for these

17. • To identify specific market segments, entrepreneurs
need to analyze a number of vari- ables.
• As an example, two major variables that can be
focused on are demographic and benefit variables.
• Demigraphic- Demographic variables include age,
marital status, sex, occupation, in- come, location,
and the like.
• Benefit Variable-help to identify unsatisfied needs that
exist within this market. Examples may include
convenience, cost, style, trends, and the like,
depending on the nature of the particular new venture.

18. 3. Consumer Behavior
• Consumer behavior is defined by the many
types and patterns of consumer
characteristics. However, entrepreneurs can
focus their attention on only two
considerations: personal characteristics and
psychological characteristics. Traditionally
some marketing experts have tied these
characteristics to the five types of consumers:
(1) innovators, (2) early adopters, (3) early
majority, (4) late majority, and (5) laggards.

19. • Personal characteristics- the differences in social class,
income, occupation, education, housing, family influence,
and time orientation are all possible personal
characteristics,
• psychological characteristics -are needs, perceptions,
self-concept, aspiration groups, and reference groups. This
type of breakdown can provide an entrepreneur with a
visual picture of the type of con- sumer to target for the
sales effort.
• The next step is to link the characteristic makeup of
potential consumers with buying trends in the marketplace.
Table 10.4 shows the changing priorities that have shaped
buying decisions. Each of these factors relates to consumer

21. • Entrepreneurs should be aware of five major
consumer classifications:
1. Convenience goods. whether staple goods (foods),
impulse goods (checkout counter items), or emergency
goods and services, consumers will want these goods
and services but will not be willing to spend time
shopping for them.
2. Shopping goods. products consumers will take time
to examine carefully and comparefor quality and price.

22. • 3. Specialty goods, products or services consumers
make a special effort to find andpurchase.
• 4. Unsought goods. items consumers do not currently
need or seek. Common examples are life insurance,
encyclopedias, and cemetery plots. These products
require explanation or demonstration.
• 5. New products. items that are unknown due to lack
of advertising or are new nerducts that take time to be
understood. When microcomputers were first in ample,
they fell into this category.

23. DEVELOPING A MARKETING PLAN
• A marketing plan is the process of determining a clear,
comprehensive approach to the creation of customers.
The following elements are critical for developing this
plan:
a. Current marketing research, determining who the
customers are, what they want, and how they buy.
b. Current sales analysis, promoting and distributing
products according to marketing research findings.
c. Marketing Information system- collecting, screening,
analyzing, storing, retrieving, and discriminating marketing
information on which to base plans, decisions, and actions.
d. Sales forcasting- coordinating personal judgment with
reliable market information Evaluation: identifying and

24. 1. Current Marketing Research
• The purpose of current marketing research is to identify
customers target markets and to fulfill their desires. For current
marketing research to be effective for the growing venture, the
following areas warrant consideration:
• The company's major strengths and weaknesses - these
factors offer insights into profit- able opportunities and potential
problems and provide the basis for effective decision making.
• Market profile- helps a company identify its current market and
service needs: How profitable are existing company services?
Which of these services offer the most potential? Which (if any)
are inappropriate? Which will customers cease to need inthe
future?

25. • Current and best customers. Identifying the company's current
clients allows manage- ment to determine where to allocate
resources. Defining the best customers enables man- agement to
segment this market niche more directly.
• Potential customers. By identifying potential customersDe ither
geographically or with an industry-wide analysis of its marketing
area company increases its ability to target this group, thus turning
potential customers into current customers.
• Competition. By identifying the competition, a company can
determine which firms are most willing to pursue the same basic
market niche.
• Outside factors. This analysis focuses on changing trends in
demographics, economics, technology, cultural attitudes, and
governmental policy. These factors may have substantial impact on
customer needs and, consequently, expected services.
• Legal changes. Marketing research performs the important task of
keeping management abreast of significant changes in
governmental rates, standards, and tax laws.

26. Current Sales Analysis
• An entrepreneur needs to continually review the methods
employed for sales and distribution in relation to the market
research that has been conducted, Matching the correct
customer profile with sales priorities is a major goal in sales
analysis. Following is a list of potential questions to be
answered by this analysis:
- Do sales people call on their most qualified prospects on a
proper priority and time-allo- cation basis?
- Does the sales force contact decision makers?
- Are territories aligned according to sales potential and
salespeople's abilities?
- Are sales calls coordinated with other selling efforts, such as
trade publication advertis-ing, trade shows, and direct mail?
Do salespeople ask the right questions on sales calls?

27. Marketing Information System
– marketing information system compiles and
organizes data relating to cost, revenue, and
profit from the customer base. This information
can be useful for monitoring the strategies,
decisions, and programs concerned with
marketing. As with all information systems
designs, the key factors that affect the value of
such a system are (1) data reliability, (2) data
usefulness or understandability, (3) reporting
system timeliness, (4) data relevancy, and (5)
system cost.

28. Sales Forecasting
• Sales forecasting is the process of
projecting future sales through historical
sales figures and the application of
statistical techniques. The process is
limited in value due to its reliance on
historical data, which many times fail to
reflect current market conditions. As a
segment of the comprehensive marketing-
planning process, however, sales
forecasting can be very valuable.

29. Evaluation
• The final critical factor in the marketing planning
process is evaluation. Because a number of variables
can affect the outcome of marketing planning, it is
important to evaluate performance. Most important,
reports should be generated from a customer analysis:
attraction or loss of customers, with reasons for the
gain or loss, as well as established customer
preferences and reactions. This analysis can be
measured against performance in sales volume, gross
sales dollars, or market share. It is only through this
type of evaluation that flexibility and adjustment can be
incorporated into marketing planning.

30. • Final Considerations for Entrepreneurs Marketing plans are
part of a venture's overall strategic effort. To be effective,
these plans must be based on the venture's specific goals.
• Following is an example of a five-step program designed to
help entrepreneurs create a structured approach to
developing a market plan:
• Step 1: Appraise marketing strengths and weaknesses,
emphasizing factors that will contribute to the firm's
competitive edge. Consider product design, reliability,
durability, price/quality ratios, production capacities and
limitations, resources, and need for special- ized expertise.

31. • Step 2: Develop marketing objectives, along with the short- and
intermediate-range salesgoals necessary to meet those
objectives. Next, develop specific sales plans for the current
fiscal period. These goals should be clearly stated,
measurable, and within the company's capabilities. To be
realistic, these goals should require only reasonable efforts and
affordable expenditures.
• Step 3: Develop product/service strategies. The product
strategy begins with identifyingthe end users, wholesalers, and
retailers, as well as their needs and specifications. The prod
uct's design, features, performance, cost, and price then
should be matched to these needs.

32. • Step 4: Develop marketing strategies. Strategies
are needed to achieve the company's in-
termediate- and long-range sales goals and
long-term marketing objectives. These
strategies should include advertising, sales
promotion campaigns, trade shows, direct mail,
and tele- marketing. Strategies also may be
necessary to increase the size of the sales force
or market new products. Contingency plans will
be needed in the event of technological
changes, geo- graphic market shifts, or inflation.

33. • Step 5: Determine a pricing structure. A firm's
pricing structure dictates which customers will be
attracted, as well as the type or quality of
products/services that will be provided. Many firms
believe that the market dictates a 'competitive
pricing structure. However, this is not always the
case many companies with a high price structure
are very successful. Regardless of the strategies,
customers must believe that the product's price is
appropriate. The price of a product or service,
therefore, should not be set until marketing
strategies have been developed."

34. Views of Pricing
• Pricing can be viewed as value, variable, variety, visible, and
virtual.
• When seen as value, the amount a customer is willing to pay is,
in the final analysis, a statement of the amount of the value they
perceive the product service.
• Pricing can variable, such varying the components of payment,
what being paid time for, the time of payment, form of payment,
the terms of payment, and the person doing some or the paying.
• There is variety of pricing because firms typically sell multiple
and services, and they may price some items influence the sales
of others or price in a manner that pushes items with higher
versus lower margins.
• The visible nature of pricing means that customers see and are
aware of the prices and most things they buy which signals to the
customer ideas about value, image, product availability, demand

35. Product Life Cycle Pricing
• Pricing procedures depending on the
nature of the venture; retail,
manufacturing, or service. Pricing for the
product cycle as presented in Table 10.5,
however might be applied to any types of
business. The table demonstrates the
basic steps of developing a pricing system
and indicates how system should relate to
the desired pricing goals.

37. Pricing in the Social Media Age
• Today's social media start-ups are finding unique
ways of generating revenue from the beginning.
There are numerous vafiations of revenue models
including freemium, affeliate, the subscription,
virtual goods, and advertising.
1. Freemium Model - offers a basic services for
free, while charging for a premium service
advanced features paying members.
2. Affiliate Model - the business makes money by
driving traffic, leads, sales another, affiliated
company's website.

38. 3. Subscription Model- This requires user to pay a
free (generally monthly or yearly) to access a product
service. If you are creating long-term relationship with
customers, this model would bership high attrition rateD
after the first time they they forget about and never
come back.
4. Virtual Goods Model - Users pay for virtual goods,
such upgrades, points, gifts, on a website game.
5.Advertising Model Advertisements -are sold
against the traffic of site. Simply put, the traffic you
haveon your site, the more you can charge for ads

39. Thank You!