Entrepreneurial Marketing: An Effectual Approach Prof. Dr. E.J. Nijssen, Eindhoven University of Technology Available from Routledge at: https://www.routledge.com/Entrepreneurial-Marketing-An-Effectual-Approach/Nijssen/p/book/9781138712911 Session 11: Review

Basic concept underlying the course Difference between startup and large corporation Execute business model Search for business model Transition process Large corporation (>100 mio $) Start up Vision, faith (assumptions) Facts (validation) Repetition (exploitation, expansion) (Blank 2007)

Basic concept underlying the course Execute business model Search for business model Transition process Large corporation (>100 mio $) Start up Execute: –Current customers/market –Known features –Proven business model and sales model –unknown customer –unknown features So search for: –Product/market fit –Scalable business model –Repeatable sales model (Blank 2007)

Basic concept underlying the course Execute business model Search for business model Transition process Large corporation (>100 mio $) Start up Traditional accounting: –Cash flow –Balance sheet –Income statement –Break even –Profits per customer Measures: –Customer acquisition cost –Viral coefficient –Average selling price/order size –Monthly burn rate (Blank 2007)

Basic concept underlying the course Execute business model Transition process Search for business model Large corporation (>100 mio $) Start up Sales: –Large sales organization –Marketing support/dept. –Scalable –Price list/data sheets –Revenue plan Customer validation process: –Early adopters/venturous customers –Minimal feature set –Experimenting/iterations –Agile development –Lack of price list (Blank 2007)

Proposed solution More start-ups fail because of lack of customers than from failure of product development Focusing customer development Develop and test hypotheses Use systematic and scientific approach/cocnepts Link with business model idea Make customer development separate process, tasks, and team

Entrepreneurial marketing in 9 key concepts Effectual marketing Serial entrepreneurs like bowling Mapping new technologies in the marketplace Crossing the chasm Building and validating assumptions Customer development process Marketing levers to translate value proposition The sales learning curve M/S capabilities for growth and survival

Traditional vs. effectual marketing Traditional marketing Identify latent need New product Satisfaction Assumptions Predictable future Linear process Effectual marketing New product Discover application/ customer link Satisfaction Unpredictable future Iterative process with experimentation Leverage netwerk Affordable loss

Explanation: Close vs. distant search Close search New technology Search scope Most obvious applications Distant search Less obvious applications So, traditional marketer and sales person of large company probably not a good idea

Perceived customer value (based on means-end chain): Features’ role Desired customer value Customer satisfaction with this value Goals-based satisfaction Consequence-based satisfaction Atribute-based satisfaction Customer’s goals and purposes Goals (end) Desired consequences in use situation Benefits Attributes (means) Desired product attributes and attribute peformance Woodruff (1997)

Developing hypotheses about market and product/market fit Customer needs No-print Convenience Speed First target segment is the customer segment with highest fit with technology’s current performance Manual adjustment Professional photographers Excellent quality image Amateurs Leisure/fun Analog/chemical Customer segments Digital Technologies

Venturous customers and potential chasms Innovators Early adopters Early majority Late majority Laggards Time Venturous customers

The competitive field Porter (1980) Industry boundaries SUPPLIERS Internal competitors Rivalry among existing firms Potential entrants Buyers Threat of new entrants, including entrepreneurs Bargaining power of buyers of suppliers Threat of substitute products or services Industry boundaries Substitutes =Brand competition =Need competition Porter (1980)

Customer development process Customer development = serious business So, use a formal process Customer discovery Customer validation Customer creation Company building Search  Transition  Execution and Repetition Blank (2006)

Relationship customer and product development with business model Information exchange Business model development process Model identification Model optimisation New product development process Customer development process

Test hypothesis: –Agile development –Customer development team Test hypothesis: –Demand creation Test hypothesis: –Problem –Customer –User –Payer Test hypothesis: –Superiority of technology –Solution Test hypothesis: –Channel Test hypothesis: –Size of opportunity/market validate business model Test hypothesis: –Pricing model

Low cost marketing program Develop a 1–2-page plan as initial sales/marketing roadmap Affordable loss requires lean approach of marketing and sales activities Use creativity to compensate for limited resources Account for both marketing and sales activities Developing marketing and sales competencies in a timely fashion

Additional tactical marketing and sales concepts AIDA communication model Pricing models Sales model Branding and augmented product model

We enjoyed working with you and hope you enjoyed the ride too! Questions?

The end Good luck with the exam!!!