E145/STS173 Workshop B Entrepreneurial Marketing E145/STS173 Workshop B Entrepreneurial Marketing Tom Byers and Jeff Rosenberger Stanford University Copyright © 2004 by the Board of Trustees of the Leland Stanford Junior University and Stanford Technology Ventures Program (STVP). This document may be reproduced for educational purposes only.

Agenda and Objectives I.Mini-lecture What is Entrepreneurial Marketing? How Can a Venture “Cross the Chasm”? Positioning and Penetration Strategies II.Positioning Examples “Companies that create the future do more than satisfy customers, they constantly amaze them.” ~ Hamel and Prahalad

“Market Analysis” Versus “Marketing” Step #1: Opportunity Recognition (Market Analysis) –Identify a Market Need –Examine the Competitive Dynamics of the Industry –Determine Growth Potential Step #2: Marketing Strategy –Develop a Unique Positioning –Develop Marketing Objectives –Build a Set of Penetration Strategies (e.g., Pricing, Promotion) –Support through Sales and Execution

What is Marketing Anyway? Marketing must be more than a sales support function. Not just ad tag lines. In all kinds of businesses, it must satisfy “the needs of the customer by means of the product and the whole cluster of things associated with creating, delivering, and finally consuming it.” Especially in high technology venturing, marketing must “invent complete products and drive them to commanding positions in defensible market segments.” Reference: Levitt and Davidow

Why is Marketing So Challenging in a High-Technology Start-Up?

Most Famous Model … Geoff Moore’s “Technology Adoption Life Cycle” Innovators Early Adopters Early Majority Late Majority Laggards Bowling Alley Main Street Tornado Source: Moore (1995), Inside the Tornado Try to Name a Discontinuous Innovation (or Disruptive Technology) Where Do You Fit When It Comes to New Technologies?

So How Does a Startup Cross the Chasm? 1.Put Your Eggs in One Basket … Target Market Segments. 2.Then Deliver a 100% Solution To Them … A Whole Product.

Dog’s RoleSegmentBrandPrice/100 gr. Dog as a family memberPremiumChum8.7 pence Dog as a companionModeratePal and Bounce6.4 & 7.9 pence Dog as an animalEconomyChappie6.3 pence Reference: A. Ryans An Example of the Power of Segmentation and Target Marketing: Pedigree Petfoods in UK Dog as a substitute child?Super Premium

Segmentation and the UK Dog Food Market: Pedigree’s Super Premium Strategy Target Market? Intense relationships, own smaller dogs, older and urban females Benefits? Very best product that can be bought, reassurance, confidence, leads to an enhanced relationship Name? Mr. Dog (later Caesar) Product? Very high quality ingredients, wide variety of flavors, special packaging Price? 17.7 to 30.7 pence per 100 grams Advertising? Dog bringing newspaper, slippers, etc. Results: Fours years later, it had a 10% share of the total dog food market. The total super premium segment of the market was about 15% -- about 10% coming from dog food brands and about 5% coming from fresh foods. In addition, Pedigree's premium brand retained its market share.

Whole Product: The 100% Solution or Ecosystem Software Program Platforms Support Consulting Installation & Training Connectivity Etc. Reference: Ted Levitt, Bill Davidow Key Decisions: Which Pieces Do We Do and Which Do Our Partners Do?

What is the Single Most Important Concept in a Marketing Strategy? Positioning (a.k.a. the “ Elevator Pitch” )

Positioning Template Sentence #1 For (target customer) who (statement of the need or opportunity), the (product/service name) is a (product/service category) that (statement of benefit). Sentence #2 Unlike (primary competitive alternative), our product (statement of primary differentiation).

Positioning Drives Penetration Strategies 1.Promotion and Communication (including branding and permission-based marketing) 2.Pricing and Business Model (including viral marketing) 3.Sales and Distribution (including affiliate marketing)

A Short Checklist for Effective Entrepreneurial Marketing … Relationships Matter! 1.How will you get close to customers? 2.How will you leverage alliances and partnerships? 3.How will you influence the infrastructure or the industry’s key “players”? 4.What is your international strategy (global markets)?

Positioning Example: Handspring Visor For busy individuals who need a way to organize, manage, and communicate, the Handspring Visor is an all-purpose handheld computer, based on the proven Palm OS, that offers simplicity of use, portability, personalization, connectivity, and functionality. Unlike the Palm Pilot, our product offers flexibility and expandability due to the springboard technology.

Now You Try It Sentence #1 For (target customer) who (statement of the need or opportunity), the (product/service name) is a (product/service category) that (statement of benefit). Sentence #2 Unlike (primary competitive alternative), our product (statement of primary differentiation).