Module 3 Topics Opportunity Recognition Competing in the Market

Module 3 Topics Opportunities Evaluation Model Assessing the Competitive Advantage Getting Organized

Review

Opportunities Arise from special knowledge identified through a creative combination of resources to deliver value at a profit.

Market Opportunity Potential to create something new that has market value Creates Significant Value Solves Significant Problem Has Potential to Earn Money Has Good Fit with Owners Is Good for Society

Opportunity Recognition Opportunity recognition search for new business ideas basic aspect of entrepreneurship Entrepreneurial alertness see opportunities overlooked by others perspective on which ideas to pursue

Opportunity Recognition Depends on Alertness Creativity Optimism Social Networks Prior Knowledge

Opportunity Recognition Active SearchSystematic Search Passive SearchAware of environment DiscoverySurprise CreativityAction

Opportunity Matrix SOLUTIONS KnownUnknown P R Known OBLE M Unknown S Match resources and needs to create a business Design specific product to solve market need New Technology Dreamer

Opportunity Analysis Entrepreneur Opportunity MarketResources Idea

The Entrepreneur Interest Independent Passion Vision Tenacity Operate Under Ambiguity Skills Family Support

Where New Business Ideas Come From Source of Ideas Unfilled Market Need Societal Trend

Specific Sources of New Business Ideas Personal Experiences Job Experience Hobby/Interest Unfilled Market Niche Education Systematic Search Other geographic areas Trade shows Other

Source of New Ideas in Business

Resources Human Financial Location Suppliers Technology Intellectual Property Other

Market Analysis Overall Market and Industry Local Market Competitive Advantage

Market and Industry Information EconomicEconomic conditions Analysis Viable economy? Time to start a business? Return onCompensate for investment of Investment time and money Customer Number of customers DemandMoney customers spend

Local Market Identify Competitors Analyze Competitors Strengths and Weaknesses

Competitor Analysis: Strengths and Weaknesses PriceFeature 1Feature 2Feature 3 New Business Competitor Competitor Competitor

Competitive Advantage Keep Simple Compete on Price or Features

Communicating with Customers Shotgun Newspaper Radio Television TargetedNewsletter Flyers OtherWord of Mouth Community Involvement

Why Ideas Survive How can we make our message last longer? What principles make ideas more memorable?

Six Principles of Sticky Ideas Simple messageMost important Limited information Surprise Element Break a pattern Don’t tell entire story Concrete ImagesAbstract - hard to remember Concrete - can be examined with senses (specific people doing specific things)

Six Principles of Sticky Ideas ustworthy Authorities Establish credibilityTrustworthy Authorities Vivid details or statistics Feelings inspire action Tap into emotionsFeelings inspire action If I look at the masses, I will never act. If I look at one, I will act. (Mother Teresa) Good stories generate action Tell storiesGood stories generate action

Sticky Messages (US) Just Do It It’s the economy stupid Golden Arches Big Brown Nothing runs like a Deere

Summary: What Sticks PrincipleImpact SimplicityFocus UnexpectedPay attention ConcreteRemember CredibleBelieve EmotionalCare StoriesAct

Organizational Forms Sole Proprietorship Partnership S-Corporation C-Corporation Limited Liability Company

Assemble a Team Owner LawyerAccountantBankerInsurance Mentor

Pricing Strategies Premium PricingUnique product Substantial competitive advantage exists Penetration PricingPrice artificially low to gain market share Price increased once achieved Economy PricingNo frills low price Costs kept at a minimum Price SkimmingHigh price because of competitive advantage Price later declines due to competition

Pricing Strategies

Discussion

Assignment Explain proposed firm’s competitive advantage. Why customers will come to your business? How will you price your product and why? What promotional methods will you use and why? What organizational form is best?