Chapter 5 Entrepreneurial Marketing Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©

Entrepreneurial Marketing Definition of marketing by the American Marketing Association: an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stake holders. Marketing practices vary depending on the type of company and the products and services it sells. Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©

Entrepreneurial Marketing Why Marketing is Critical for Entrepreneurs Because no venture can become established and grow without a customer market; Because it is difficult and expensive to bring new products and services to market; To differentiate product or service to customers makes the company distinctive and valuable; Companies must be able to switch marketing gears quickly to attract new customer segments. Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©

Entrepreneurial Marketing Entrepreneurs Face Unique Marketing Challenges limited resources in financial, managerial, and time; limited market information; decision-making inclined to be muddled by personal biases and beliefs; poorly established relations with multiple audiences. Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©

Market research techniques Existing market New market Philosophy of market research Deductive data analysis Intuition Techniques for gathering customer information Focus groups, surveys, mail studies Industry experts, trend extrapolation, future scenarios Examples New types of toothpaste, new car models Social media exchange markets Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©

Disadvantages to existing companies entering new markets Core rigidities: companies are only good at things they are used to doing Tyranny of the current market: companies listen to their customers, who are not a source of ideas for new products in new markets Use myopia: customers of existing firms see needs or solutions very narrowly (i.e., not the needs of others) Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©

Disadvantages to existing companies entering new markets Because large companies have these disadvantages with new markets, new ventures should focus on new markets instead of established ones Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©

Entrepreneurial Marketing Acquiring Market Information Marketing research could cover information such as: -Product attributes important to customers; -Possibility of customers’ buying willingness by marketing behaviors; -Market trend; -The location of the customers’ preference. Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©

Entrepreneurial Marketing Acquiring Market Information Two basic types of market data Primary data Data you collect yourself Limitations of primary data Secondary data Economical and usually used to collect baseline information Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©

Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. © Conjoint analysis Asks individuals to express their preferences for various product that are especially chosen to offer a systematic array of features Price, size, weight, battery life, color Two choices for each feature leads to 32 different products (2x2x2x2x2) Important to determine most important features Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©

Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. © Conjoint analysis Conjoint analysis is a useful technique for determining the relative importance, in the customer’s preferences and decisions, of the dimensions they consider important Effective use of conjoint analysis helps entrepreneurs design products that have high appeal to potential customers and maximize chances of venture success Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©

Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. © Market dynamics Entrepreneurs are more successful in large and growing markets Large markets amortize the fixed costs of getting started over a larger number of units It’s easier to sell into rapidly growing markets Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©

Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. © Market dynamics The performance of product adoption follows an S shape Initially, need a large amount of effort to achieve small improvements in product performance Then performance improvements accelerate and small efforts can lead to large improvements Later, must make large efforts to achieve small improvements Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©

Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. © Market dynamics Established firms rarely compete with entrepreneurs to develop new products on the early part of the S curve The new product usually begins with inferior performance that hurts the company’s overall performance Managers of established companies believe they can always improve the performance of their existing products to compete with new products Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©

Entrepreneurial Marketing Marketing Strategy for Entrepreneurs A company’s marketing strategy must closely align with its resources and capabilities; Segmentation, targeting, and positioning are key marketing dimensions that set the strategic framework. Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©

Entrepreneurial Marketing Marketing Strategy for Entrepreneurs/the Marketing Mix promotion Product Strategy place Pricing Strategy Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©

Entrepreneurial Marketing Guerilla Marketing Guerilla marketing acts as non-traditional, grassroots, and captivating – that gain consumers’ attention and build awareness of the company. Word-of-Mouth marketing, Buzz marketing, and Viral Marketing. Other issues in Guerrilla Marketing. Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©

Entrepreneurial Marketing Marketing Skills for Managing Growth Understanding and Listening to the Customer Building brand awareness and building brand equity Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©

Entrepreneurial Marketing Conclusion Marketing is a delicate balance of art and science. It is necessary for entrepreneurs to scale up or change focus. Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©