Entrepreneurial Marketing Copyright © Florida International University, Miami, FL Marketing the New Venture Dr. Alan L. Carsrud The Eugenio Pino & Family Global Entrepreneurship Center Florida International University

Entrepreneurial Marketing Copyright © Florida International University, Miami, FL Basic Marketing Questions What products or services are you selling? To whom do you sell? Does someone represent you or distribute your products or services? How do you promote sales? How do you price your output? What do customers expect?

Entrepreneurial Marketing Copyright © Florida International University, Miami, FL Remember Terminology MARKET The set of all actual and potential buyers of a product POTENTIAL MARKET The set of consumers who profess a sufficient level of interest in the market offer AVAILABLE MARKET The set of consumers who have interest, income, and access to a particular market offer TARGET MARKET The part of the available market the company decides to pursue MARKET DEMAND The total volume of a product that would be purchased by a defined customer group in a defined geographical area in a defined time period in a defined marketing environment under a defined marketing program

Entrepreneurial Marketing Copyright © Florida International University, Miami, FL Market Segmentation What is a market segment? Why is it important?

Entrepreneurial Marketing Copyright © Florida International University, Miami, FL What is a “Market Segment”? Set of potential customers Who have similar needs Who reference each other when buying Are alike in the way they: –Perceive value –View products and services –Purchase products and services

Entrepreneurial Marketing Copyright © Florida International University, Miami, FL Why Define a Market Segment? Easier to understand customer needs Focus “whole solution” to a narrower set of customer needs Easier to become a leader in a smaller market (Big fish in small pond) More effective use of marketing dollars Generally more profitable

Entrepreneurial Marketing Copyright © Florida International University, Miami, FL Markets: Geographic Variables Region City or metro size Climate Density Pacific, Mountain, West North Central, West South Central, East North Central, East South Central, South Atlantic, Middle Atlantic, New England Under 4,999; 5,000-19,999; 20,000-49, ,000,000-3,999,999; 4,000,000 and over Northern, southern, tropical Urban, rural, suburban

Entrepreneurial Marketing Copyright © Florida International University, Miami, FL Markets: Demographic Variables Age Gender Family size Occupation Education Nationality Religion Ethnicity Income

Entrepreneurial Marketing Copyright © Florida International University, Miami, FL Lifestyle Markets: Psychographic Variables Club memberships Social activities TV viewing habits Hobbies Vacation preferences Compulsive Outgoing Authoritarian Ambitious Personality

Entrepreneurial Marketing Copyright © Florida International University, Miami, FL Markets: Usage Variables Occasions Benefits Usage rate User status Loyalty status Buyer- readiness stage Attitude toward product Regular occasion, special occasion Quality, service, economy, speed Light user, medium user, heavy user Nonuser, ex-user, potential, first-time, regular None, medium, strong, absolute Unaware, aware, informed, interested, intends to buy Enthusiastic, positive, indifferent, negative, hostile

Entrepreneurial Marketing Copyright © Florida International University, Miami, FL PIMS: Profit Impact of Marketing Strategies Originally a General Electric study Now the Strategic Planning Institute Studied 2600 business units since 1972 Evaluated 28 factors related to ROI Determined the factor that most affected ROI was market share

Entrepreneurial Marketing Copyright © Florida International University, Miami, FL PIMS Firms with market shares over 40% have an avg. ROI 2 1/2 times more than firms with market shares under 10% Increasing market share an additional 10% results in an additional 5 point increase in ROI

Entrepreneurial Marketing Copyright © Florida International University, Miami, FL Profitability Increases with Market Share Market share of up to 10% = 13.2% ROI 10% - 20%, ROI = 18.0% 20% - 30%, = 23.6% 30% - 40%, = 24.4% Over 40% market share, ROI = 32.3%

Entrepreneurial Marketing Copyright © Florida International University, Miami, FL Conclusion: Don’t enter a new market segments unless you can capture % market share in a few years

Entrepreneurial Marketing Copyright © Florida International University, Miami, FL Entrepreneurial Strategy: Define market segment small enough to allow you to capture 25% to 30% share Be a “Big fish in small pond” Ideal: Be the only supplier in a very narrowly defined market. But: Is the market large enough for future growth?

Entrepreneurial Marketing Copyright © Florida International University, Miami, FL Product & Service Adoption Late majority Early majority Early adopters Innovators Rate of adoption Laggards 2.5% 13.5% 34% 16%

Entrepreneurial Marketing Copyright © Florida International University, Miami, FL Marketing to “Innovators” Product/service must be an innovation (example internet courses, dating) Product/service must be functional, but not perfect Draft manuals ok Have them beta test Want to talk with developers

Entrepreneurial Marketing Copyright © Florida International University, Miami, FL Marketing To Early Adopter Direct sell the “dream”, but clearly define scope & deliverables Relate to their specific objectives Have them reference other visionaries who have bought; your best salesmen Price is secondary: want it right, complete, quickly & on time

Entrepreneurial Marketing Copyright © Florida International University, Miami, FL Marketing To “Pragmatists” Proven product or services, based on standards, many satisfied customers, market leadership Want competition: lower prices, alternatives Industry specific seminars and conferences Develop long term relationships Like one-stop shopping but slow to buy

Entrepreneurial Marketing Copyright © Florida International University, Miami, FL The “Conservatives” “Back side” of the curve = 1/3 population Significant opportunity for sales & profits Don’t like change Want only mature whole products or known services, fully packaged and supported....at a low price Buy through known distribution channels

Entrepreneurial Marketing Copyright © Florida International University, Miami, FL Laggards Last 1/6 of population = 17% Don’t buy anything unless they have to Just now buying microwave ovens & VCRs Not worth talking about Not worth me making this slide! Enough said....

Entrepreneurial Marketing Copyright © Florida International University, Miami, FL QUESTIONS?