1. Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001
Chapter 5
Start-up: making it happen
Back to Contents

2. Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001
Marketing
Customers buy BENEFITS… not features
Standard benefits Our shop accepts all leading credit cards… which means you can budget for your purchases to suit your pocket.

3. Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001
Marketing
Customers buy BENEFITS… not features
Standard benefits Our shop accepts all leading credit cards… which means you can budget for your purchases to suit your pocket.
Company benefits Our shop is a family business… which means that you get individual, personal attention from somebody who cares.

4. Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001
Marketing
Customers buy BENEFITS… not features
Standard benefits Our shop accepts all leading credit cards… which means you can budget for your purchases to suit your pocket.
Company benefits Our shop is a family business… which means that you get individual, personal attention from somebody who cares.

5. Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001
Marketing
Customers buy BENEFITS… not features
Standard benefits Our shop accepts all leading credit cards… which means you can budget for your purchases to suit your pocket.
Company benefits Our shop is a family business… which means that you get individual, personal attention from somebody who cares.
Differential benefits We are sole agents for that product… which means you can’t get it anywhere else.

6. Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001
The marketing mix
PRODUCT
Design/sizes colours
Materials
Specification
Quality
Packaging
After-sales service
PRICE
List price
Discounts
Payment terms
Service/spares prices
PLACE
Location
Retail/wholesale
Mail/telephone order
Delivery methods
PROMOTION
Advertising
Brochures/data sheets
Public relations
Personal selling and networks
Exhibitions
Gift/sales aid
PEOPLE

7. Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001
Generic market strategies
Broad market
COMMODITY SUPPLIER
OUTSTANDING
SUCCESS
Low cost/price
High cost/price
Low differentiation
High differentiation
MARKET TRADER
NICHE PLAYER
Focused market

8. Costs, volume and revenue
Total revenue
Cost or revenue £ C
Target profit
Total costs
Break-even point A B
Fixed costs X Y
Output volume

9. Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001
Contribution analysis
Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001
1. Break-even point (£ sales) =
  Fixed costs  
Contribution margin (%)

10. Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001
Break-even example
Sales £1000
Variable costs
Contribution £ %
Fixed costs
Profit £

11. Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001
Break-even example
Sales £1000
Variable costs
Contribution £ %
Fixed costs
Profit £
Break-even point = = £1000
0.40

12. Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001
Contribution margin
Percentage change in sales volume needed to achieve the same profit after a price change
PRICE
CHANGE
CONTRIBUTION MARGIN
20%
30%
40%
+33%
+20%
+14%
+100%
+50%
+300%
–5%
–10%
–15%
+60%

13. Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001
Contribution margin
Percentage change in sales volume needed to achieve the same profit after a price change
PRICE
CHANGE
CONTRIBUTION MARGIN
20%
30%
40%
+5%
–20%
–25%
–11%
+15%
+10%
–33%
–43%
–27%
–14%
+33%
+20%
+14%
+100%
+50%
+300%
–5%
–10%
–15%
+60%

14. Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001
The pricing range
Variable Average Value to
cost per cost per customer
unit unit
‘Too low’ Going rate ‘Too high’
price price price
Pricing range

15. Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001
Pricing
Skimming
Penetration

16. Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001
Generic market strategies
Broad market
COMMODITY SUPPLIER
OUTSTANDING
SUCCESS
Low cost/price
High cost/price
Low differentiation
High differentiation
MARKET TRADER
NICHE PLAYER
Focused market

17. Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001
Customer loyalty ladder
Prospect
Customer
Regular customer
Supporter
Advocate
INCREASING LOYALTY

18. Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001
Generic market strategies
Broad market
COMMODITY SUPPLIER
OUTSTANDING
SUCCESS
Low cost/price
High cost/price
Low differentiation
High differentiation
MARKET TRADER
NICHE PLAYER
Focused market

19. Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001
Segmentation
Industrial
Type of business
Size of business
Quantity of purchase
Credit worthiness
After-sales service
Usage rate

20. Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001
Segmentation
Industrial
Type of business
Size of business
Quantity of purchase
Credit worthiness
After-sales service
Usage rate
Consumer
Socio-economic group
Age
Sex
Home location
Occupation
Stage in family life-cycle
Benefit required

21. Relationship v transactional marketing
Relationship marketing
Encourages close, frequent contact
Encourages repeat sales
Focus on service
Focus on value
Focus on quality of total offering
Focus on long term
Transactional marketing
Limited contact
Orientated toward single purchase
Limited customer service
Focus on product/service benefits
Focus on product quality
Focus on short term

22. Entrepreneurial marketing planning
Determine future organisational performance objectives
Review conventional influences on performance
Can marketing conventions deliver performance goals?
Yes No
CONVENTIONAL PLAN
ENTREPRENERIAL PLAN

23. Entrepreneurial marketing planning
Map sector conventions
Assess scale of entrepreneurial activity
Assess entrepreneurial opportunity
Launch early
Assess entrepreneurial capability
Define performance objectives
Define strategy
Develop detailed plan
Specify control systems

24. Market research Field research Reflects your needs You control quality
Up to date
Expensive
Takes time
Can tell competitors what you are up to
Desk research
Cheap
Quick
Good for background
Not specific
Can be out of date
Can be incomplete or inaccurate
Advantages
Disadvantages

25. Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001
Market research
Personal Telephone Postal interview interview questionnaire
Quality of data       
Quantity of data     
Speed      
Response rate     
Cost high fair fair

26. Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001
The selling potential matrix
Business potential of buyer
High
Medium
Low
Friendly 1 2 3
Attitude of buyer
Indifferent 2 3 4 3 4 5
Unfriendly

27. Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001
Selling skills
Know what customers want
Know how to match this to the product/service you have to sell
Know how to build up argument that it does indeed meet their requirements
Know how to close the sale

28. Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001
Closing the sale
Trial close
Alternative close
Summary close
Concession close
Quotation close
Direct close

29. Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001
Forms of business
Sole trader
Partnerships
Limited companies
Franchises