Entrepreneurship - Chapters 9, 10, & 11 - Unit 2
Elasticity (Fig. 11.1)
From economics, the idea that the market's demand for a product or service is sensitive to changes in its price
Just-In-Time Inventory (JIT)
Having just enough product on your shelves to meet the immediate purchases; Usually requires frequent shipment from your supplier
Leasing: Operational Issues
Hidden charges; Use of premises; Noncompete; Hours of operation; Rent default; Moves and remodels
Hit Rate
How many prospects or leads you need to approach in order to make one sale; Also called the conversion rate
Leasing
an option with a considerably lower initial cash outlay; Often the only feasible choice; Lease expenses are deductible business expenses
Building
has the advantage of having the perfect layout in the perfect location and the street appeal of a new building, but it is costly and slow
Survey
A data-collection method using a questionnaire—in person, on phone, on paper, or on the Internet
Heterogeneity
A quality of a service in which each time it is provided it will be slightly different from the previous time
Customer Retention
techniques that focus on efforts to promote satisfaction with and interest in the firm
Keyword and Description Tags
Terms included in the hidden portion of a web page which are used by search engines such as Yahoo! and Google to describe your website and evaluate its focus and category placement
Product
anything that is offered to the market to satisfy consumer wants, needs, and demands; goods, services, people, ideas
Total Product Approach
our product means more to the consumer than just the core component; Can help you get inside your customers' heads and figure out the most cost-effective "bundle" of value and cost benefits; Knowing what your product "means" to consumers will help you set an appropriate price
Perishability
service exhibits perishability in that if it is not used when offered, it cannot be saved for later use
Service Life Cycle
1-Initial Service Bundle, 2,3,4 Incremental Changes
Public Importance
1.) Things that are considered important to large numbers of otherwise unrelated people 2.) Things that are of civic importance, as opposed to private or corporate entities
Power
A concept in public importance that alludes to potential shifts in control or influence
Currency
A concept in public importance that alludes to the degree to which the issue is immediate in its impact
Famous Faces
A concept in public recognition that alludes to connections of your event or firm to individuals the general public would recognize
Issue Recognition
A concept in public recognition which alludes to the extent to which the public is familiar with the issue or problem at hand
Trendiness
A concept in public recognition which alludes to the fit of the topic to current fashion or public interest
Proximity
A concept in public recognition which alludes to the impact level of the issue being discussed
Media Content Strategy Plan
A document, for the managers and employees of the firm to see, that details the specifics of the firm's marketing efforts including the goals, targetaudiences, distribution channels, keywords, content types, calendar, publishing procedures, action items, KPIs, and analytics across all the different types ofmarketing efforts the firm will attempt
Focus Group
A form of data gathering from a small group led by a moderator
Concentrated Strategy
A marketing strategy in which a marketer selects one specificgroup of consumers and designs a marketing mix specifically for that group
Differentiated Strategy
A marketing strategy in which a marketer selects two or more distinct groups of consumers and designs specific marketing mixes to meet their needs
Undifferentiated Strategy
A marketing strategy that uses no segmentation; assumes that all consumers have virtually identical needs and can be reached by the same marketing mix
Serviceable Obtainable Market (SOM)
A marketing term (also called the target market) that represents the customers that a firm expects to be interested in its particular product or service, and able to be serviced by the firm
Media Kit
A type of specialized web page or sales-material-based package (hard copy or PDF) sent to media outlets that is focused on telling them about your company and its story; often built around a press release for something of potential current interest to the media outlet; Also called a press kit
Press Release
A written announcement intended to draw news media attention to a specific event; Attention, Interest, Desire, Action
Press Relations
Activities used to establish and promote a favorable opinion by the media
Public Relations
Activities used to establish and promote a favorable opinion by the public
Advertising
Advertising is often used to support the corporate identity and value propositions that are established through public relations efforts; advertising outlets include newspapers, magazines, billboards, television, and Internet banner ads
Primary Research
An approach to researching based on the gathering of new information, using techniques such as interviewing, surveying, and observation
Secondary Research
An approach to researching based on the use of existing information, often from government, commercial, or academic databases and research efforts
Tangibility
An item's capability of being touched, seen, tasted, or felt
Guidelines for Naming a Business
Be careful about infringing on trademarks; Something that describes firm or product and is easy to remember: "Discount Furniture"; Creative spellings are eye-catching; don't go overboard; Beware of selecting a name too narrow to allow the firm to grow
Public Recognition
Being recognized or acknowledged by large numbers of people, similar to "fame."
Target Customer
Benefit matching; Long-term value; Influencer impact
Ethnographic Research
Data gathered by simple observation—seeing what consumers do, rather than asking them
The Mechanics of Organizational Identity and Branding
Domain name and website; Logo; Phone lines; Business cards and stationery; Brochures and flyers; Sales packets and marketing kits; Signs; Promotional novelties
Planning for Marketing
Don't underestimate the power of marketing plans; For start-ups, they help define how the firm will build its brand and relationship with customers; For established businesses, the marketing plan becomes a key step in imagining how a firm might reposition itself and maintain its most important relationship, the one it has with customers
Cognitive Dissonance
Doubt that occurs after a purchase has been made; An inconsistency between experience and belief
Dividing the Market
Geographically; Demographically; By the benefits sought
Stages of New Product Development
Idea Generation/Source of Business Ideas (End Users/Customers/Salespeople/Market Research/Competitors) > Idea Screening for Business Potential (Objective Fit/ROI standard/Product Fit/Market Trends) > Idea Evaluation/Feasibility Study (Concept Testing/Business Analysis) > Product Development (Prototypes/Test Market) > Commercialization (Marketing Plan/Production/Market Introduction)
Publicity
Information about your company and its activities that is disseminated to the public inorder to gain their good opinion
Product Life Cycle
Introduction > Growth > Maturity > Decline
Donations
Monetary or other gifts to organizations or people who are in need
Free Ink
Mentions of your company or products in the media for which your firm did not pay
Crafting Your Message
Message should combine the elements of your product or service's value proposition with the needs of your target customer; Need to decide the voice or tone of you message; i.e. humor, fear, patriotism, collegiality, etc.
Entrepreneur's Name
Not very clear to customers what you do; How to handle name if you sell the company; Is your name appropriate: i.e. Payne for a dentist
Sponsorships
Paying for a local organization's needs in exchange for recognition
Sales Leads
People who receive a promotional impression and who give some thought to buying the product
Me-Too Products
Products essentially similar to something already on the market
Predetermined Market Segments
Professionally compiled target audiences based on shared demographic, financial, shopping, and psychographic characteristics
Process of Personal Selling
Prospect and Evaluate; Prepare; Present; Close; Follow-up
Goods-Services Mix
Pure Good > A Good-Dominated Market > Hybrid > A Service-Dominated Market > Pure Service
Open-Ended Question
Question that allows respondents to express themselves as they choose; for example, "What do you like about this book?"
Dichotomous Question
Question that has only two possible choices; for example, "Have you shopped here before?"
Categorical Question
Question that is answered by selecting the proper category; for example, "What is your ethnicity? "White, African American, Hispanic, Asian, American Indian, Other."
Scalar Question
Question that is answered by some sort of scale; for example, "On a scale of 1 to 5, how do youlike this book?"
Prospects
Sales leads who actually make some sort of effort to learn more about the product, service, or business in anticipation of a possible purchase
Value Proposition
Small business owners' unique selling points (also known as benefits) that customers can expect from your goods or services, including benefits that differentiate your offering from those of the competition
Marketing Research
Systematic collection and interpretation of data to support future marketing decisions
Search Engine Optimization
Techniques applied to web pages in order to obtain favorable placement on Internet search page results
Total Product
The entire bundle of products, services, and meanings of your offering; includes extras like service, warranty, or delivery, as well as what the product means to the customer
4P's of Marketing (C9)
The four major components of a marketing effort—product, price, promotion, and placement; Also called the marketing mix
Brand Promise
The gains provided (i.e., the benefits) or the help given (i.e., the pains removed) by theproduct or service your firm offers
Outstanding Customer Service
The idea of "going all out" for the customer or providing over-the-top service, not just the basichelp, professionalism, and friendliness we all expect in any business transaction; an employee or manager who is trying to make sure the customer walks away with an exceptional experience
Succinct Message
The key point in as few and as memorable words as possible; effective
Brand
The name a firm puts on itself and its products to differentiate them from competitors' offerings; "A brand is a promise. A good brand is a promise kept."
Prototype
The name given to the first model of a product or service; Some may be functioning, but built in a way that no consumer would buy it (e.g., with exposed wires and sharp edges) but shows the product can do what is promised; Some look like the final product, but might not be functional; made to prove aspects of the idea and are seen as the first stop along the path of product/service creation
Commercialization
The process of making the new products ready for use by consumers by achieving standardsof durability and performance suitable for the market and comparable to (if not better than) the competition
Personal Selling
The process of selling your products and service; includes prospect and evaluate, prepare, present, close, and follow-up
Customer Relationship Management (CRM)
The process of tracking the customer's different contacts with the firm, and using this data to help improve sales as well as the customer's experience
Marketing Funnel (Fig. 10.1/10.2/10.3)
The rule of thumb in marketing that it takes a large number of people to be made aware of your product in order to find a purchaser
Purchasing Process
The sequence of steps an individual or organization goes through in making a decision to buy a product or service
Customer Job
The term given to what a potential customer is trying to do—perform or complete some sort of task, solve some problem, or try to achieve some outcome; The target of the job is often the key to what a proposed product or service is intended to help
Pivot
Typically, a term describing a change of direction in the thinking of an entrepreneur or a firm, often based on new data or other findings
Impression (C10)
What it is called when someone notices a promotional effort
Core Product
basic description of what a product is
Augmented Product
core product plus features that tend to differentiate it from the competition; brand names, quality levels, packaging
Promotional Mix
how much of each message conveyance you will use to sell your product as well as your objective in using each one
Segmentation
process of dividing the market into smaller portions of people who have certain common characteristics
Secondary Research Facts
refers to using existing data or databases to gather information on the topic of interest to you; often free and quick; data may not be timely and you don't always know why the data were gathered and whether they were gathered correctly
Target Market
the segment or segments you select on which to concentrate your marketing efforts
Born International
A new firm that opens a Web site immediately, thus being exposed to customers from around the world
Mat Release
A news release that is typeset and thus may be photographically reproduced for inclusion in anewspaper
Sheltered Workshop
A nonprofit organization or institution that provides business services by using workerswho have disabilities or who are rehabilitated
Budget Cycle
A term applied to the schedule and the process for setting the schedule for making purchases byan individual or an organization
Retailer
An intermediary business thatsells to consumers or end usersof a product (typically in single orsmall quantities)
Bundling
Combining two or more products in one unit and pricing it less than if the units were sold separately
Freight Forwarders
Firms specializing in arranging international shipments— packaging, transportation, and paperwork
Skimming
Setting a price at the highest level the market will bear, usually because there is no competition at the time
Odd-Even Pricing
Setting a price that ends in the number 5, 7, or 9
Partitioned Pricing
Setting the price for a base item and then charging extra for each additional component
Bot
a web-based program that uses artificial intelligence techniques to automate tasks such as searches
Fulfillment Center
A company that will warehouse your products and fill your customers' orders for you
Letter of Credit
A document issued by a bank that guarantees a buyer's payment for a specified period of time upon compliance with specified terms
Documentary Draft
A draft which can be exercised only when presented with specified shipping documents
Sales Promotion
A form of communication that encourages the customer to act immediately, such as coupons, sales, or contests
Markup Pricing
A price-setting method where an amount is added to the cost of a product to set the retail price and provide a profit
Inseparability
A quality of a service in which the service being done cannot be disconnected from the provider of the service
Co-Working Space
A type of "incubator lite" offering low-cost shared space and basic business services (Wi-Fi,desks, coffee, conference room, copier, etc.) for a daily, weekly, or monthly rental fee; rarely get any equity in the businesses using the space
Customer Vector
A type of CRM report which segments by customer (or customer group) on purchases or dates of purchase
E-Tailer
An electronic retailer; a store that exists only on the Internet
Contract Manufacturing
An existing firm with the correct manufacturing capabilities makes your product for you
Accelerator
An organization that supports start-ups, typically of a particular type (e.g., Internet, biotech, fashion, sports, women-owned firms, etc.) with a financial investment, free or inexpensive office space, mentoring, a variety of free or low-cost support services, and other resources; goal of an accelerator is to accelerate a start-up from its early stages to being ready to pitch for investment; Most take an equity stake in the companies they help
Price Gouging
Charging an outrageously high price for something
Off-Peak Pricing
Charging lower prices at certain times to encourage customers to come during slack periods
Telemarketing
Contact via telephone for the express purpose of selling a product or service; Can either be inbound (customer calls company) or outbound (company calls customer)
The Fundamentals of Pricing: Contextual Factors
Decide what is the optimum price; Examine existing market prices for similar products and services; Consider your business costs; Your Company Objectives; Marketing Strategy; Channels of Distribution; Competition; Legal and Regulatory Issues
Low Customer Contact Business
Manufacturing business; Commercial space might be appropriate; Support businesses will be in or near the area; Business incubator: www.nbia.org
Direct Sales
Methods of going directly to your customer in order to sell your product; Vending machines, door-to-door salespeople, leasing space at a craft fair, farmers' markets, party sales, and most industrial sales
Channels
People and firms who connect producers of goods and services with customers
Direct Response Advertising
Placing an advertisement in a magazine or newspaper, on television or radio, or in any other media; Ad contains an order blank with a phone number and e-mail or regular mail address with the intent of having the customer place an immediate order
Periodic or Random Discounting
Sales conducted at either predictable or non-predictable intervals
Mail Order
Sales made from ads in newspapers or magazines, with purchases made online or by phone as well as by mail
Pricing Strategy Wrap-Up
Temporary reduction in price won't tarnish your product image; Consumers also feel smart about buying something at a better price; They will feel they got a great deal
Markup
The amount an entrepreneur adds to costs to provide a profit
Price Lining
The practice of setting (usually) three price points: good quality, better quality, best quality
Customer Development Process
The procedure to organize and pursue the finding, obtaining and keeping of new customers
Guerilla Marketing
The use of creative and relatively inexpensive ways to reach your customer; Examples include door-knob hangers, flyers under windshield wipers, T-shirts, balloons, and messages written on sidewalks
Multichannel Marketing
The use of several different channels to reach your customers, for example, a Web site, direct mail, and traditional retailing
Internal Reference Price
a consumer's mental image of what a product's price should be
External Reference Price
an estimation of what a price should be based on advice, advertisements, or comparison shopping
Idea Evaluation
exhaustive process of specifying the details of each idea's technological feasibility, its cost, how it can be marketed, and its market potential; Basic evaluation tool is the feasibility analysis
Distribution
process of getting your product to your customers; "Where are my customers?"; "Where should I be?"
Elastic Product
product for which there are any number of substitutes and for which a change in price makes a difference in quantity purchased
Inelastic Product
product for which there are few substitutes and for which a change in price makes very little difference in quantity purchased
Importing
similar to exporting, but buyers and sellers are reversed; Travel abroad - look for products that are selling well in the country you're visiting; Trade mission and domestic and international trade shows are also good sources
Microinventory
A set of goods or service that consists of only one or a few items
Manufacturer
The entity which produces a product or service to be sold
Product Development Process
The procedure to organize and pursue the creation of new goods or services
Market Segmentation
The process of dividing the market into groups that have somewhat homogeneous needs for a product or service
The Fundamentals of Pricing: Value
The value delivered to the customer is second in order of importance to the pricing decision; In addition to demand and value provided, you must consider the prices set by your competition
Key Factors for Determining Optimum Price
1. Demand for the product or service 2. Value delivered to the customer 3. Prices set by competing firms 4. Your business strategy and product placement
Typical Retail Layouts
1. Grid 2. Free-Form
Typical Manufacturing Layout (Fig. 11.5)
1. Production Line 2. Process
Strategies of Market Growth (Fig. 10.6)
1.) Market Penetration 2.) Market Expansion 3.) Product Expansion 4.) Diversification
Influencer
A customer role describing a person or group who can make credible or recognized suggestions or recommendations to others regarding purchase choices
Decision Maker
A customer role that describes a person in an organization who is responsible for choosing which product or service will be obtained
Purchaser
A customer role that describes an individual or institution that pays for or obtains a product orservice
End User
A customer role that describes the person who eventually makes actual use of a product or service in his or her personal or work life
Customer Profile
A detailed description of an archetypical or hypothetical potential customer for a product or service, also called a customer persona
Wholesaler
A intermediary business which buys (typically in large quantities) and sells (typically in smaller quantities) to businesses rather than consumers
Penetrated Market (PM)
A marketing term that describes the actual number of customers of an operating firm, divided by the size of the target market, which gives a percentage of the market the firm (or product/service) has attained so far
Total Available Market (TAM)
A marketing term that refers to all of the people or organizations (in one nation, region, or the world) who might consider a product or service being offered
Serviceable Available Market (SAM)
A marketing term that refers to the customers within the geographic reach of a firm
Direct Mail
A method of selling in which catalogs, brochures, letters, videos, and other pieces of marketing materials are mailed directly to customers from which they can mail, call, or e-mail an order; Direct faxing and direct e-mailing are more modern forms of direct mail
Agent
A middleman business which represents a manufacturer's product or service to other business-to-business middleman firms
Diversification
A strategy whose goal is growth, based on adding new products or services to the firm's existing collection of offerings
Product Expansion
A strategy whose goal is growth, based on selling existing customers a product or service they have never bought before
Market Expansion
A strategy whose goal is growth, based on selling in areas or to groups previously not served by the business
Market Penetration
A strategy whose goal is growth, based on selling more of the firm's product or service to the existing customer base
Manufacturers' Suggested Retail Price
A target price set by a manufacturer for a product or service intended to provide profit for each intermediary in the distribution channel
Viral Marketing
Any electronic equivalent of word-of- month advertising, in which the advertiser's message spreads quickly and widely via e-mail, website, blogs, and other online tools
Three Typical Locations
At the client's location; At a mutually accessible location; At your firm's location
Multiple or Bonus Pack
Combining more than one unit of the same product and pricing it lower than if each unit were sold separately
Location
First choice for many entrepreneurs is their hometown; Local banker knows you, more likely to loan money; You understand market's needs and wants; Friends and family are usually first customers
Indirect Exporting
Exporting using intermediaries such as agents, export management companies, or export trading companies
Direct Exporting
Exporting using no intermediaries
Direct Marketing
Selling your goods or services to consumers without intermediaries, typically to select customer groups and typically with tracking of the results
Client's Location
Services include such things as house or office cleaning, pest control, remodeling, lawn and gardening services, carpet cleaning, and similar services which must be performed at the client's house; As the firm grows, it may outgrow its home-based headquarters
Prestige or Premium Price
Setting a price above that of the competition so as to indicate a higher quality or that a product is a status symbol
Captive Pricing
Setting the price for an item relatively low and then charging much higher prices for the expendables it uses
Margin
The amount of profit, usually stated as a percentage of the total price
Law of Supply and Demand
The economic theory that describes how the demand for products (or services) and thesupply of them affect each other
Public Interest
Things that are generally considered to be beneficial to large numbers of people,; Civic causes and benefits, as opposed to private and corporate benefits; Good story, human interest, visuals, cultural resonance
High Customer Contact Business
Three critical site selection considerations: Traffic, Customer ease, Competition; Presence of traffic generators in the area; Parking is also an issue
Newsworthy Events
To garner serious attention from the media and the public, a news story needs to deliver certain essentials that will hold their attention and keep your news in their thoughts; should have public recognition, importance, and interest
Mutually Accessible Location
Too much specialized equipment to be readily transported; A need for at least some client involvement; Barbershops, dentist offices, video rental stores restaurants
Buying
something already in existence shortens the time and may be somewhat cheaper
Optimum Price (C11)
the highest price that would produce your desired level of sales (or revenues) in your target market
