Exam 2 Entr.

(Marketing Philosophies) Production-driven philosophy

"If you build it, they will come" Utilized by companies making state-of-the-art products (i.e., Apple)

(Marketing Philosophies) Consumer-driven philosophy

Focus on research to discover consumer needs, desires, & preferences before production ever begins

Value Proposition Template

For [target customer] who [statement of the need or opportunity] our [product/service] is [product category] that [statement of benefit].

Effective Social Media Marketing

Goal is to create a conversation among customers in your market space

Evaluation

Identifying and assessing deviations from marketing plans

Operations Segment

This segment begins by describing the location based on labor availability, wage rate, proximity to suppliers and customers, and community support. How does the venture actually operate? What facilities are required to handle the new venture? (plant, warehouse storage, offices) What equipment needs to be acquired? (special tooling, machinery, computers, and vehicles)

Management Support

This segment identifies the key personnel, their positions and responsibilities, and the career experiences that qualify them for those roles. The entrepreneur's role should be clearly outlined.

Financial Segment

This segment should demonstrate the potential viability of the venture and should include these three basic financial statements: •the pro forma (projected) balance sheet •income statement •cash-flow statement

- Milestone Schedule Segment

This will provide investors with a timetable for the various activities to be accomplished. They need to be realistic and can be established within any appropriate time frame such as quarterly, monthly, or weekly. They must be coordinated with other aspects of the production and operations schedule.

New products

Unknown or ununderstood products (no advertising has been done yet)

Unsought goods

What consumers don't actively seek out/need

Focus groups

gathering small groups of potential customers for an in-depth discussion about the new venture the entrepreneur is proposing

Insights into Ordinary Patterns

identifying and tracking patterns (buying at different times of year, questions that customers are asking; information sources customers are relying on)

Lead user research

lead users (people who have needs for which no solution exists and who often have ideas for effective products that have not yet been developed) somtiems experiment with prototype solutions

Flexibility

obstacles must be anticipated and alternative strategies must be formulated

Freemium model

offers a basic service for free, while charging for a premium service with advanced features to paying members.

Strategic Decisions

only major strategic decisions need to be supported through marketing research.

Marketing strategy

outlines the general marketing philosophy and approach of the company

PRICING POLICY

presents a convincing strategy that will penetrate the market, maintain a market position, and produce profits

Current sales analysis

promoting and distributing products according to marketing research findings

Action

providing money, advice, or contact; buying the product; scheduling a second meeting

Irrelevancy:

research data will contain either information that merely supports what is already known or irrelevant information

Blog monitoring

self explanatory

A Business Plan Covers

- Current status - Expected needs - Projected results

Customer observation

- observing situations as they occur

Milestones

- sub-goals must be set for continual and timely evaluation of progress

Business Model

A business model describes the rationale of how an organization creates, delivers, and captures value

• Appendix

Any additional documentation that is not appropriate for prior segments but conveys relevant, supporting information (diagrams, blueprints)

Packaging is important

Appearance •Professionally bound (NOT stapled) •Plastic clear cover sheet & end sheet Length •Should be 20-25 pages (be concise!!) •Supporting info should be made to readers upon request The cover and title page •Name and contact information of the business •Date and NUMBER of the plan (know when it's distributed) The executive summary Table of contents •Well-designed table of contents

Consumer Behavior: Types of Customers

Consider the personal characteristics and psychological characteristics that influence consumer's behavior

Specialty goods

Consumers will take special effort to find/buy

Shopping goods

Consumers will take time and examine and compare carefully

Sales forecasting

Coordinating personal judgment with reliable market information

Entrepreneurial Marketing

Entrepreneurial marketing is a set of processes adopted by entrepreneurs based on new and unconventional marketing practices in order to gain traction and attention in competitive markets •Focuses on: Building trust Finding out consumer preferences Creating long-term competitive advantage

Harvest strategy

Every business plan should provide insights into the future harvest strategy. -Deals with issues such as management succession and investor exit strategies -It's important for an entrepreneur to plan for a liquidity event as an exit strategy or plan for the orderly transition of the venture as it grows -With foresight, entrepreneurs can keep their dreams alive, ensure the security of their investors, and usually strengthen their businesses in the process.

Marketing for Entrepreneurs

Knowledge of the market Development of the marketing plan Proper approach to a pricing strategy Understanding and application of social media Understanding of marketing research

Components of Effective Marketing

Market Segmentation, Marketing Philosophy, Consumer Behavior

Inhibitors to Market Research

Mistaken beliefs that inhibit the use of marketing research: cost, complexity, strategic decisions, irrelevancy

Convenience goods

Necessary or impulsive goods that customers don't spend too much time shopping for

(Marketing Philosophies) Sales-driven philosophy

Personal selling & advertising Utilized by companies in saturated, over-supplied industries (i.e., car sales)

Critical-Risks Segment

Potential risks such as the effect of unfavorable trends in the industry, design or manufacturing costs that have gone over estimates, difficulties of long lead times, and unplanned-for new competition should be identified.

Factors Affecting Pricing Strategy "Psychological considerations"

Price may signal quality Marketing monthly price can generate more sales than total selling price Buyers expect to pay "even" prices for prestigious items and "odd" prices for common goods. More benefits = less price resistance

Critical factors that must be addressed when planning are:

Realistic goals, commitment, Milestones, and flexibility

Components of the Business Plan

Section I: Executive Summary Section II: Business Description A.General description of business B.Industry background C.Goals and potential of the business and milestones (if any) D.Uniqueness of product or service Section III: Marketing A.Research and analysis 1.Target market (customers) identified 2.Market size and trends 3.Competitive analysis 4.Estimated market share B.Marketing plan 1.Market strategy—sales and distribution 2.Pricing 3.Advertising and promotions

Components of the Business Plan continued

Section IV: Operations A.Identify location: advantages B.Specific operational procedures C.Personnel needs and uses D.Proximity to suppliers Section V: Management A.Management team—key personnel B.Legal structure—stock and employment agreements, and ownership C.Board of directors, advisors, and consultants Section VI: Financial A.Financial forecast (pro forma financial statements) •Profit and loss •Cash flow •Break-even analysis •Cost controls •Budgeting plans Section VII: Critical Risks A.Potential problems B.Obstacles and risks C.Alternative courses of action Section VIII: Harvest Strategy A.Liquidity event (IPO or sale) B.Continuity of business strategy C.Identify successor Section IX: Milestone Schedule A.Timing and objectives B.Deadlines and milestones C.Relationship of events Section X: Appendix or Bibliography

Entrepreneurial Tactics in Market Research

See the following slides

Web-based surveys

Survey monkey

Marketing Plan

The process of determining a clear, comprehensive approach to the creation of customers Critical elements for developing a marketing plan: 1.Current Marketing Research 2.Current Sales Analysis 3.Marketing Information System 4.Sales Forecasting Evaluation

Market Segmentation - Choosing your Customer

The process of identifying a specific set of characteristics that differentiate one group of consumers from the rest. Demographics Benefit sought •Convenience •Cost •Style •Quality •Reputation

Guerrilla marketing

The use of nonconventional tactics and unorthodox practices applied to marketing research

Social Media Marketing

The use of social networks, online communities, blogs, wikis, and other online collaborative media tools for marketing purposes.

Complexity:

•research techniques rely on overly complex sampling, surveying, and statistical analysis.

Advertising Model

advertisements are sold against the traffic of the site.

Marketing information system

collecting, screening, analyzing, storing, retrieving, and dissemination marketing information on which to base plans, decisions, and actions

Archival research

collection of records that have been created or accumulated over time (secondary information)

Competitive analysis

compares competing products or services on the basis of price, performance, service, warranties, and other pertinent features

Enable

customers to promote a message themselves with multiple online social media venues

Advertising plan

discusses the advertising and promotional campaign including a schedule and costs

Affiliate model

the business makes money by driving traffic, leads, or sales to another, affiliated company's website.

Realistic goals

these must be specific, measurable, and set within time parameters

Subscription Model

this requires users to pay a fee (generally monthly or yearly) to access a product or service.

Technological Tools

tracking software to see how visitors use firm websites; surveys; tracking responses to advertisements

Virtual Goods Model

users pay for virtual goods, such as upgrades, points, or gifts, on a website or in a game.

Create

value with an event, video, tweet, or blog entry that attracts attention and becomes viral

Business Description:

•A general description of the business, industry background, goals and potential of the business and milestones, and the uniqueness of the product or service are included. •Include any information on patents, copyrights, and trademarks as well as special technological or market advantages

Market

•A group of consumers (potential customers) who have purchasing power and unsatisfied needs. •A new venture will survive only if a market exists for its product or service.

Quantitative

•Analytical assessments based on empirically gathered numerical measurements •Results are "objective" •Requires larger samples to be able to perform the statistical analyses

The Question Approach

•Asking questions as part of your pitch, rather than making statements is a powerful way to encourage others to respond or at least think more deeply about the answer •Example: Ronald Regan during presidential campaign - "Are you better off now than you were four years ago?"

Traditional Marketing

•Big cash investment •Main focus is on the product •Goal is to maximize profit •Short-term relationship with customer •Delivers marketing message as a monologue

Value Proposition

•Bundle of products and services that create value for a customer segment •Solves a customer's problems or satisfies a customer need

Revenue Streams

•Cash a company generates from each customer segment •Fixed versus dynamic pricing Ways to generate revenue streams: Asset sale; usage fee; subscription fee; leasing or renting; licensing; brokering; advertising

The Twitter Approach

•Challenges you to capture the essence of your idea within the 140 character limit •Example: Apple •iPod - "1,000 songs in your pocket" MacBook Air - "The World's thinnest notebook"

Factors Affecting Pricing Strategy "REAL" considerations

•Competitive pressure •Availability/Sufficient supply •Seasonal or cyclical demand •Distribution costs •The product's life-cycle stage •Changes in production costs •Economic conditions •Customer services provided •Customer lifetime value

The Era of Generation C (as in Content)

•Connected, creative, collaborative, and contextual The customer is central to all effective marketing activity

Social Media Marketing Distinctions

•Control Versus Contributions Social media marketing emphasizes audience contribution and relinquishes organizational control over large parts of the content •Trust Building Firms cannot fully control the content users create; development of trusting relationships is required •Two-Way Communication Social media creates an ongoing interactive conversation between the firm and the customer

Cost Structure

•Describes all costs incurred to make the business model work •Two broad cost structures: Cost Driven versus Value Driven Characteristics of cost structures: Fixed costs, variable costs, step costs, upfront, vs. ongoing costs

Step 5: Determine a pricing strategy

•Determines which customers will be attracted •Should not be set until marketing strategies have been developed

Step 2: Develop marketing objectives and goals

•Develop short and intermediate range sales goals to meet marketing objectives •Develop specific sales plans for current fiscal period

Step 1: Appraise marketing strengths and weaknesses

•Emphasize factors that will contribute to the firm's competitive edge •Consider product design, reliability, durability, price/quality ratios, production capacities/limitiations, resources, and need for specialized expertise

Benefits of a Business Plan For the entrepreneur

•Forces critical/objective view of business •Forces development & communication of strategies/expectations •Creates measurable benchmarks to compare your future performance with •Is a communication tool with outsiders •Is operational tool for guiding venture towards success

Shift from the 4Ps to the 4Cs:

•From Product........to Cocreated •From Promotion.....to Communities •From Price............to Customizable •From Place............to Choice

Conducting the interview

•General structure: Ask a broad question Listen Probe further and seek clarification Ask "Why?" Say "Tell me more about that" Repeat! •Take notes throughout (and ask permission if recording) •Record basic facts about the person (gender, race, occupation, age, affluence)

Customer Segment

•Groups of people an organization aims to reach and serve • •Segmented according to needs, channels, relationships, profitability, and/or payment preferences Examples of customer segments: Mass Market, Niche, Segmented, Diversified, Multi-sided platforms

Channels

•How a business communicates with and reaches its customer segments to deliver its value proposition Examples of channels: Store fronts, sales force, web sales, partner stores, wholesaler

Step 3: Develop product/service strategies

•Identify end users, wholesalers, and retailers as well as their needs and specifications •Align product's design, features, performance, cost, and price with those needs

Step 3: Gather Primary Data

•Information gathered by you specifically for the research at hand •Examples Surveys Interviews Experimentation Focus Groups

Step 2: Gather Secondary Data

•Information that has already been compiled. •Advantage: less expensive and available •Disadvantages: outdated, lacks specificity, questionable validity

Entrepreneurial Marketing

•Investment of time, energy, creativity, commitment •Main focus is on the customer •Goal is to meet and satisfy customer needs •Long-term interactive relationship with customer •Delivers marketing message as a dialogue

Pitfall #1: No realistic goals

•Lack of attainable goals •Lack of time frame to accomplish things •Lack of priorities Lack of action steps

Developing a Social Media Marketing Plan

•Listen - to what people are saying about the company •Identify - the target market •Categorize - social media platforms by target market •Appraise - location, behavior, tastes, and needs of the target audience •Implement - choose the right platform •Collaborate - with platform members •Contribute - to content to build reputation and add value •Convert - brand building, increasing customer satisfaction, driving word of mouth recommendations •Monitor - social media initiatives

Commitment

•the venture must be supported by all involved—family, partners, employees, team members

Encourage

•user participation and dialogue that fully engages customers with online conversations.

Developing an Information-Gathering Instrument

•Make sure each question pertains to a specific objective that is in line with the purpose of the study. •Place simple questions first and difficult-to-answer questions later in the questionnaire. •Avoid leading and biased questions. •Ask yourself: "How could this question be misinterpreted?" Reword questions to avoid misunderstanding. •Give concise but not complete directions in the questionnaire. •Use scaled questions rather than simple yes/no questions to measure intensity of an attitude or frequency of an experience.

Key Resources

•Most important assets required to make a business model work Categories of key resources: Physical, intellectual, human, and financial

Key Activities

•Most important things a company must do to make a business model work Examples of key activities: Production, problem solving, supply chain, platform/network, and marketing/sales

At the early stages of a new venture, you are marketing yourself

•Most investors will invest in you first and foremost, not just your idea •Investors want to see that they can build a long-term relationship with you over a period of years and that you are capable of collaborating to build the business

Step 4: Develop marketing strategies

•Necessary to achieve marketing objectives and goals •Includes advertising, sales promotion campaigns, trade shows, direct mail, and telemarketing

Key Partnerships

•Network of suppliers and partners that make a business model work • •Alliances, competition, joint ventures, buyer-supplier relationships Motivations for partnerships: Optimization and economies of scale Reduction of risk and uncertainty Acquisition of resources or activities

Pitfall #4: Lack of Experience

•No experience in business •No experience in the specific area of the business •Lack of understanding of the industry in which the venture fit •Failure to convey a clear picture of how and why the venture will work and who will accept it

Pitfall #2: Not Anticipating Roadblocks

•No recognition of future problems •No admission of possible flaws or weaknesses in the plan •No contingency or alternative plans

Why is your pitch important?

•People decide in less than 90 seconds if they want to hear more about an idea or not, and it takes between 7 and 20 seconds to create a first impression1

The Storytelling Approach

•Powerful way of engaging and connecting with people •Successful pitches draw people into your story

Benefits of a Business Plan For financiers:

•Provides details of the market potential •Illustrates entrepreneur's thought process for capturing market •Identifies critical risks and how/if entrepreneur can deal with them

Qualitative

•Requires researcher to delve deeper into the questions with the respondents •Implies smaller sample size •Results are subjective

Social Media Marketing Distinctions Trade off

•Social Media can attract customers fast (go viral), but allows comments (good and bad) to be published to the world. •Customers can leave just as fast as they come ...must find ways to keep your customers and attract new ones!

Pitches should end with a "call to action"

•The action you would like your audience to take after you have finished your presentation

There are two main parts to the "perfect pitch":

•The content, which includes your value proposition, the problem and solution, and the resources required •The communication Research has shown that 93% of our communication is nonverbal: 55% of the message is conveyed through facial expression 35% is conveyed through expression voice tone

Marketing Research

•The gathering of information about a particular market, followed by analysis of that information.

Executive Summary

•This should be a clever snapshot of the complete plan. •Should concisely explain the business's current status, its products and services, value proposition, benefits to customers and investors, financial forecasts, future objects, and amount of financing needed

Customer Relationships

•Types of relationships a business establishes with its customer segments •Motivations: acquisition, retention, up-selling Examples of relationship types: Personal assistance, self service, automated service, communities, co-creation

Pitfall #5: No Market Niche (Segment)

•Uncertainty about who will buy the basic idea(s) behind the venture •No proof of need or desire for the good or product being proposed •Assumption that there will be customers or clients just because the entrepreneur thinks so

Step 1: Define the research purpose and objectives

•What are the informational requirements for a decision to be made? •Where do potential customers go to purchase the good or service in question? •Why do they choose to go there? •What is the size of the market and how much of it can the business capture? •How does the business compare with competitors? •What impact does the business's promotion have on customers? •What types of products or services are desired by potential customers?

Interviewing your Potential Customer 1.Preparing for your interview:

•What is the purpose of the interview? What are you hoping to understand and learn more about? •You should not walk into an interview thinking you already know what they need - you must listen!! •Prepare some broad, open-ended questions to better understand your customers Example: Understanding needs of pet owners •Tell me about an average day with Indy. (day in the life) •Why did you adopt Indy? (values) •How do other people in your life interact with Indy? (connections with others) •Tell me about some recurring "headaches" (problems) you have with Indy. (pain points)

After the interview

•Write down any additional observations or thoughts while the interaction is still fresh in your mind!

Current marketing research

•determines who the customers are, what they want, and how they buy

Cost:

•research is too expensive.