Entrepreneurial Small Business 5th Edition; Chapter 4

Target Market

A marketing term (also called serviceable obtainable market, or SOM) that refers to the group of customers in the area you plan to serve who would be likely to be interested in your product, or those of competitors. Target markets can refer to individuals or market groups called segments.

Casual Model of Entrepreneurship

One of two approaches to thinking about entrepreneurship (the other is effectuation). The casual approach is one in which you want to create a particular product or service that does not yet exist, and to achieve that end, you have to cause the product or service to exist. This can mean you will have to learn new skills, or find others to help you achieve your end.

Feasibility Study

A feasibility studies evaluates the potential of a business opportunity by studying five primary areas in depth: the overall business idea, the product/service, the industry and market, financial projection (profitability), and the plan for future action.

Gain

A gain can be any sort of outcome (a product, service, outcome, or situation) customers or potential customers would like to encounter or be able to depend in. It is one of two driving forces of creating new products or services, with the other driving force being pain.

Customer Segment

A group or subgroup of potential purchasers that can be approached in a coherent manner.

License

A legal agreement granting you rights to use a particular piece of intellectual property.

Pain

A pain can be any sort of problem, annoyance, source of aggravation, shortcoming, or suboptimal situation customers or potential customers face. It is one of two driving forces of creating new products or services, with the other driving force being gain.

Royalty

A payment to a licensor based on the number or value of licensed items sold.

Pilot Test

A preliminary run of a business, sales effort, program, or website with the goal of assessing how well the overall approach works and what problems it might have.

Creativity

A process producing an idea or opportunity that is novel ans useful, frequently derived from making connections among distinct ideas or opportunities.

Entrepreneurial Alertness

A special set of observational and thinking skills that help entrepreneurs identify good opportunities; the ability to notice things that have been overlooked, without actually launching a formal search for opportunities, and the motivation to look for opportunities.

A/B Testing

A way to check customers reaction to websites describing your product or service. Two versions (version "A" and version "B') of the sites are posted and are served up randomly to prospective customers. The version that gets the most commitments from customers is the one kept and the less attractive site is revised and the two versions tested until one revision gets consistently superior customer reactions.

Imitative Strategy

An overall strategic approach in which the entrepreneur does more or less what others are already doing.

Business Models

Business models are a way to identify and organize key information on a business and how it achieves its goals. Business models can be analytic tools (like a business model canvas) or a way to do business (like the "razor and blade" business model).

Freemium

Freemium is an approach to pricing, and business model, that connects free and premium products or services. Typically a free version is offered and users have the option to pay to move up to premium features. Popular examples include Dropbox (5 GB of space for free, with more space or services at a price) and Angry Birds (free ad-supported version; paid version removes ads).

RBI Screen

RBI stands for "Really Big Idea" and is a fast technique for making initial assessments (called screens) of prospective business ideas based on five questions. The RBI approach comes from Alex Burton, and can be found at theinnographer.com/toolkit/really-big-idea.

Radical Innovation Strategy

Rejecting existing ideas, and presenting a way to do things differently.

Opportunity Recognition

Searching and capturing new ideas that lead to business opportunities. This process often involves creative thinking that leads to discovery of new and useful ideas.

Value Proposition

Small business owners' unique selling points (also known as benefits) that customers can expect from your goods or services, including benefits tha differentiate your offering from those of the competition.

Incremental Strategy

Taking an idea and offering a way to do something slightly better than it is done presently.

Feasibility

The extent to which an idea is viable and realistic and the extent to which you are aware of internal (to your business) and external (industry, market, environment) forces that could affect your business.

Conversion Rate

The measure of how many visitors to your website (or people who click on your online advertisement) are actually willing to make a commitment to the product or service promotes in the site.

Licensee

The person or firm that is obtaining the rights to use a particular piece of intellectual property.

Licensor

The person or organization that is offering the rights to use a particular piece of intellectual property.