Marketing for entrepreneurs Piers Robinson Nuventis

Marketing for entrepreneurs

Piers RobinsonNuventis

Marketing for Entrepreneurs

• Objectives• Marketing philosophies and definitions• The customer and segmentation• Understanding the industry• Developing a product• Developing a market entry strategy

Objectives

Objectives

• To ensure you understand the importance of:– Research and analysis of your customer and

industry– Segmentation– A ’whole product’– A ‘USP’– A market entry strategy

Marketing philosophies/

definitions

Commercial philosophies

As markets develop, business philosophies change:

Product Customer• Sales led Advertising and Selling

Customer Product• Market led Market Research

Product Customer• Product led

In order to succeed, new companies must follow ‘market led’ principles

Marketing definitions

‘Marketing is a process by which individuals and groups obtain what they need and want through

creating and exchanging products and value with others’…

Marketing definitions

‘Marketing is a system of interacting business activities designed to plan, price,

promote and distribute want-satisfying products and services to organizational and household users in a competitive

environment at a profit’…

Marketing definitions

‘Marketing is about developing and delivering a product or service to satisfy a need or want

in a competitive market’…

Marketing definitions

Blah, blah, blah!All of these definitions are valid – but the

next one is simple, and highlights the fact that every business function

should be focused on the customer…

Marketing definitions

‘Marketing is satisfying customer needs profitably’…

Marketing definitions

‘Great devices are invented in the laboratory, great products are invented in the Marketing Department’Theodore Levitt

Editor, Harvard Business Review

‘‘Technological breakthroughs alone will not enable a company to survive. Marketing makes products’

Robert Noyce, Co-founder, Intel Corporation

And finally, if you don’t believe how And finally, if you don’t believe how important ‘marketing’ is…important ‘marketing’ is…

RESEARCH

Importance of research

• Without research you will not:– fully understand your customer– have a good grasp of other companies in your

industry– have adequate information to start a business– win the New Business Challenge

Types of research

• Secondary research– Helps you derive a good understanding of your

environment– Sources:

• Journals/ publications• National press• Websites• Contacts/ networks• Analysts reports• Patent searches• www.google.co.uk

Types of research

• Primary research– Helps you derive a good understanding of your

customer/ end user– Types:

• Quantitative – number based analysis

• Qualitative – anecdotal

Customer & Segmentation

Understanding the customer

‘It’s not about you. It’s not about your revolutionary products or services.

Successful entrepreneurial ventures are about serving customers and their needs.

Not just any customers. Target customers’

John Mullins, ‘The New Business Road Test’

• Definition of ‘customer’ or ‘market’:

‘The set of actual or potential buyers of a product or service’

Understanding the customer

‘Segmentation’

• It is important to ‘segment’ your customer base as users have differing characteristics and behaviours

• Think of the appropriate ways to segment your market

• Then determine which segments are most appropriate to your business

Understanding the customer

‘Pen portrait’

• A ‘pen portrait’ can really help you get into the head of your target customer

You might have an idea who your customer is… but find your ‘niche’

The global washing machine market

Your product/ service

A ‘market entry strategy’…??

Segmentation

The global washing machine market

Your product/ service

Households only

You might have an idea who your customer is… but find your ‘niche’

Segmentation

The global washing machine market

Your product/ service

Households only

In the UK

Segmentation

You might have an idea who your customer is… but find your ‘niche’

Segmentation

The global washing machine market

Your product/ service

Households only

In the UK

Earning £100k+ p.a.

You might have an idea who your customer is… but find your ‘niche’

Segmentation

The global washing machine market

Your product/ service

Households only

In the UK

Earning £100k+ p.a.

With current machine over 2 years old

You might have an idea who your customer is… but find your ‘niche’

The global washing machine market

Households only

In the UK

Earning £100k+ p.a.

Segmentation

Your product/ service

With current machine over 2 years old

You might have an idea who your customer is… but find your ‘niche’

Your ‘milestones’ will help you to reach that customer

‘Milestones’

Your product/ service

Milestones

T1 T2 T3 T4

Segmentation methodsFactor Consumer markets Industrial markets

What are the characteristics of the customer?

Age, sex, raceIncomeFamily sizeLife cycle stageLocationLifestyle

Vertical industryGeographical locationSize of companyTechnologyProfitabilityStyle/ culture of management

How will the customer purchase/ use the product?

Size/ frequency of purchaseIssues with brand loyaltyPurpose of usePurchasing behaviourImportance of purchaseSource of purchase

Application of productImportance of purchaseVolume of purchasesFrequency of purchasePurchasing procedureDistribution channel

What are the users’ specific needs, and preferences

Similarity to existing purchasesPrice elasticityBrand preferencesDesired featuresQuality

Performance requirementsAssistance from suppliersBrand preferencesDesired featuresQualityService requirements

So now we know…

• How to research the customer• How to segment the market• How to put the customer first

Now you must think about the industry and work out how to reach them…

Understanding the INDUSTRY

Understanding the industry

• Definition of ‘industry’:

The group of companies which ultimately sell to the customer

The industry ‘supply chain’

• The ‘supply chain’ consists of all the companies/ people who will make sure your product/ service get to the customer

• You need to know the supply chain intimately, so you can determine where you fit in

The industry ‘supply chain’

Producer

Wholesaler/ reseller

Retailer

Retailer

Customer ConsumerSupplier

Where are you in the chain?

Porter’s Five Forces

• Porter’s Five Forces is a classic industry analysis tool

• It is a means of identifying the different stakeholders, or ‘forces’, which affect:– The level of competition in an industry– The ability of a company to become powerful in

that industry

Porter’s 5 Forces

This will help you think about the competitive This will help you think about the competitive environment – whatever size the market isenvironment – whatever size the market is

Competitive rivalry

Threat of new entrants

Substitutes

Suppliers Buyers

Adapted from M.E. Porter, ‘Competitive Strategy’, Free Press, 1980

Competitor analysis

• Every company has competitors• They might be:

– A similar product/ service to yours– A ‘substitute’ product/ service– The option to do nothing!

• You must understand your competitors intimately

Competitor analysis

• Who are they?• Where are they?• What do they offer?• What size/ share/ growth rate are they?• What are they good at?• What are they bad at?

Competitor Strengths Weaknesses Threat

(1 to 5)

Your competitive advantage

Competitor analysis

Critical Success Factors (CSFs)

A CSF is something that has to be done right in order to succeed in an industry. Some examples:

• Food preparation?• Retail?• Airline industry?• Telecoms?• Media?

Freshness/ hygiene

Location/ service

Safety/ efficiency

Functionality/ speed

Content/ reach

Developing a PRODUCT

Added extrasAdded extras

The Product/ Service continuum

Tangible/ physical itemTangible/ physical item

Warranty/ supportWarranty/ support

Intangible/ experiential offeringIntangible/ experiential offering

ProductProduct ServiceService

• Suppliers bolt-on additional products to their core offering to gain competitive advantage

• Then they add services to their products to make them more valuable to the customer

Meeting customer needs

• Tips– When developing a product/ service, think

about the pen portrait to remind yourself of the customers’ needs…

– Write down the customer needs– Work out how to solve them– Try to offer a ‘whole solution’

A ‘whole product’ solution

Where you show you are committed Where you show you are committed to solving their problemto solving their problem

Where you can showyou understand the customer’sbusiness problem…and yoursolution The

Product

Hardware

Software

Legacyinterfaces Connectivity

Pre-salesservices

Post-salesservice

& support

Peripherals

Consulting

What your in-What your in-categorycategory

competitors competitors have inhave in

commoncommon with youwith you

Source: ‘Crossing the Chasm’, Geoffrey Moore

‘Barriers to entry’ prevent competitors from

stealing your customers. Your barriers could be:

Barriers to entry

• Intellectual property protection:• Patent, trademark, copyright, licence rights

• Exclusive relationship with a supplier/ customer• Alliances/ partnerships with other companies• A unique proposition/ brand• Unique location

Unique Selling Proposition (USP)

• A USP helps you to differentiate your product/ service

• It might be:– Speed– Size – Weight– Convenience– Comfort– Enjoyment– Safety

– Style

– Strength

– Quality

– Functionality

– Better support

– Ease of use

– But NOT price

Some examples of USPs…

Company USP

- Dyson - Revolutionary solution

- Apple operating system - Smarter/ better design

- Audi - Build quality

- Pret a Manger - Fresher

- Ebay - Community

- Innocent drinks - Healthier

- Harley Davidson - Tribal

- Linux - Openly available

- Stella Artois - More expensive

Developing a market entry strategy

Strategic development

• Do further research to identify the long term opportunities

• Then determine your milestones to achieve the long term goals

• The roll out plan/ commercialisation plan/ market entry strategy is what most people fall down on!

Milestones

• The milestones will help you achieve your mission

• They could be in the following categories:– Product development– Funding– Commercial/ market development– Team development– Etc

Developing the strategy

In essence, strategic decisions are about ‘products’ and ‘markets’. The Ansoff Matrix sums it up…

Product development

Market penetration

DiversificationMarket development

Existing Existing New New

Existing Existing

New New

PRODUCTSPRODUCTS

MARKETSMARKETS

Devising your business model

• What will your business structure be?– Licensing IP– Merger– Joint venture– Partnering– Outsourcing– In-house development

• In selecting a business model, think about:– Customer need

• Who will buy?

• What will they buy?

• How often will they buy?

– Quality of IP (is it a platform technology?)– Industry CSFs and competitive environment– Company’s capabilities and internal resources (risk

profile/ motivation/ experience)

Devising your business model

Your first customer

• Once you have devised your business model, and identified your segment, select who to target first

• It may be:– Your key customer, or a less significant player– A company you have easy access to– A company that you perceive to have the greatest need– A company you could develop a long term relationship with

• Your choice depends upon your product, your risk profile and your strategy

Pricing

• Decide how much you are going to charge

• Think about– How your price compares to the market average?– Are you going to make enough money?

• Note: the more you have ‘differentiated’ your product/ service, the more money you can charge

Partnerships/ alliances

• In reality, you will always need the involvement of third parties to get to market

• External relationships could be vital:– To offer a ‘whole solution’– To provide product development expertise– To block potential competitors– To enable access to customers/ suppliers– To enable focus on core competencies

Questions?

Contacts

Who: The Challenge Team(Piers/ John/ Solange)

Where: Tanaka Business School (2nd Floor)

Telephone: 020 7594 9199 (x49199)

E mail: challenge@ic.ac.uk

URL: www.ec.ms.ic.ac.uk/challenge