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Professor Tom Byers and Consulting Professor Tom Kosnik

Copyright © 2008 by the Board of Trustees of the Leland Stanford Junior University and Stanford TechnologyVentures Program (STVP). This document may be reproduced for educational purposes only.

“Companies that create the future do more thansatisfy customers, they constantly amaze them.”

~ Hamel and Prahalad

Entrepreneurial Entrepreneurial MarketingMarketingand Global Venturesand Global Ventures

SessionSession #4#4

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Sahlman, Harvard Business Review AIR Case Study, HBS Online

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Agenda and ObjectivesAgenda and ObjectivesA. Entrepreneurial Marketing

1. What Is It?

2. How Can a Venture “Cross the Chasm”?

3. Positioning First, then Go-to-MarketStrategies

4. Positioning Exercises

B. Global Ventures

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Why is Marketing So Challengingin a Technology Venture?

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What is Marketing Anyway?What is Marketing Anyway?

• Marketing must be more than a sales supportfunction. Not just ad tag lines. In all kinds ofbusinesses, it must satisfy “the needs of thecustomer by means of the product and thewhole cluster of things associated with creating,delivering, and finally consuming it.”

• Especially in high-technology venturing,marketing must “invent complete products anddrive them to commanding positions indefensible market segments.”

Reference: Levitt and Davidow

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Ali GAli G’’s Opportunity Analysis Projects Opportunity Analysis Project

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““Market AnalysisMarket Analysis”” Versus Versus ““MarketingMarketing””

Step #1: Opportunity Recognition (Market Analysis)

–Identify a Market Need

–Examine the Competitive Dynamics of the Industry

–Determine Growth Potential

Step #2: Marketing as a Strategy

–Develop a Unique Positioning

–Develop Marketing Objectives

–Build a Set of Go-to-Market Strategies (e.g., Pricing,Promotion)

–Support through Sales and Great Execution

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Famous Model Famous Model …… Geoff Moore Geoff Moore’’ss““Technology Adoption Life CycleTechnology Adoption Life Cycle””

Innovators

InnovatorsEarlyEarly

AdoptersAdopters

Early Early

MajorityMajority

LateLate

MajorityMajority

LaggardsLaggards

Bowling Alley

Main StreetTornado

Source: Moore (1995), Inside the Tornado

Try to Name aDiscontinuousInnovation (or

DisruptiveTechnology)

Where Do You FitWhen It Comes toNew Technologies?

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So How Does a StartupSo How Does a StartupCross the ChasmCross the Chasm??

1.Put Your Eggs in One Basket …

Target Market Segments.

2.Then Deliver a 100% Solution To Them …

A Whole Product.

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Dog’s Role Segment Brand Price/100 gr.

Dog as a family member Premium Chum 8.7 pence

Dog as a companion Moderate Pal and Bounce 6.4 & 7.9 pence

Dog as an animal Economy Chappie 6.3 pence

Reference: A. Ryans

An Example of the PowerAn Example of the Powerof Segmentation andof Segmentation and

Target Marketing:Target Marketing:Pedigree Petfoods in UKPedigree Petfoods in UK

Dog as a substitute child? Super Premium

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Segmentation and the UK Dog Food Market:Segmentation and the UK Dog Food Market:PedigreePedigree’’s Super Premium Strategys Super Premium Strategy

• Target Market? Intense relationships, own smaller dogs, olderand urban females

• Benefits? Very best product that can be bought, reassurance,confidence, leads to an enhanced relationship

• Name? Mr. Dog (later Caesar)• Product? Very high quality ingredients, wide variety of flavors,

special packaging• Price? 17.7 to 30.7 pence per 100 grams• Advertising? Dog bringing newspaper, slippers, etc.

Results: Fours years later, it had a 10% share of the total dog foodmarket. The total super premium segment of the market was about

15% -- about 10% coming from dog food brands and about 5%coming from fresh foods. In addition, Pedigree's premium brand

retained its market share.

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Whole Product: The 100% SolutionWhole Product: The 100% Solution((““EcosystemEcosystem”” of Partners) of Partners)

SoftwareProgram

Platforms

Support

Consulting

Installation& Training

Connectivity

Etc.

Reference: Ted Levitt, Bill Davidow

Key Decisions:Which PiecesDo We Do andWhich Do OurPartners Do?

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What is the Single MostWhat is the Single MostImportant Concept in aImportant Concept in a

Marketing Strategy?Marketing Strategy?

Positioning (a.k.a. the “Elevator Pitch”)

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Positioning TemplatePositioning Template• Sentence #1 (Why buy this at all?)

For (target customer)who (statement of the need & opportunity),the (product/service name) is a (product/service category)that (statement of benefit).

• Sentence #2 (Why buy from us vs. others?)

Unlike (primary competitive alternative),our product (statement of primary differentiation).

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Positioning Should DrivePositioning Should DriveGo-to-Market StrategiesGo-to-Market Strategies

Promotion and Communication(including branding)

Pricing and Business Model(including viral marketing)

Sales and Distribution(including affiliate marketing)

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Positioning Example:Positioning Example:Palm TreoPalm Treo

For busy individualswho need a way to organize, manage, and

communicate,the Palm Treo is an all-purpose handheld

computer, camera, and mobile phone, all basedon the proven Palm operating system,

that offers simplicity of use, portability,personalization, connectivity, and functionality.

Unlike pure personal digital assistants,our product offers expandability due to the

springboard technology and benefits of an all-inone capability.

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Positioning Example:Positioning Example:Apple iPhoneApple iPhone

For anyone who wants to travel in stylewho loves to communicate and mix work and play,

anywhere, anytimethe Apple iPhone is a smart phone AND an iPod,that offers Apple’s legendary ease-of-use,

elegance, intuitive integration, and cool.

Unlike Blackberries, Treos and other smart-phonesour product offers better talking, faster browsing,

music and movies, and photos that come to life,all on the big screen in the palm of your hand.

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Now Give It a Try PleaseNow Give It a Try Please

• Sentence #1

For (target customer)who (statement of the need/opportunity),the (product/service name) is a (product/servicecategory)that (statement of benefit).

• Sentence #2

Unlike (primary competitive alternative),our product (statement of primary differentiation).

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A Short Checklist for EffectiveA Short Checklist for EffectiveEntrepreneurial Marketing Entrepreneurial Marketing ……Relationships Matter!Relationships Matter!

How will the startup get close to customers?

How will they leverage alliances andpartnerships?

How will they influence the market’sinfrastructure and the industry’s key“players”?

Going global: what is theirinternational strategy? Let’s Learn More!

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Innovative Companies Gace a “Double Chasm” as They Go Global!

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The Double-Chasm ChallengeThe Double-Chasm Challenge

• The Market Chasm – based on the early majority

adopters’ perceptions of the innovation’s risks

• The Cultural Chasm – based on:

– Lack of experience of the company’s leaders in each new

country’s local culture

– Lack of trust among adopters in each new country in the

“foreign” company and its leaders.

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The Cultural ChasmThe Cultural Chasm

LanguageLaws

Circles of InfluenceEthics

ReligionEducation

Culture

Business-Government

Provincial Code

Business Ecosystem

“Foreign” High-tech

venture

Adopters in a new country’s

Local culture

Lack ofExperience

Lack of Trust

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Key QuestionsKey Questionsfor Going Globalfor Going Global

1. Who can help us go global?

2. What are some good examples of firms who have

gone global?

3. When should we think about going global?

4. Where should we focus?

5. Why should we care about going global?

6. How can we become global entrepreneurs on a

shoestring budget?

Source: Professor Kosnik (Stanford)

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Who Can Help Us Go Global?Who Can Help Us Go Global?

• Venture cap ital f irm s

• Ang el investors

• Investm ent bankingf irm s

• Stock exchang esaround the world

• Law f irm s

• Pub lic accountingf irm s

• Consult ing f irm s

• Executive search f irm s

• Universit ies

• Global customers whoare potential partners

• Business and technicalnews m edia

• Government ag encies

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What Are Good Examples ofWhat Are Good Examples ofFirms Who Have Gone Global?Firms Who Have Gone Global?

Accenture Acer Amazon.com Applied Materials Bain BCG Ebay Facebook Goldman Sachs Goog le Hew lett Packard Infosys Intel

McKinsey Microsoft Mitsub ishi Morg an Stanley Nokia Myspace Oracle SAP Sony Softbank TSMC W ipro Yahoo!

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When Should We Think About This?When Should We Think About This?1 . W hen we write the business p lan

2 . W hen we form our founding team

3 . W hen we name our products and our company

4 . W hen we decide where to source R&D,Eng ineering , Manufacturing , Sales, and CustomerSupport

5 . W hen we p ick our cap ital sources

6 . W hen we identify the targ et m arket

7 . W hen we p ick our most im portant customers

8 . W hen we select our strateg ic partners

9 . W hen we recruit our talent and suppliers

1 0 . W hen we analyze our competit ion

1 1 . All of the above!

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Where Should We Focus?Where Should We Focus?

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Why Should We Care About BecomingWhy Should We Care About BecomingGlobal Entrepreneurs?Global Entrepreneurs?

Higher Upside Potential

and Lower Downside Risk

Competing with global competitorson their home turf

manages risk

Access to globalcapital marketshelps lower yourcost of capital

Access to globalsuppliers of world

class technology & talenthelps to innovate & grow

Participating inmultiple regions reduces risk of

recession at home

Access to globalcustomer base maximizes

learning & innovation

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How Can We Become GlobalHow Can We Become GlobalEntrepreneurs Entrepreneurs Right Here and Now?Right Here and Now?

Read about exemplars in different cultures

Ask classmates, recruiters, and alumni about how things differ intheir home region from yours

Learn new words and try new foods with your team mates

Think global at every step of your OAP

Cruise the web around the world when preparing for class

Ask your OAP mentors about their global experiences

Look to government agencies who can help

Meet global investors who often visit Stanford

Visit entrepreneurial hotspots around the globe

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First Step First Step …… Get This Book? Get This Book?

What is the most crucial issue in next20 years for entrepreneurs?

Could it be “the convergence oftechnology and events that allows India,China, and so many other countries tobecome part of the global supply chain

for services and manufacturing, creatingan explosion of wealth in the middleclasses of the world's two biggest

nations, giving them a huge new stake inthe success of globalization?”

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Where can you learn more?Where can you learn more?

• Stanford Technology Ventures Program:• http://stvp.stanford.edu

• STVP Educators Corner• http://edcorner.stanford.edu/

• Business Association of Stanford EngineeringStudents

• http://bases.stanford.edu

• Global Entrepreneurial Marketing (GEM)• http://gem.stanford.edu

• DFJ Entrepreneurial Thought Leaders (ETL) Program• http://etl.stanford.edu

• NUS Enterprise:• http://www.enterprise.nus.edu.sg/