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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: [email protected]
URL: www.ec.ms.ic.ac.uk/challenge