bygrave & zacharakis, 2007. entrepreneurship, new york: wiley. © chapter 5 entrepreneurial...
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Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©
Chapter 5
Entrepreneurial Marketing
Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©
Definition of marketing by the American Marketing Association:
an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stake holders.
Marketing practices vary depending on the type of company and the products and services it sells.
Entrepreneurial Marketing
Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©
Why Marketing is Critical for Entrepreneurs
Because no venture can become established and grow without a customer market;
Because it is difficult and expensive to bring new products and services to market;
To differentiate product or service to customers makes the company distinctive and valuable;
Companies must be able to switch marketing gears quickly to attract new customer segments.
Entrepreneurial Marketing
Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©
Entrepreneurs Face Unique Marketing Challenges
limited resources in financial, managerial, and time;
limited market information;
decision-making inclined to be muddled by personal biases and beliefs;
poorly established relations with multiple audiences.
Entrepreneurial Marketing
Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©
Market research techniquesExisting market New market
Philosophy of market research
Deductive data analysis
Intuition
Techniques for gathering customer information
Focus groups, surveys, mail studies
Industry experts, trend extrapolation, future scenarios
Examples New types of toothpaste, new car models
Social media exchange markets
Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©
Disadvantages to existing companies entering new markets• Core rigidities: companies are only good at
things they are used to doing• Tyranny of the current market: companies
listen to their customers, who are not a source of ideas for new products in new markets
• Use myopia: customers of existing firms see needs or solutions very narrowly (i.e., not the needs of others)
Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©
Disadvantages to existing companies entering new markets• Because large companies have these
disadvantages with new markets, new ventures should focus on new markets instead of established ones
Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©
Acquiring Market InformationMarketing research could cover information such as:
-Product attributes important to customers;-Possibility of customers’ buying willingness by marketing behaviors;-Market trend;-The location of the customers’ preference.
Entrepreneurial Marketing
Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©
Acquiring Market InformationTwo basic types of market data
•Primary data•Data you collect yourself•Limitations of primary data
•Secondary data•Economical and usually used to collect baseline information
Entrepreneurial Marketing
Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©
Conjoint analysis
• Asks individuals to express their preferences for various product that are especially chosen to offer a systematic array of features
• Price, size, weight, battery life, color• Two choices for each feature leads to 32
different products (2x2x2x2x2)• Important to determine most important
features
Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©
Conjoint analysis
• Conjoint analysis is a useful technique for determining the relative importance, in the customer’s preferences and decisions, of the dimensions they consider important
• Effective use of conjoint analysis helps entrepreneurs design products that have high appeal to potential customers and maximize chances of venture success
Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©
Market dynamics
• Entrepreneurs are more successful in large and growing markets– Large markets amortize the fixed costs of
getting started over a larger number of units– It’s easier to sell into rapidly growing markets
Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©
Market dynamics
• The performance of product adoption follows an S shape– Initially, need a large amount of effort to
achieve small improvements in product performance
– Then performance improvements accelerate and small efforts can lead to large improvements
– Later, must make large efforts to achieve small improvements
Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©
Market dynamics
• Established firms rarely compete with entrepreneurs to develop new products on the early part of the S curve– The new product usually begins with inferior
performance that hurts the company’s overall performance
– Managers of established companies believe they can always improve the performance of their existing products to compete with new products
Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©
Marketing Strategy for Entrepreneurs
A company’s marketing strategy must closely align with its resources and capabilities;
Segmentation, targeting, and positioning are key marketing dimensions that set the strategic framework.
Entrepreneurial Marketing
Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©
Entrepreneurial MarketingMarketing Strategy for Entrepreneurs/the Marketing Mix
Product Product StrategyStrategy
placeplace
promotiopromotionn
Pricing StrategyPricing Strategy
Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©
Entrepreneurial Marketing
Guerilla Marketing
Guerilla marketing acts as non-traditional, grassroots, and captivating – that gain consumers’ attention and build awareness of the company.
Word-of-Mouth marketing, Buzz marketing, and Viral Marketing.
Other issues in Guerrilla Marketing.
Entrepreneurial Marketing
Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©
Entrepreneurial MarketingMarketing Skills for Managing Growth
Understanding and Listening to the Customer
Building brand awareness and building brand equity
Entrepreneurial Marketing
Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©
Conclusion
Marketing is a delicate balance of art and science.
It is necessary for entrepreneurs to scale up or change focus.
Entrepreneurial Marketing