Marketing challenges for entrepreneurial ventures

Objectives 1. To review the importance of entrepreneurial marketing and associated research for

new ventures

2. To identify the key elements of an effective market survey

3. To distinguish entrepreneurial marketing and guerrilla marketing from ordinary marketing

4. To outline the processes of undertaking marketing research

5. To present factors that inhibit the use of marketing

6. To examine the entrepreneurial marketing concept philosophy, segmentation and consumer orientation

7. To establish the areas vital to a marketing plan

8. To characterise the marketing stages of growing ventures

9. To examine entrepreneurial marketing on the Internet

10. To differentiate green marketing from traditional marketing practice

11. To discuss the key features of a pricing strategy. 2

But first

Q. What is the point of marketing a new product or service? ?

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Marketing is civilised warfare Marketing is as critical to new businesses as it is for

established ones

Start-ups must be intimately in touch with their customers

A market is a group of potential customers who have purchasing power and unsatisfied needs

A new venture will survive only if a market exists for its product or service

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Entrepreneurial marketing

Proactive identification and exploitation of opportunities for acquiring and retaining profitable customers through innovative approaches to risk management, resource leveraging and value creation.

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A small business is not a little big business

Entrepreneurs are not corporations

They are selfmaximising, profitseeking autonomous individuals leading small teams

They suffer from resource poverty

They need zero-budget marketing or guerrilla marketing

Principles of guerrilla marketing Based on human psychology

Primary investments are time, energy and imagination money

The primary statistic is profit

Concentrate on new relationships

Aim for more referrals, more transactions with existing customers and larger transactions

Forget the competition and concentrate on cooperating

Use current technology as a tool to empower your marketing

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Guerrilla marketing

Q. What could you do to market a new MP3 watch using guerrilla marketing? ?

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Guerrilla marketing tactics Webzine Email newsletters Send ecards to clients on

special dates Participate in online

newsgroups and forums Speeches to companies,

schools or organisations Trade sets of business

cards with other businesses

Make yourself newsworthy

Do something environmentally conscious

Work with local media

Give free samples, trials, consultations, etc.

Do whatever your competition isn't doing

Relationship marketing

Build longer term relationships with customers

Understand their life cycle needs

Provide a range of products/services to existing customers as they need them

Use it when:

You offer relatively high-value consumer products

The costs of switching are high

Customer involvement is high

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Marketing research

Gather information about your market

Then analyse the information (make it meaningful)

Plan a comprehensive approach to research

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Marketing research procedures

A. Define the research purpose and objectives Where do potential customers go to purchase your good/service?

Why do they choose to go there?

What is the size of the market? How much of it can you capture?

How do you compare with competitors?

What impact does your promotion have on customers?

What types of products/services do potential customers desire?

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Marketing research procedures B. Gather secondary data

Exhaust all the available sources of secondary data

Internal data exists in the business

External data includes the Internet, trade journals, other entrepreneurs, etc.

Problems with secondary data:

Outdated

May not fit the current problem

Validity

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Marketing research procedures C. Gather primary data

Observational methods avoid contact with respondents

Survey methods contact respondents in varying degrees

Experimentation model your marketing messages and try them out

Develop an information-gathering instrument (questionnaire)

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Marketing research procedures

D. Interpret and report information A lot of data has no meaning until it has been examined, and

possibly depicted graphically

Tables, charts and other graphic methods are useful

Descriptive statistics mean, mode and median are useful too

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Marketing research questions (Sales)

Do you know your competitors sales performance by type of product and territory?

Do you know which accounts are profitable and how to recognise a potentially profitable one?

Is your sales power deployed where it can do the most good?

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Marketing research questions (Distribution)

Do you know all you should about distributors and dealers attitudes towards your product/service?

Are distributors/dealers salespeople saying the right things about your products/services?

Has your distribution pattern changed along with the geographical shifts of your markets?

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Marketing research questions (Markets)

Do you know about differences in buying habits and tastes by territory and kind of product?

Do you have as much information as you need on brand/manufacturer loyalty and repeat purchasing?

Can you plot, from period to period, your market share of sales by products?

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Marketing research questions (Advertising)

Is your advertising reaching the right people?

Do you know how effective your advertising is (in comparison with your competitors)?

Is your budget allocated appropriately for greater profit?

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Marketing research questions (Products)

Do you have a reliable quantitative method for testing market acceptability?

Do you have a reliable method for testing the effect on sales of new or changed packaging?

Do you know whether adding higher or lower quality levels would make new profitable markets?

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The marketing concept

Integrate your approach to:

Marketing philosophy

Market segmentation

Consumer behaviour

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Marketing philosophy 1. Production-driven philosophy

Produce efficiently and worry about sales later

2. Sales-driven philosophy Personal selling to persuade customers to buy the companys

output

3. Consumer-driven philosophy Research to discover consumer preferences

Of the three philosophies, a consumerdriven orientation is often most effective for the entrepreneur

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Marketing philosophy

The philosophy is influenced by:

Competitive pressure

Entrepreneurs background

Short-term focus (a risky aspect)

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Market segmentation

The process of identifying a specific set of characteristics that differentiate one group of consumers from the rest

A total market is often made up of sub-markets (called segments)

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Market segmentation

Q. What market segments do you belong to? ?

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Market segmentation examples

People living in poverty Single-serve packs of shampoo, detergents and other consumer

items sell well to people who cannot afford to stockpile products Nokia have been successful in selling low-end mobile phones to

people living on a few dollars a day

Ecotourists in outback Australia have been segmented into: Hard Soft Structured

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Various variables

Demographic variables include age, marital status, sex, occupation, income and location

Benefit variables identify unsatisfied needs within a market

Psychographics statistical analysis of psychological characteristics

Consumer behaviour

Defined by the types and patterns of consumer characteristics

Especially personal and psychological characteristics

Characteristics are linked to buying trends

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Market segmentation

Q. If you were to write a marketing plan, what would it need to tell people? ?

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Marketing plan A marketing plan is the process of determining a clear,

comprehensive approach to the creation of customers

It typically includes:

Current marketing research

Sales research and analysis

Marketing information system

Sales forecasting

Evaluation

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Current marketing research Identify customers (target markets) and fulfil their desires,

by examining:

The companys major strengths and weaknesses

Market profile

Current and best customers

Potential customers

Competition

Outside factors

Legal changes

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Low-cost marketing research

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Current sales analysis Match customer profiles with sales priority Answer questions, such as:

Do salespeople call on their most qualified prospects on a proper priority and time-allocation basis?

Does the sales force contact decision makers? Are territories aligned according to sales potential and

salespeoples abilities? Are sales calls coordinated with other selling efforts? Do salespeople ask the right questions on sales calls?

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Marketing information systems A computerised system to compile and organise

data, including cost, revenue and profit Key factors are:

Data reliability Data usefulness or intelligibility Reporting timeliness Data relevance System cost

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Sales forecasting

Projecting future sales through historical sales figures and statistical techniques

Important, but potentially flawed due to the use of historical data

Product research

Focus on competitors: What products do competitors currently offer?

What is the extent of their product range?

Do they provide the consumer with a good range of choices?

Do they have a product range that provides different levels of pricing and quality?

Are fad items a feature of this industry?

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Evaluation

The final critical factor

Performance of the plan must be evaluated

Factors include:

Customer retention

Customer preferences and reactions

Sales volume , gross sales and market share

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Example five-step program 1. Appraise strengths and weaknesses, emphasising

competitive edge

2. Develop marketing objectives and specific sales plans

3. Develop product/service strategies

4. Develop marketing strategies

5. Determine a pricing structure

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Marketing stages

There are distinct stages of maturation

Marketing strategy and marketing goals are closely aligned at each stage

Each stage requires a distinct marketing organisation

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Marketing stages

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Internet marketing

Q. What are the various methods used to market products using the Internet? ?

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Marketing on the Internet Can assist the overall marketing strategy

Communicate:

Company/brand

Marketing mix

Cultivate new customers (globally)

Allows customers to serve themselves (not limited by opening hours and location)

A mechanism for low-cost information gathering

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Internet segmentation Customers have different experiences at different

times Customised experiences through usage-based

segmentation A simple set of segments:

Browsers draw them into the site Buyers ease of access to the purchase Shoppers combination of browser and buyer

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McKinsey Internet segmentation

Simplifiers like convenience

Surfers spend time browsing

Connectors are socialising

Bargainers are devoted to low-cost deals

Routiners return to the same sites

Sportsters are looking for information, and focus on sports and entertainment

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Acquisition, conversion and retention

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Green marketing

A movement and a controversy

Green objectives, not just green theming (or green washing)

Take a position!

But note: consumers prefer green product all other things being equal

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Pricing strategies Factors affecting the pricing decision

Competitive pressure Availability of sufficient supply Seasonal or cyclical changes in demand Distribution costs Products life cycle stage Changes in production costs Prevailing economic conditions Customer services provided by the seller Amount of promotion The markets buying power

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Pricing strategies

Price your products to maximise profit

Creating buzz is key

Distribution (bundling) is a perceived plus

Choose your reference accounts wisely

Unique promotional campaigns

Advertising experiments

Marketing may affect capital raising more than sales

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Summary

(close your books)

Q. What are the main sections in a marketing plan?

Q. How would you market a rake that is also a mini-wheelbarrow?

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Marketing research procedures: Define the research purpose and objectives Gather secondary data Gather primary data Interpret and report information

Marketing plan: Current marketing research Sales research and analysis Marketing information system Sales forecasting Evaluation

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