Entrepreneurial Marketing

In this chapter what has been covered during the lectured session are as below :

1.Explain the purpose of market segmentation.
2.Describe the importance of selecting a target market.
3.Describe the importance of the ability to position a company’s products on benefits rather than features.
4.Identify the four components of the marketing mix.

The Process of Selecting a Target Market and Positioning Strategy consist of three which are :

• Segmentating the market,
• Select a target market and
• crating a unique positioning strategy


The Four Ps of Marketing for New Ventures are :

• Price
• Place
• product
• Promotion

Direct selling

Industry and Competitor Analysis

What is Industry Analysis?

• Industry

o An industry is a group of firms producing a similar product or service, such as airlines, fitness drinks, furniture, or electronic games.

• Industry Analysis

o Is business research that focuses on the potential of an industry.

What is Industry Analysis Important?

• Once it is determined that a new venture is feasible in regard to the industry and market in which it will compete, a more in-depth analysis is needed to learn the ins and outs of the industry.

• The analysis helps a firm determine if the niche market it identified during feasibility analysis is favorable for a new firm.

How Industry and Firm-Level Factors Affect Performance

• Firm Level Factors

o Include a firm’s assets, products, culture, teamwork among its employees, reputation, and other resources.

• Industry Level Factors

o Include threat of new entrants, rivalry among existing firms, bargaining power of buyers, and related factors.

• Conclusion

o In various studies, researchers have found that from 8% to 30% of the variation in firm profitability is directly attributable to the industry in which a firm competes.

The Five Competitive Forces Model

Industry Types and the Opportunities They Offer

• Emerging Industries

o Industries in which standard operating procedures have yet to be developed.

§ Opportunity: First-mover advantage.

• Fragmented Industries

o Industries that are characterized by a large number of firms of approximately equal size.

§ Opportunity: Consolidation.

• Mature Industries

o Industries that are experiencing slow or no increase in demand.

§ Opportunities: Process innovation and after-sale service innovation.

• Declining Industries

o Industries that are experiencing a reduction in demand.

§ Opportunities: Leadership, establishing a niche market, and pursuing a cost reduction strategy.

• Global Industries

o Industries that are experiencing significant international sales.

§ Opportunities: Multidomestic and global strategies.

Competitor Analysis

• What is a Competitor Analysis?

o A competitor analysis is a detailed analysis of a firm’s competition.

o It helps a firm understand the positions of its major competitors and the opportunities that are available.

o A competitive analysis grid is a tool for organizing the information a firm collects about its competitors.

Types of Competitors New Ventures Face

Getting Financing or Funding

1) Three reasons most new ventures need to raise money during their early life



2) Alternatives for raising money:
• Personal funds
i)Vast majority of founders contribute personal funds along with sweat equity that represents the value of the time and effort that a founder puts into a new venture.
ii)Friends and family are the second source of funds
iii)Bootstrapping is finding ways to avoid the need for external financing or funding through creativity, ingenuity, thriftiness, cost-cutting or any means necessary.
iv)Examples of bootstrapping methods:


• Preparing to raise debt or equity financing


*Two most common alternatives are:
i)Equity funding – exchanging partial ownership in a firm, usually in the form of stock, for funding
ii)Debt financing – getting a loan

Elevator speech
• A brief, carefully constructed statement that outlines the merits of a business opportunity.
• Most elevator speeches are 45 seconds to 2 minutes long.
• Preparing an elevator speech:


Sources of equity funding
• Venture capital
i) Money that is invested by venture-capital firms in start-up and small businesses with exceptional growth potential.
ii) Important part of obtaining venture-capital funding is going through the due diligence process.

• Initial public offerings
i) Company’s first sale of stock to the public.
ii) Initial public offering is an important milestone for a firm.
iii) Reasons that motivate firms to go public are:


• Sources of debt financing
i) Commercial banks
ii) SBA Guaranteed Loans

• Creative sources of financing/funding
i) Leasing
ii) Small Business Innovation Research Grants
iii) Other Grant Programs
iv) Strategic Partners

Feasibility Analysis

• Process of determining whether a business idea is viable.
• Preliminary evaluation of business idea that conducted for the purpose of determining whether the idea is worth pursuing.

When to conduct feasibility analysis

• The proper time to conduct a feasibility analysis is early in thinking through the prospects for a new business.
• It is to screen ideas before a lot of resources are spent on them.

Role of feasibility analysis in developing business ideas.



Forms of feasibility analysis
1) Product/service feasibility analysis
• An assessment of the overall appeal of the product or service before a prospective firm rushes a new product or service into development.
• It is important to make sure that the product or service is what prospective customers want.
• Components of product/service feasibility analysis:
i)Product/service desirability
* Think about the surroundings and conditions in order to determine the basic appeal of the product/service.
* Administer a concept test – feedbacks from the customers.
ii)Product/service demand
* Administer buying intentions survey.
* Conduct library, internet and Gumshoe research.

2) Industry/target market feasibility analysis
• An assessment of the overall appeal of the industry and the target market for the proposed business.
• Form by a group of firms that produce a similar product or service which their target market is the limited portion of the industry it plan to go after.
• Components of industry/target market feasibility analysis:
i) Industry attractiveness


ii) Target market attractiveness
* The challenge is to find a market that’s large enough for the proposed business but is yet small enough to avoid attracting larger competitors.
* Assessing the attractiveness of a target market is tougher than an entire industry.
* Therefore, considerably ingenuity must be employed to find information in order to assess the attractiveness of a specific target market.

3) Organizational feasibility analysis
• It is conducted to determine whether a proposed business has sufficient management expertise, organizational competence and resources to successfully launch a business.
• Components of organizational feasibility analysis:
i) Management prowess
* Evaluate the ability of the management team to satisfy itself that management has the requisite passion and expertise to launch the venture.
* Two important factors in this area are:
• The passion that the entrepreneur has for the business idea.
• The extent to which the entrepreneur or the founding team understands the markets in which the firm will participate.
i) Resource sufficiency
* To make sure the entrepreneur has sufficient resources to launch the proposed venture or not.
* To test, a firm should list the 6-12 most critical nonfinancial resources that will be needed to move the business idea forward successfully.
* Example of nonfinancial resources:


4) Financial feasibility analysis
• A preliminary financial assessment is sufficient.
• Components of financial feasibility analysis:
i) Total start-up cash needed
* To prepare the business to make the first sale.
* An actual budget should be prepared consists of anticipated capital purchases and operating expenses needed.
ii) Financial performance of similar businesses
* Estimate the proposed start-up’s financial performance by comparing it to similar, established businesses
iii) Overall financial attractiveness of the proposed investment
* A number of other financial factors are associated with promising business start-ups.

Developing An Effective Business Model

It is very useful for a new venture to look at itself in a holistic manner and understand that it must construct an effective “business model” to be successful. Everyone that does business with a firm, from its customers to its partners, does so on a voluntary basis. As a result, a firm must motivate its customers and its partners to play along. The objectives of this chapter are as below:

1. Describe a business model.
2. Explain business model innovation.
3. Discuss the importance of having a clearly articulated business model.
4. Discuss the concept of the value chain.
5. Identify a business model’s two potential fatal flaws.
6. Identify a business model’s four major components.
7. Explain the meaning of the term business concept blind spot.
8. Define the term core competency and describe its importance.
9. Explain the concept of supply chain management.
10. Explain the concept of fulfillment and support.


BUSINESS MODEL

A firm’s business model is its plan or diagram for how it competes, uses its resources, structures its relationships, interfaces with customers, and creates value to sustain itself on the basis of the profits it generates. The term “business model” is used to include all the activities that define how a firm competes in the marketplace. It’s important to understand that a firm’s business model takes it beyond its own boundaries. In Dell’s case, it needs the cooperation of its suppliers, customers, and many others to make its business model possible.





IMPORTANCE OF BUSINESS MODEL

The importance of business model is it will focuses attention on how all the elements of a business fit together and constitute a working whole. There are always opportunities for business model innovation. Netflix is an example of a business model innovator. Four Components of a Business Model consist of:

Business Plan

What Is a Business Plan?

• Business Plan

o A business plan is a written narrative, typically 25 to 35 pages long, that describes what a new business plans to accomplish.

• Dual-Use Document

o For most new ventures, the business plan is a dual-purpose document used both inside and outside the firm.

Guidelines for Writing a Business Plan

• Structure of the Business Plan

o To make the best impression a business plan should follow a conventional structure, such as the outline for the business plan shown in the chapter.

o Although some entrepreneurs want to demonstrate creativity, departing from the basic structure of the conventional business plan is usually a mistake.

o Typically, investors are busy people and want a plan where they can easily find critical information.

o Software Packages

· There are many software packages available that employ an interactive, menu-driven approach to assist in the writing of a business plan.

· Some of these programs are very helpful. However, entrepreneurs should avoid a boilerplate plan that looks as though it came from a “canned” source.

o Sense of Excitement

· Along with facts and figures, a business plan needs to project a sense of anticipation and excitement about the possibilities that surround a new venture.

• Content of the Business Plan

o The business plan should give clear and concise information on all the important aspects of the proposed venture.

o It must be long enough to provide sufficient information yet short enough to maintain reader interest.

o For most plans, 25 to 35 pages is sufficient.

• Types of Business Plans

o There are three types of business plans.

Types of Business Plans

Recognizing Opportunities and Generating Ideas

Opportunity: A favorable set of circumstances that creates a need for a new product, service or business.

An opportunity has four essential qualities:

Full View of the Opportunity Recognition Process:

Depicts the connection between an awareness of emerging trends and the personal characteristics of the entrepreneur

Techniques for Generating Ideas:

- Brainstorming

- Focus Groups

- Library and Internet Research

Blue Ocean

The concepts of blue ocean strategy are as in the table below:

Innovation

Outlines

• What is Innovation?

• Creativity & Innovation

• Innovation Vs Invention

• Types of Innovation

What is Innovation ?

• a new idea, method or device.

• the process of making improvements by introducing something new.

• the process of translating new ideas into tangible product.

• the successful exploitation of new ideas.

• A creative idea that is realized.

• change that creates a new dimension of performance.

Innovation & Creativity

• All innovation begins with creative ideas . . . We define innovation as the successful implementation of creative ideas.

• Creativity by individuals and teams is a starting point for innovation; the first is necessary but not sufficient condition for the second

• Creativity – coming up with ideas.

• Innovation – bringing the ideas to life.

• Creativity – displayed by individuals.

• Innovation – occurs in the organisational and societal context.

Innovation vs Invention

• Invention - the creation of new tools or the novel compilation of existing tool.

• Innovation occurs when someone uses an invention - or uses existing tools in a new way - to change how the world works, how people organize themselves, and how they conduct their lives.

• Innovation is the management of all the activities involved in the process of idea generation, technology development, manufacturing and marketing of a new (or improved) products/services or manufacturing process or equipment.

Types of Innovation

Creativity in Technopreneurship

1) Ability to see the same things as everyone else but think something different.
2)Involves translation or our unique gifts and talents into something that is both new and useful.

Components of creativity


Barriers to creativity
• Self-constraining beliefs
Assuming certain constraining conditions that do not exist makes the problem more difficult
•Fears, beliefs and stresses
Having strong beliefs and fear of criticism may have limited ability to be creative
•Routines and rigidity
Inhibit the information gathering, interactions and incubation of thought that leads to creativity

Examples of creative products

How To Choose A Good Company Name

You can create good company names using these ideas:

• a name which are connected to your nature of business

• a name which is meaningful

• a name which is easy to pronounce or remember

• a name which is very unique / different / extraordinary

• a name which is connected to future

• a name which should not be used by others

• a name which gives you hope

• a name which brings luck

• a name is combination of directors names

• a coined word which sound nice

• name of place connected to your business

• a name which is extraordinary

• a name which is different of others

• a name which is futuristic sounding

• a name which is easy to spell

• a name which sounds good in different languages but has a meaning

• a name which takes into account numerology

• a name which has a short form meaning

• a name which bring power

• a name which is a combination of two words

• a name in English Language or Bahasa Malaysia – preferably

• a name which can be registered as a dot-com domain name

Example:

Favourite fruit of founder Steve Jobs. He was three months late in filing a name for the business, and he threatened to call his company Apple Computers if the other colleagues didn't suggest a better name by 5 o'clock.

Brain Profiling

Benefits of using brain map (Profile)

1) Understand the way of thinking and behave in order to increase motivation and productivity
2) Appreciate our approaches and styles of learning and processing information
3) Provide a well proven means for stimulating greater creativity, innovation and synergistic teamwork.
4) Appreciate the difference in individuals and team members to celebrate the diversity of a group.
5) Helping the employees in their career or job choice
6) Better understanding on our motivational needs
7) Helping in integrating strategic and tactical thinking
8) Appreciate the different in communication styles and interpersonal relationship.
9) Giving greater self-confidence.
10)Allow people to realize that its OK to be different, having unique strength and talent.

Intro to Entrepreneurship

Below are the lessons that have been covered during the lectured session.

1. Explain entrepreneurship and discuss its importance.
2. Discuss three main reasons people decide to become entrepreneurs.
3. Identify four main characteristics of successful entrepreneurs.
4. Explain five common myths regarding entrepreneurship.
5. Explain how entrepreneurial firms differ from salary-substitute and lifestyle firms.
6. Discuss the changing demographics of entrepreneurs in the United States.
7. Discuss the impact of entrepreneurial firms on economies and societies.
8. Identify ways in which large firms benefit from the presence of smaller entrepreneurial firms.
9. Explain the entrepreneurial process.


What is entrepreneurship?


• Academic Definition (Stevenson & Jarillo)
– Entrepreneurship is the process by which individuals pursue opportunities without regard to resources they currently control.

• Venture Capitalist (Fred Wilson)
– Entrepreneurship is the art of turning an idea into a business.

• Explanation of What Entrepreneurs Do
Entrepreneurs assemble and then integrate all the resources needed –the money, the people, the business model, the strategy—needed to transform an invention or an idea into a viable business



3 main reason of becoming an entrepreneur

4 main characteristics of successful entrepreneurs

The Entrepreneurial Process Consists of Five Steps
Step 1: Deciding to become an entrepreneur.
Step 2: Developing successful business ideas.
Step 3: Moving from an idea to an entrepreneurial firm.
Step 4: Managing and growing the entrepreneurial firm.
Step 5: Exiting the venture.