The Nature & Importance of Entrepreneurs
Chapter 5
Concept &
Development of
Entrepreneurship
Entrepreneurial
Decision Process
Types of Start-up
Ventures
Entrepreneurship &
Economic
Development
Ethics and Social
Responsibility
Entrepreneurship
2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd.
5-1
Chapter Learning Objectives
Chapter 5
Concept &
Development of
Entrepreneurship
Entrepreneurial
Decision Process
Types of Start-up
Ventures
Entrepreneurship &
Economic
Development
1.
2.
3.
4.
5.
6.
Ethics and Social
Responsibility
Entrepreneurship
To understand the relevance of industry and
competitive analysis to the market planning process.
To describe the role of marketing research in
determining marketing strategy for the marketing plan.
To illustrate an effective and feasible procedure for the
entrepreneur to follow in engaging in a market
research study.
To define the steps in preparing the marketing plan.
To explain the marketing system and its key
components.
To illustrate different creative strategies that may be
used to differentiate or position the new venture’s
products or services.
2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd.
5-2
Chapter Opening Profile
Chapter 5
Concept &
Development of
Entrepreneurship
•
Spin Master Ltd.
•
•
www.spinmaster.com
Ronnen Harary, Anton Rabie,
Ben Varadi
– 30-something Canadians
– North American toy market
• Earth Buddy, Mighty
Beanz
Started 10 years ago
Rely on public relations,
unconventional marketing
methods, and self-promotion
Entrepreneurial
Decision Process
Types of Start-up
Ventures
•
•
Entrepreneurship &
Economic
Development
•
Air Hogs
– Built a suitcase filled with the
plane, a plastic airline cup, a
bag of peanuts, and a barf
bag
– Hired college kids to travel to
air shows demonstrating the
product to airplane
enthusiasts
– Appearances on NBC’s
Today show and Rosie
O’Donnell’s talk show
Ethics and Social
Responsibility
Entrepreneurship
2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd.
5-3
Industry/Competitor Analysis
Chapter 5
Concept &
Development of
Entrepreneurship
•
•
•
Industry analysis completed as part of the business plan (covered in
Chapter 6)
Assessment of environmental/industry trends
Porter’s Five Forces Model
Entrepreneurial
Decision Process
•
Types of Start-up
Ventures
Entrepreneurship &
Economic
Development
Competitor analysis
– Gather information from
different sources
– Use figure 5.1 (over)
– Use the information to
determine market positioning
for the new venture
•
Ethics and Social
Responsibility
Entrepreneurship
2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd.
Information sources:
– Newspaper, magazine
articles
– Internet
– Catalogues, brochures
– Distributors, suppliers
– Corporate annual reports
– Trade publications
5-4
Competitor Analysis
Chapter 5
Concept &
Development of
Entrepreneurship
Entrepreneurial
Decision Process
Types of Start-up
Ventures
Entrepreneurship &
Economic
Development
Ethics and Social
Responsibility
Entrepreneurship
2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd.
5-5
Marketing Research for the New Venture
Chapter 5
•
Concept &
Development of
Entrepreneurship
Entrepreneurial
Decision Process
Types of Start-up
Ventures
Entrepreneurship &
Economic
Development
Gathering information to determine:
– Who will buy the product or service?
– What is the size of the potential market?
– What price should be charged?
– What is the most appropriate
distribution channel?
– What is the most effective
promotion strategy to inform and
reach potential customers?
Steps in the marketing
research process:
1.
2.
3.
Ethics and Social
Responsibility
4.
Entrepreneurship
2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd.
Define the purpose
Gather data from secondary
sources
Gather information from
primary sources
Analyze and interpret results
5-6
Understanding the Marketing Plan
Chapter 5
Concept &
Development of
Entrepreneurship
Entrepreneurial
Decision Process
Types of Start-up
Ventures
Establishes how the entrepreneur will effectively compete and operate in the
marketplace
Designed to provide answers to 3 basic questions
• Where have we been – background
• Where do we want to go
• How do we get there
Entrepreneurship &
Economic
Development
Ethics and Social
Responsibility
Entrepreneurship
•
Characteristics of a marketing plan:
– Provides a strategy to achieve
mission/goals
– Based on facts and valid
assumptions
– Appropriate organization
– Provides for continuity
– Simple and short
– Flexibility built-in
– Specific performance criteria to
be monitored
2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd.
5-7
Marketing Research (continued)
Chapter 5
•
Defining the purpose or objectives:
– What marketing decisions are being made?
– What information is needed?
– Look to the four P’s of marketing strategy
•
Gathering data from secondary
sources:
– Use free information that has
already been gathered by
someone else first
– Publicly available information
– Commercial sources
Concept &
Development of
Entrepreneurship
Entrepreneurial
Decision Process
Types of Start-up
Ventures
Entrepreneurship &
Economic
Development
•
Ethics and Social
Responsibility
Entrepreneurship
2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd.
Information sources:
–
–
–
–
–
–
Statistics Canada
Industry Canada
Departments of labour
Business/economic
development agencies
Local chambers of commerce
Local media
5-8
Marketing Research (continued)
Chapter 5
•
Gathering data from primary sources:
– Collecting information directly from the source
– Different methods for different purposes
– Can be expensive and time consuming
•
Analyzing and interpreting the
results:
– What does the data collected
mean?
– Compare to research objectives
– Use to make better marketing
decisions
Concept &
Development of
Entrepreneurship
Entrepreneurial
Decision Process
Types of Start-up
Ventures
Entrepreneurship &
Economic
Development
Ethics and Social
Responsibility
Entrepreneurship
2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd.
•
Data collection methods:
– Observation
– Networking
– Focus group discussions
– Surveys
– Experimentation
5-9
Marketing Plan for a Consumer Products Company
Chapter 5
Concept &
Development of
Entrepreneurship
Entrepreneurial
Decision Process
Types of Start-up
Ventures
Entrepreneurship &
Economic
Development
Ethics and Social
Responsibility
Entrepreneurship
2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd.
5-10
Marketing Plan for a Consumer Products Company
Chapter 5
Concept &
Development of
Entrepreneurship
Entrepreneurial
Decision Process
Types of Start-up
Ventures
Entrepreneurship &
Economic
Development
Ethics and Social
Responsibility
Entrepreneurship
2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd.
5-11
Marketing Plan for a Consumer Products Company
Chapter 5
Concept &
Development of
Entrepreneurship
Entrepreneurial
Decision Process
Types of Start-up
Ventures
Entrepreneurship &
Economic
Development
Ethics and Social
Responsibility
Entrepreneurship
2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd.
5-12
Marketing Plan for a Business-to-Business Company
Chapter 5
Concept &
Development of
Entrepreneurship
Entrepreneurial
Decision Process
Types of Start-up
Ventures
Entrepreneurship &
Economic
Development
Ethics and Social
Responsibility
Entrepreneurship
2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd.
5-13
Marketing Plan for a Business-to-Business Company
Chapter 5
Concept &
Development of
Entrepreneurship
Entrepreneurial
Decision Process
Types of Start-up
Ventures
Entrepreneurship &
Economic
Development
Ethics and Social
Responsibility
Entrepreneurship
2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd.
5-14
Marketing Plan for a Service Company
Chapter 5
Concept &
Development of
Entrepreneurship
Entrepreneurial
Decision Process
Types of Start-up
Ventures
Entrepreneurship &
Economic
Development
Ethics and Social
Responsibility
Entrepreneurship
2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd.
5-15
Marketing Plan for a Service Company
Chapter 5
Concept &
Development of
Entrepreneurship
Entrepreneurial
Decision Process
Types of Start-up
Ventures
Entrepreneurship &
Economic
Development
Ethics and Social
Responsibility
Entrepreneurship
2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd.
5-16
Characteristics of a Marketing Plan
Chapter 5
Concept &
Development of
Entrepreneurship
Entrepreneurial
Decision Process
Types of Start-up
Ventures
Entrepreneurship &
Economic
Development
The marketing plan should be designed to meet certain criteria
• A strategy for accomplishing the company goal and
objectives
• Based on facts
• An appropriate organization must be described to implement
the marketing plan
• Provide for continuity
• Short and simple
• Flexibility
• Specify performance criteria
Ethics and Social
Responsibility
Entrepreneurship
2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd.
5-17
Facts Needed for Market Planning
Chapter 5
Concept &
Development of
Entrepreneurship
Entrepreneurial
Decision Process
Types of Start-up
Ventures
Entrepreneurship &
Economic
Development
Ethics and Social
Responsibility
Entrepreneurship
2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd.
5-18
Steps in Preparing the Marketing Plan
Chapter 5
•
Concept &
Development of
Entrepreneurship
Marketing mix (definition): combination of product, price,
promotion, and distribution and other marketing activities needed
to meet marketing objectives
Entrepreneurial
Decision Process
Types of Start-up
Ventures
Entrepreneurship &
Economic
Development
Ethics and Social
Responsibility
Entrepreneurship
2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd.
5-19
Market Segmentation & Targeting
Chapter 5
Concept &
Development of
Entrepreneurship
•
•
Entrepreneurial
Decision Process
Types of Start-up
Ventures
Entrepreneurship &
Economic
Development
•
Ethics and Social
Responsibility
Entrepreneurship
Breaking a marketplace down into categories of buyers who share similar
characteristics
5 characteristics of useful segmentation:
– Meaningful
– Mutually exclusive
– Measurable
– Substantial
– Actionable
Target market: specific group of
potential customers toward which the
venture aims its marketing plan
•
Customer profile:
– Demographic variables
– Attitudes on price/quality
– Where currently shops
– Influence of advertising
– Quantities and frequency of
purchasing
– Why customers buy
2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd.
5-20
Relationship Marketing
Chapter 5
Concept &
Development of
Entrepreneurship
Entrepreneurial
Decision Process
Types of Start-up
Ventures
Entrepreneurship &
Economic
Development
•
•
•
Building a relationship with the firm’s most profitable customers
70% to 80% of profits come from small minority of customers
Challenge to figure out who they are
•
Use of database technology to
identify and track
Communication is key
Allocation of selling effort to
focus on them
Firing unprofitable customers?
•
•
•
Ethics and Social
Responsibility
Entrepreneurship
2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd.
5-21
Marketing Strategy
Chapter 5
Concept &
Development of
Entrepreneurship
Entrepreneurial
Decision Process
•
•
•
Considering Strengths and Weaknesses
Establish goals and objectives for venture
Marketing strategy decisions:
•
Product or service:
Types of Start-up
Ventures
Entrepreneurship &
Economic
Development
Ethics and Social
Responsibility
Entrepreneurship
– Physical product
–
–
–
–
–
–
–
–
Packaging
Brand
Image
Warranty
Service
Delivery time
Features
Style
2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd.
•
Pricing:
– Costs
– Markups or
margins
– Competition
5-22
Ethics
Chapter 5
Stealth Marketing
Concept &
Development of
Entrepreneurship
Entrepreneurial
Decision Process
Types of Start-up
Ventures
Entrepreneurship &
Economic
Development
Ethics and Social
Responsibility
Entrepreneurship
2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd.
5-23
Major Considerations in Channel Selection
Chapter 5
Concept &
Development of
Entrepreneurship
Entrepreneurial
Decision Process
Types of Start-up
Ventures
Entrepreneurship &
Economic
Development
Ethics and Social
Responsibility
Entrepreneurship
2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd.
5-24
Promotion
Chapter 5
•
Concept &
Development of
Entrepreneurship
Entrepreneurial
Decision Process
Types of Start-up
Ventures
Entrepreneurship &
Economic
Development
Promotional campaigns should consist of:
– Determine objectives
– Define customers
– Determine benchmarks
•
Guerilla marketing:
– Profile your target group
– Pursuing traditional goals of profit
–
–
–
–
–
Get the message out
Develop the message
Cost it out
Implement the plan
Evaluate the plan
•
and revenue through
unconventional means
– Most bang for buck
– Needs creative thinking
Public relations:
– Press kit, events
– Speaking opportunities
Ethics and Social
Responsibility
Entrepreneurship
2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd.
5-25
Promotion
Chapter 5
Concept &
Development of
Entrepreneurship
Entrepreneurial
Decision Process
Types of Start-up
Ventures
Entrepreneurship &
Economic
Development
Get on TV
• Know your story
• Think Visually
• Find the right show
• E-mail, don’t call
• Consider your timing
• Be available
Ethics and Social
Responsibility
Entrepreneurship
2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd.
5-26
Promotion
Chapter 5
Concept &
Development of
Entrepreneurship
Entrepreneurial
Decision Process
Types of Start-up
Ventures
Entrepreneurship &
Economic
Development
Ethics and Social
Responsibility
Entrepreneurship
•
Internet strategy:
– Company website
– Blogs
– Direct e-mail
•
– Banner advertisements
– Affiliate programs
– Participate in online forums
or chat groups
– Registration with search
engines
• SEO Search Engine
Optimization
2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd.
Website issues:
– Website objective
– Website construction
– Content
– Promotion
– Communication
– Registration
– Purchase and delivery
mechanism
– Security
– Metrics
5-27
Business-to-Business Markets
Chapter 5
Concept &
Development of
Entrepreneurship
Entrepreneurial
Decision Process
•
•
Require a different approach than consumer markets
Products are more expensive, customized, specialized, larger in
quantity, and riskier to purchase
•
Relies on:
– More direct
channel of
distribution
– Personal selling
– Trade
publications
– Trade shows
Types of Start-up
Ventures
Entrepreneurship &
Economic
Development
Ethics and Social
Responsibility
Entrepreneurship
2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd.
5-28
Final Steps
Chapter 5
Concept &
Development of
Entrepreneurship
•
•
Budgeting the marketing strategy
Implementation of the marketing plan
•
Monitoring progress of marketing
actions
Contingency planning
Entrepreneurial
Decision Process
•
Types of Start-up
Ventures
Entrepreneurship &
Economic
Development
•
Why some marketing plans fail:
– Lack of a real plan
– Lack of an adequate situation
analysis
– Unrealistic goals
– Unanticipated events
Ethics and Social
Responsibility
Entrepreneurship
2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd.
5-29
Chapter Closing Comments
Chapter 5
Concept &
Development of
Entrepreneurship
Entrepreneurial
Decision Process
Types of Start-up
Ventures
Entrepreneurship &
Economic
Development
1.
2.
3.
4.
5.
6.
To understand the relevance of industry and competitive
analysis to the market planning process.
To describe the role of marketing research in determining
marketing strategy for the marketing plan.
To illustrate an effective and feasible procedure for the
entrepreneur to follow in engaging in a market research
study.
To define the steps in preparing the marketing plan.
To explain the marketing system and its key components.
To illustrate different creative strategies that may be used to
differentiate or position the new venture’s products or
services.
Ethics and Social
Responsibility
Entrepreneurship
2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd.
5-30