Introduction to Entrepreneurship

Introduction to Entrepreneurship
Map Your Venture Plan
What Makes You Tick
• Take out a piece of paper and write down
everything that you like to do.
• Include sports, hobbies, and anything else you
Business Ventures
• List and identify any business ventures you
feel that you would like to run.
• Develop what you might want to include in
your Venture.
Venture Partners
• Work on your networking skills and walk
the class asking you peers what venture they
would like to do.
• If similarities think about maybe a
partnership to work on your Venture plan.
Pick your Group
• Pick wise.
• The next part of the class you are to pick your
group that you will create a venture plan.
• All groups need to be approved by the teacher.
What is a Venture?
• A venture is a business that an entrepreneur
would like to develop.
• The process of a venture includes the most
important developmental process called the
Business Plan.
What is a Business Plan
• A business plan is a summary of how a
business owner, manager, or entrepreneur
intends to organize an entrepreneurial
endeavor and implement activities
necessary and sufficient for the venture to
• It is a written explanation of the company's
business model.
Business Plan Con’t
• Business plans are used internally for
management and planning and are also used
to convince outsiders such as banks or
venture capitalists to invest money into a
Business Plan Con’t
• Business plans are noted for often quickly
becoming out of date.
• One common belief within business circles
is that the actual plan may have little value,
but what is more important is the process of
planning, through which the manager gains
a greater understanding of the business and
of the options available.
Business Model
• Is the way you develop you business practice, how
you get your business out there.
• Example – Shop keeper model.
• This involves setting up a store in a location where potential
customers are likely to be and displaying a product or service.
• Go to the following site to see what your business
model will be.
Business Plan Con’t
• A business plan can be seen as a collection
of sub-plans including a marketing plan,
financial plan, production plan, and human
resource plan
• See the following site to see a example of
what a business plan
Business Plans Include the Following
Business Overview
Products and Services
Industry Overview
Marketing Strategy
Management and Staffing
Regulatory Issues
Implementation Plan
Financial Plan
Executive Summary
Confidentiality and Recognition of
Know Your Business’ History
• History and Background
• “If you know the enemy and know yourself,
you need not fear the result of a hundred
battles. If you know yourself but not the
enemy, for every victory gained you will also
suffer a defeat. If you know neither the
enemy nor yourself, you will succumb in
every battle.”
- Sun Tzu Art of War
• You must know your history and
background in order to learn about your
• Gives you an understanding of potential of
your venture and challenges that you might
• Readers will first want to know about the history
of your business.
• If you have an existing business, briefly describe
when and by whom the business was started and
any major changes that have occurred in the
• If this is a new business, highlight some of the
reasons why you would like to start this specific
Group Contract
• You have selected your group to work with
you must create a contract that all will sign.
• Must include:
Group expectation.
Consequences if expectations are not met.
Rules on firing individuals.
All group members signatures.
What’s Next
• Time to start your VENTURE
Vision and Mission Statement
• It is important to have a long-term vision of
what you want your business to become.
• Some businesses use their vision and
mission statement to highlight their business
strategies and philosophies or to show the
importance that their business places on
developing good relationships with
customers and employees.
Vision Statement
• A vision statement describes in graphic
terms where the goal-setters want to
position themselves in the future. It may
describe how they see events unfolding over
10 or 20 years if everything goes exactly as
Mission Statement
• A mission statement resembles a vision
statement, but has a more immediate focus.
• It details what one will do today to attain
one's goal, purpose, or mission. Ford's brief
but powerful slogan, "Quality is Job 1"
could count as a mission statement.
Mission Statement
• However, most mission statements involve more
detail, often describing who will do what, for
whom, how, and why.
• For example: "Our mission consists of meeting or
exceeding the demands of business-computer
users by offering a level of service that surpasses
anything available in the Tritown area while
providing our employees with a stimulating
environment in which to grow and providing our
shareholders with a return above the industryaverage."
Mission & Vision Statements
• Vision statements often appear more
graphic and more abstract than mission
statements, which tend more to the concrete
and the proscriptive.
• A vision statement "paints a picture" of
ideal future outcomes.
• Vision Statement usually located in main
entrance of the companies building.
Mission & Vision Statements
• In the 1980s, Bill Gates had a simple vision: "A
personal computer on every desk, and every
computer running Microsoft software".
• I have a dream that one day this nation will rise up
and live out the true meaning of its creed: "We
hold these truths to be self-evident: that all men
are created equal.“
Martin Luther King
Vision Statement May Include:
clarity and lack of ambiguity
painting a vivid picture
describing a future
memorable and engaging expression
realistic aspirations
alignment with organizational values and culture
subjection to customer needs (in the case of a
vision statement for a business organization)
Your Turn
• By yourself you are to develop a Vision
Statement for your future and a Mission
Statement for this class.
• Use your notes to help with creating a vision and
mission statement.
• Must be typed and handed in.
• Mark breakdown –
• Application – 10 marks Communication – 10 marks
• Knowledge – 10 marks Thinking – 10 marks
• Objectives list the short to medium term (1 to 5
year) goals of the business.
• What do you want the business to accomplish?
• Your objectives should be simple, measurable and
realistic. A business plan loses credibility if the
objectives are not believable to the reader.
• Use the S.M.A.R.T. approach
Objectives Con’t
• You can set objectives for:
• desired market position (for example, we want
to be the largest repair shop in town),
• sales (we want sales to increase by 25% over
the next twelve months),
• profitability (we want to improve profitability
by 5% in 1997),
• or any other issue which is important to your
• Primary Objectives
• These are your main
goal that you wish to
• More focused and
• Secondary Objectives
• These are objectives
that are not as
important to meet as
the primary objectives.
• Do demonstrate
potential gains that
may also be
Vision, Mission & Need
Successful Business
Objective Examples
1. Establish and maintain a unique position
among CD-ROM oriented publications in
Canada as the best magazine to consult
when wanting information about new or
existing CD-ROM products and industry
2. Expand magazine distribution to the
remainder of Western Canada and Ontario.
Objectives Examples
3. Increase distribution per issue from current levels
of 20,000 copies to 50,000 copies. A bank loan of
$100,000 will be obtained to finance the increase
in copies, distribution and marketing and ensure a
positive cash flow in the first year of operations.
4. Expand the magazine from its current 64 pages to
96 pages per issue by the end of 1997.
5. Position the magazine for an acquisition by a
major publisher within the next two years
Your Turn
• You are to set five personal objectives that
you would like to achieve by the end of the
• With five primary objectives to meet, then
develop two secondary objectives.
What business structure are you
• With the idea of your venture and your
business plan you must decide on
organization structure.
• Are you working alone?
• With someone?
• Or with a group?
• These are all question needed to ask
Ownership Types
• This allows you to understand the potential
benefits as well as potential risks that may
be present.
• You must chose smart to be successful.
• Example – Muslcocity
Business Structure
• How you 'structure' your business is important for
two reasons:
• legal purposes
• tax purposes
• What you choose to do depends a lot on how you
manage or run your business AND your financing
• One final consideration is what your expected tax
position at the end of the year will be.
Business Structures
• Remember:
• The first structure that you choose may only be
• As your business grows, you may want to change your structure.
• Your business can be classified under one of the following
business structures and each has its advantages and
• Sole Proprietorship
• Partnership
• Corporation
• Franchises
Sole Proprietorship
• FACT: You are the business.
• FACT: All profits and losses come directly
to you.
• Characteristics:
• owned and operated by one person
• unlimited personal liability
• most widely used business structure
Sole Proprietorship
• Advantages:
• easy to form
• has the least amount of
government intervention
• very flexible
• you have complete
responsibility and control of
the business
• all income and losses are
consolidated on your
personal income tax return
• Disadvantages:
• the business ends if the
owner quits for any reason
• you have complete
responsibility and control of
the business
• you may have limited
ability to raise capital
• you may have fewer
resources and talents to
draw from
• Proprietorship:
• A proprietorship is a business owned by one
person who is fully responsible for all debts and
obligations related to his or her business.
• A creditor with a claim against a sole proprietor
would normally have a right against all of his or
her assets, whether business or personal.
• This is known as unlimited liability.
• FACT: A voluntary association of 2 or more
people who act as co-owners of the business.
• FACT:The partners combine their talents to run
the company.
• FACT: Always have a partnership agreement
drawn up that spells out the rights and duties of all
partners (and their descendants) to help you to
avoid headaches later on.
• Advantages:
• easy to form
• flexible
• limited government
• may be possible tax
advantages since your
income is taxed as personal
• may benefit from having
the combined talents and
funding of partners
• Disadvantages:
• UNLIMITED personal
liability of at least one
• may be hard to get large
sums of money
• the actions of one partner
can make the entire
business liable
• Some factors needed for
a successful working
relationship among
• trust
• willingness to work
together and coordinate
• a strong sense of
commitment from all
• frequent, clear
• Partnership:
• A partnership is a business, not incorporated, in
which two or more persons combine their
• A partnership agreement may specify the capital
contributions to be made by each partner, the
ratios in which partnership earnings and losses
will be distributed, the management
responsibilities of the partners, and the partners'
rights to transfer or sell their individual interests.
• FACT: This is a separate entity formed by
filing Articles of Incorporation with your
Secretary of State.
• FACT: You must file a separate business
tax return because you and the business are
legally separate.
• Advantages:
• limited personal liability
• ownership can be
transferred through stock
• unlimited life
• usually it is easier to obtain
• should have a larger pool of
talent and expertise
• gives an impression of
credibility to potential and
current customers
• Disadvantages:
• your business activity may
be restricted by the charter
• lack of representation of
minority stockholders
• extensive record keeping
may be required
• organizing expenses to
become a corporation can
be high
• double taxation
There are 2 special types of corporations that
may be advantageous for smaller companies:
• S Corporations• limited personal liability
• pass through income/loss to
your personal income
• more expensive to set up
than a sole proprietorship or
• income is divided among
the owners based on their
ownership interests
• Limited Liability
Corporations (LLC)•
limited personal liability
pass through income/loss to
your personal income
• can include more than 35
• profit and loss can be
allocated differently than
the ownership interests
• more expensive to set up
than a sole proprietorship or
Nonprofit Corporation
• Usually religious, charitable, or educational
• Most are private in nature
• Corporation:
• A corporation, also known as a Limited Company,
is a legal entity which is separate and distinct from
its members (shareholders).
• Each shareholder has limited liability.
• A creditor with a claim against the assets of the
company would normally have no rights against
its shareholders, although in certain circumstances
shareholders may be held liable.
• FACT: the right to own and operate this
business is provided by the
owner/manufacturer to sell their product.
• Advantages:
• training and guidance
is available
• there may be brand
name appeal
• often there is a proven
track record
• financial assistance
may be available
• Disadvantages:
• franchise fees
• franchisor maintains a
fair amount of control
• promises may not be
Questions to Ask Regarding
What is the total investment cost?
Are there additional royalties or other hidden costs?
What is the franchises performance to date?
Is there a franchisee available that you can talk with and determine
their satisfaction level?
Can the business continue if something happens to the owner?
Which legal structure should you choose?
Can you get additional monies if needed?
Will you be able to get the people you need?
Will you be able to work under someone else's rules?
What are the termination clauses if any?
Are there sales quotas that must be met?
What government requirements do you need to be aware of?
Your Turn
• Think about your business, and identify
what type of business you are running and
the type ownership you have.
• Are are some of the advantages and also
some disadvantages of you business
Location, Location, Location
• In a business you maybe as successful as
the location that you pick.
• Location is not only a factor of success but
could be the key factor in longevity of your
• In industrial markets, customer location
may be important in some cases.
• Shipping costs may be a purchase factor for
vendor selection for products having a high
bulk to value ratio, so distance from the vendor
may be critical.
• In some industries firms tend to cluster
together geographically and therefore may have
similar needs within a region.
Your Business
• In your Venture Team you are to do the
• Create a Vision Statement and Mission
• Set a list of your objectives for the
company should have at least 5
• Develop a potential location site.
• Create a Company name for your Venture.
Unit 3
Marketing Your Ideas
Invention or Innovation
• Make a list of ten products and by
yourself decide if the product is an
innovation or invention.
• Define the difference between
innovation and invention
Invention or Innovation
• Select three products and describe the
innovation of the products.
• Create a flow chart detailing your
innovation/evolution of your selected products
• Make sure you have sufficient information of
your products innovation
• Present your best one to the class and handin all 3
Innovation of the Portable Audio
• Invention is an object, process or
technique which displays an element of
novelty. In certain circumstances, legal
protection may be granted to an
invention by way of a patent
In business and economics, innovation is often divided into four
• Product innovation, which involves the introduction of a new
good or service that is substantially improved. This might
include improvements in functional characteristics, technical
abilities, ease of use, or any other dimension
• Process innovation involves the implementation of a new or
significantly improved production or delivery method.
• Marketing innovation is the development of new marketing
methods with improvement in product design or packaging,
product promotion or pricing.
• Organizational innovation involves the creation of new
organizations, business practices, or ways of running
Invention vs. Innovation
• While an invention is merely theoretical
(even though the legal protection of a
patent may have been sought), an
innovation is an invention that has been
put into practice.
Ways to Find New Ideas
• Newspaper
• Articles containing local and global trends
• Magazines
• Report possible changes
• Specialty magazines – target market
• Trade Shows
• Show new products to markets
Protecting Your Idea
• Intellectual property are rights to protect
your ideas/inventions/innovations
• They consists of the following:
Industrial Act
• A patent is a set of exclusive rights
granted by a state to a person for a
fixed period of time in exchange for the
regulated, public disclosure of certain
details of a device, method, process or
substance (known as an invention)
which is new, inventive and useful.
• The exclusive right granted a patentee is the
right to prevent others from making, using, or
selling the claimed invention, not the right to
make, use, or sell the invention themselves.
• The patentee may have to comply with other
laws and regulations to make use of the
claimed invention.
• So, for example, a pharmaceutical company
may obtain a patent on a new drug but will be
unable to market the drug without regulatory
• Copyright is a set of exclusive rights
granted by government for a limited
time to regulate the use of a particular
form, way or manner in which an idea or
information is expressed.
• Copyright may subsist in a wide range of creative or
artistic forms or "works" and subject matter other than
• These include literary works, movies, musical works,
sound recordings, paintings, photographs, software,
live performances, television or sound broadcasts
and in some jurisdictions industrial designs.
• Copyright is a type of intellectual property; designs or
industrial designs may be a separate or overlapping
form of intellectual property in some jurisdictions.
• It is not designed or intended to cover
the actual idea, concepts, facts, styles
or techniques which may be embodied
in or represented by the copyright work.
• Copyright law provides scope for satirical or
interpretive works which themselves may be
• For example, the copyright which subsists in relation
to a Mickey Mouse cartoon prohibits unauthorised
parties from distributing copies of the cartoon or
creating derivative works which copy or mimic
Disney’s particular talking mouse, but does not
prohibit the creation of artistic works about talking
mice in general. Other forms of intellectual property
may impose legal restrictions where copyright does
• A trademark is a distinctive sign of
some kind which is used by a business
to identify itself and its products and
services to consumers, and to set the
business and its products or services
apart from those of other businesses.
• A trademark comprises a name, word,
phrase, logo, symbol, design, image, or
a combination of one or more of these
• The essential function of a trademark is to
serve as an exclusive identifier of the
commercial source or origin of products or
services, such that a trademark, properly
called, indicates source or acts as a badge of
• The use of a trademark in this way is known
as trademark use, and a trademark owner
seeks to enforce its rights or interests in a
trademark by preventing unauthorised
trademark use.
Industrial Design Act
• An industrial design consists of the creation of
a shape, configuration or composition of
pattern or color, or combination of pattern and
color in three dimensional form containing
aesthetic value.
• An industrial design can be a two- or threedimensional pattern used to produce a
product, industrial commodity or handicraft
Marketing: What is it?
• To succeed, entrepreneurs must attract
and retain a growing base of satisfied
• Marketing programs, though widely
varied, are all aimed at convincing
people to try out or keep using particular
products or services.
Marketing: What is it?
• Business owners should carefully plan
their marketing strategies and
performance to keep their market
presence strong.
• Marketing is based on the importance of
customers to a business and has two
important principles:
Marketing: What is it?
• 1. All company policies and activities
should be directed toward satisfying
customer needs.
2. Profitable sales volume is more
important than maximum sales volume.
Marketing: What is it?
• To best use these principles, a small business
• Determine the needs of their customers through
market research
• Analyze their competitive advantages to develop a
market strategy
• Select specific markets to serve by target
• Determine how to satisfy customer needs by
identifying a market mix
Class Work
• For each of the following topics above,
research in your text and make notes
for each one of them.
• What is included specific points that
should be addressed for each one and
every thing else.
• Work Hard
Marketing Is
• “Marketing is the process of planning
and executing the pricing, promotion,
and distribution of goods, ideas, and
services to create exchanges that
satisfy individual and organizational
goals.” American Marketing Association
Marketing Plan
• Marketing Plan Includes:
Marketing Research
Marketing Strategy
Target Market
Marketing Mix – 5 P’s
Marketing Research
• Market research will help you to determine if
there is a need.
• The research does not have to be elaborate
and expensive, but you MUST gather
information about your market and analyze
that information.
• Know what information you need to gather
before you begin researching the market.
Marketing Research
• Market research is broader in scope
and examines all aspects of a business
environment. It asks questions about
competitors, market structure,
government regulations, economic
trends, technological advances, and
numerous other factors that make up
the business environment.
Marketing Research
• Product research - This looks at what
products can be produced with available
technology, and what new product
innovations near-future technology can
• Advertising research - This attempts to
assess the likely impact of an advertising
campaign in advance, and also measure the
success of a recent campaign.
Marketing Research
• Primary Research
• The technique of gathering data firsthand
through such methods as personal
observations, interviews, questionnaires
and surveys.
• Secondary Research
• Information that is gathered by other
means, such as Stats Canada (Census
Marketing Research
• Most common form of Primary data is a
• Surveys allow potential consumer
behaviors/patterns and allows us to
segment the selected market.
• See Ridge Survey
Marketing Research
Creating A Survey Assignment
• With the product advertisement that you have
decided to choose from your magazine,
prepare the following:
• Decide on an advertisement and innovate the
product. (Develop a new product line)
• Create a market research survey.
• Professionally typed.
• Distribute 10 surveys and analyze the information.
• Present the findings make sure you use visuals.
Marketing Segmentation
Market Segmentation and
• A market:
• people or organizations with needs
• money to spend
• willingness to spend it
• A target market:
• narrow section of the market
• Market segmentation
• grouping consumers into clusters
Target Market Strategies
1. market aggregation:
Single Marketing Mix
One Aggregate (Mass)
Target Market Strategies
2. single-segment segmentation:
Single Marketing
Target Market Strategies
3. multiple-segment segmentation:
Mix A
Market Segment A
Market Segment B
Mix B
Mix C
Market Segment C
Effective Market Segmentation
• The bases of segmentation must be
measurable with accessible data
• Segments must be accessible
• Segments are large enough to be
How do we segment a market?
• First broad segments are business and
end consumers
• Next further define the segment by:
Geographic location
Geographic Segmentation
Geographic Segmentation
• Regional distribution: People in a region
tend to share values and attitudes
• Urban, rural, suburban distribution
• Census Metropolitan Areas (CMA)
• Suburban growth and back to city
• Geodemographic Clustering: using postal
codes to cluster segments
Segmenting using Geographics
• Geographic Region: Atlantic, Prairies,
Ontario, Quebec, BC
• City or CMA size: Under 25,000 or
25,001 – 100,000 or 100,001 – 500,000
• Urban or rural
• Climate: mountainous, seacoast, rainy,
Demographic Segmentation
• Develop a detailed profile of members
from a target segment
• Easy to observe but can be very
• There are differences across segments
based on age, gender, family life-cycle
stage, education, ethic background,
Segmenting using Demographics
• Income: under 10,000; 10,00125,000;25,001-35,000;35,001-50,000;over
• Age: under 6; 6-12;13-19;20-34;35-49;50-64;
65 and over
• Gender:
• Family life cycle:
• Ethnic background:
• Education:
• Occupation:
Family Life-cycle
Segmentation by Income
• Income has an important influence on how
people spend
• Disposable income vs. discretionary income
• Many factors contribute to household buying
• Spending varies depending on life-cycle
stage and income
• Segmenting by income doesn’t necessarily
mean targeting the high end consumers
Psychographic & Behavioural
Personality – depends on individual
Lifestyle – active, interests in art or politics
Social Class – upper, middle, lower
Benefits – the function they want from the
Usage – heavy user, medium user, light user,
• Relates to the manipulation of the
marketing mix variables to create an
image or perception that the company
wants to be known for.
Positioning approaches
Head on competition
occupy a gap in the market
distance a brand from competitors
market leadership
appeal to a lifestyle
Positioning Maps
• Positioning Maps help:
• see how key players in a market are
viewed by consumers
• helps see competitive clusters and market
Pepsi Taste Test
• Drink samples
• Identify 3 marketing aspects (Branding
& Positioning) of each:
• Coke
• Pepsi
• Drink Samples
Branding & Tag Lines
What is it? And why do we use it?
What Is Branding?
• A Name, term, slogan, symbol, or a
combination of these.
• Used to identify the product of one
company and what it does to
differentiate it from the competitor.
Branding & Colors
• Colors can help
determine brand
• Cleveland Browns
• Orange & Brown
• Colors known
around the NFL and
help establish
• Dawg Pound
Tag Line
• What is a Tag Line?
• It is a saying that allows the brand to
create an identity.
• Usually found at the end of the
image/advertisement to form a relationship
to the product.
• Reason why its called tag line is b/c it “tags
along” with the brand image.
Companies Tag Lines
• Is It In YOU?
• Just Do It
• Taste of the New
• Can’t beat the Real
• Gatorade
• Pepsi
• Coke
Your Turn
• Stay in your teams
• Given 1 chocolate bar
• Analyze bar (what the bar means to you
and the demographics/Target Market)
• Create a new Tag Line for the chocolate
• State why the Tag line identifies with the
chocolate bar.
• Hand in paper to me for marks
Hand in
• State new Tag Line
• Explain connection between Tag line
and Product
• Identify Target Market and
Marketing Mix
• The marketing mix is probably the
most famous phrase in marketing. The
elements are the marketing 'tactics'.
Also known as the 'four Ps', the
marketing mix elements are price,
place, product, and promotion.
Marketing Mix
Marketing Mix
• The concept is simple.
• Think about another common mix - a cake
• All cakes contain eggs, milk, flour, and
sugar. However, you can alter the final
cake by altering the amounts of mix
elements contained in it.
• So for a sweet cake add more sugar! It is
the same with the marketing mix.
Marketing Mix
• Another way to think about the marketing mix
is to use the image of an artisit's palette.
• The marketer mixs the prime colours (mix
elements) in different quantities to deliver a
particular final colour.
• Every hand painted picutre is original in some
way, as is every marketing mix.
• Some commentators will increase the
marketing mix to the 'five Ps', to include
• There are many ways to price a
• Let's have a look at some of them and
try to understand the best
policy/strategy in various situations.
Pricing Strategies
• Premium Pricing
• Use a high price where there is a
uniqueness about the product or service.
• This approach is used where a a
substantial competitive advantage exists.
• Such high prices are charge for luxuries
such as Cunard Cruises, Savoy Hotel
rooms, and Concorde flights.
Other Pricing Strategies
• Product Bundle Pricing
• Here sellers combine several products in
the same package. This also serves to
move old stock. Videos and CDs are often
sold using the bundle approach.
Pricing Strategies
• Economy Pricing
• This is a no frills low price.
• The cost of marketing and manufacture are
kept at a minimum.
• Supermarkets often have economy brands
for soups, spaghetti, etc.
Pricing Strategies
• Price Skimming
• Charge a high price because you have a substantial
competitive advantage. However, the advantage is not
• The high price tends to attract new competitors into the
market, and the price inevitably falls due to increased supply.
• Manufacturers of digital watches used a skimming approach
in the 1970s. Once other manufacturers were tempted into
the market and the watches were produced at a lower unit
cost, other marketing strategies and pricing approaches are
Pricing Strategies
• Penetration Pricing
• The price charged for products and
services is set artificially low in order to
gain market share.
• Once this is achieved, the price is
• This approach was used by France
Telecom in order to attract new corporate
Other Pricing Strategies
• Promotional Pricing
• Pricing to promote a product is a very
common application. There are many
examples of promotional pricing including
approaches such as BOGOF (Buy One Get
One Free).
Other Pricing Strategies
• Value Pricing
• This approach is used where external
factors such as recession or increased
competition force companies to provide
'value' products and services to retain
sales e.g. value meals at McDonalds.
• Place is also know as Channels of
• A channel of distribution comprises a set of
institutions which perform all of the
activities utilised to move a product and its
title from production to consumption.
There are six basic 'channel'
1. Do we use direct or indirect channels?
(e.g. 'direct' to a consumer, 'indirect' via a
2. Single or multiple channels
3. Cumulative length of the multiple
4. Types of intermediary (see later)
5. Number of intermediaries at each level
(e.g. how many retailers in Southern
6. Which companies as intermediaries to
avoid 'intrachannel conflict' (i.e. infighting
between local distributors)
Place/Channels of Distribution
• Types of Channel Intermediaries.
• There are many types of intermediaries
such as:
• Wholesalers, agents, retailers, the Internet,
overseas distributors, direct marketing (from
manufacturer to user without an intermediary),
and many others.
• Wholesalers
• They break down 'bulk' into smaller
packages for resale by a retailer.
• They buy from producers and resell to
• They provide storage facilities.
• For example, cheese manufacturers seldom
wait for their product to mature. They sell on to
a wholesaler that will store it and eventually
resell to a retailer.
• Wholesalers offer reduce the physical
contact cost between the producer and
consumer e.g. customer service costs, or
sales force costs.
• A wholesaler will often take on the some of
the marketing responsibilities.
• Many produce their own brochures and use
their own telesales operations.
• Agents are mainly used in international
• An agent will typically secure an order for a
producer and will take a commission.
• They do not tend to take title to the goods.
• This means that capital is not tied up in goods.
• Retailers will have a much stronger personal
relationship with the consumer.
• The retailer will hold several other brands and
• A consumer will expect to be exposed to many products.
• Products and services are promoted and
merchandised by the retailer.
• The retailer will give the final selling price to the
• Retailers often have a strong 'brand' themselves e.g.
Ross and Wall-Mart in the USA, and Alisuper,
Modelo, and Jumbo in Portugal.
• The Internet has a geographically disperse market.
• The main benefit of the Internet is that niche products
reach a wider audience e.g. Scottish Salmon direct
from an Inverness fishery.
• There are low barriers low barriers to entry as set up
costs are low.
• Use e-commerce technology (for payment, shopping
software, etc)
• There is a paradigm shift in commerce and
consumption which benefits distribution via the
Marketing Plan
• Marketing Plan Includes:
Marketing Research
Marketing Strategy
Target Market
Marketing Mix – 5 P’s
Customer Needs
• The founder of a successful cosmetics
firm, when asked what his business did,
replied, "In the factories we make
perfume and in the shops we sell
Customer Needs
• Business people usually define their business in
physical terms.
• Customers, on the other hand, see businesses as
satisfying their needs.
• Compare a cheap ballpoint pen with a quality
fountain pen.
• Basically they are very similar: they both write well, are
comfortable to hold, and have clips that hold them in place
and caps that protect your pockets from ink stains.
• One costs $1, the other perhaps $100. Customers pay the
extra $99 for largely intangible benefits, such as status or the
pleasure the pen will bring as a gift. The makers of each pen
both have successful businesses, but the needs they satisfy
are poles apart.
Customer Needs
• Until you have clearly defined the needs of
your potential customers, you cannot begin to
assemble a product to satisfy them.
• American psychologist Abraham Maslow says
that "all customers are goal seekers who
gratify their needs by purchase and
consumption." He classifies consumer needs
in a five-stage pyramid, called the hierarchy
of needs.
Customer Needs
Maslow’s Hierarchy of Needs
Social needs
Physiological needs (hunger and thirst)
Customer Needs
• Every product or service is bought to satisfy
one or more of these needs. So, for example,
as people's hunger and thirst needs are
satisfied, they move up the hierarchy to
satisfy other needs.
• Try interesting someone who is starving and
cold in "higher" things, or see how much more
food you buy if you shop when you are
hungry than when you have just consumed a
large meal.
Customer Needs
• Where are your customers on the needs
hierarchy, and how can your product or
service help them to achieve their goals?
Writing Up and Presenting Your Business
• The above sections are intended to help you assemble the
information needed to write up your business plan. The
plan will require substantial editing and rewriting; the way
in which it is written up will undoubtedly influence the
chances of getting a hearing, if you are seeking outside
support for your venture.
• You must also give some thought to how you will handle
the meeting with your bank, venture capital firm, or other
backers. Presentation skills and good planning will help
make a good production, and "showbiz" counts for a
surprising amount in the money world.
Writing Up and Presenting Your Business
• The following guidelines will help you and
your colleagues make the most efficient use
of the information in the planning category
when constructing your business plan:
• 1. Do not expect to be told where to find all
of the information about your business. You
will need to do some research yourself.
Writing Up and Presenting Your Business
• 2. Do not copy a sample, however good it may
sound; use it to help you understand the purpose
of that article only.
• 3. Try to strike a balance between qualitative and
quantitative statements in writing up your business
plan. That is, try to back up as many of your
statements as possible with numbers and
documented sources of information. On the other
hand, do not include numbers just because you
have them; make sure that they really serve a
Writing Up and Presenting Your Business
• 4. Finally, before attempting to write up
your business plan, make sure the
information you have compiled is internally
consistent. If you have business partners,
make sure you are all in substantive
agreement, both at each stage and with the
final outcome.