Entrepreneurial Marketing: An effectual approach
By Edwin J. Nijssen
Available directly from Routledge at:
http://www.routledge.com/books/details/9780415722216/
Suggestions for using the book in courses and teaching materials:
Based on several requests for advice on how to organize an entrepreneurial marketing
course and which teaching materials I use, I wrote this brief note.
The aim is to offer guidance about which topics to cover in both short and more extensive
courses. In addition I refer to teaching materials that can generally be downloaded from the
Internet and are therefore easily obtained (e.g. via library).
The book can be used for short, several day courses and full courses on entrepreneurial
marketing. Suggestions on how to organize the course and which teaching materials to
apply are provided below, including where to find these materials. Many are easy to
download from the Internet, specifically from TED talks, Youtube, The New Yorker etc.
1. Short, ½ day or 1 day course:
For a brief orientation-like course one may want to focus on several important concepts of
the book, i.e. related to the effectual marketing. I would suggest, for instance, using:
i.
Materials from the introduction to define the topic and explain why new technology
and innovations need marketing. It may be useful to show Table 6.1 “The result of
different marketing efforts in combination with quality of an innovation”. It illustrates
that innovations’ success in the market place benefits greatly from both strong new
technology and strong marketing. Next, I would discuss some definitions: What is
marketing? What is sales? What is the market? What then is a market oriented
company? Particularly the definition of market is useful, as often students will only
refer to customers and not to the exchange between customers and providers. It
immediately makes clear why information about customers (behavior), competitors
and (customer perceptions of) competitor products are needed.
ii.
Proceed by explaining the difference between traditional and entrepreneurial
marketing.
iii.
A subsequent topic that requires attention is customer value. This is best explained
focusing on Gourville, John T. "Eager Sellers. Stony Buyers”, Harvard Business
Review (2006): 99-106., which explains that many innovations require behavioral
change, and that customers often already have a product they currently use. Aware
that providers often exaggerate what their new product can do, customers are
reluctant to change. The reluctance is fueled by feelings of loss aversion; ‘looking at
the uncertain new product my current product is not half bad’. The problem gets
worse if we realize that providers generally focus on technical issues rather than
explaining what the product can do for the customer (products as a means to an
end). For slides simply make screen shots of the matrix and trade-off examples of the
Gourville article.
iv.
Next, move to the adoption diffusion curve (innovators, early adopters etc) and
explain about market segments. Then, explain that new technology generally begins
by underperforming on several dimensions valued by customers of the current
technology. Hence, the challenge is to identify customers that appreciate what the
new technology (application) can do better and who are less concerned about the
dimensions not so well covered. It introduces Abell’s 3 Dimensional representation of
the marketplace to the students. The slides from the book that focus on the example
Entrepreneurial marketing,
Available directly from Routledge at:
an effectual approach
By Edwin Nijssen
http://www.routledge.com/books/details/9780415722216/
v.
vi.
of “how the digital cameras penetrated the market” works well for this purpose. The
story is that even with little information, one can begin to “discover the customer” and
then follow up by visiting and interviewing people of this segment to validate
assumptions.
From the previous point one naturally arrives at recognizing the importance of
distinguishing the customer’s development process as a natural complement of the
engineering oriented new product development process. Introduce the concept by
discussing each of the four stages of customer development. Stress the iterative
character of this process and its link with discovering and updating the business
model of the start-up. An interesting article to refer to is: Onyemah, Vincent, Martha
Rivera Pesquera, and Abdul Ali. "What Entrepreneurs Get Wrong." Harvard Business
Review 91.5 (2013): 74-79.
Special attention may then be allocated to discussing where to get market
information from. Discuss sources and the distinction between primary and
secondary data, as well as the issues that do not apply but provides a backdrop for
radically new product’s secondary data. Remember that many entrepreneurs have a
lot of experience in their industry and, as a result, understand dynamics better than
the average person.
Depending on whether the course is ½ a day or a full day you may want to integrate one or
two videos in to your teaching. Consider using something from Dragons Den (tape a session
or go to http://www.bbc.co.uk/programmes/b006vq92/episodes/guide) to illustrate that
venture capitalists show heightened attention as soon as the entrepreneur mentions having
sold some products to a customer. Other options are using the cardboard bicycle video to
have students think and develop a 3D representation for this market and for identifying this
entrepreneur’s first customer segment (go to Youtube:
https://www.youtube.com/watch?v=txSboSNQINs.).
I personally like an episode where two serial entrepreneurs, brothers Jim and Richard
George, make a pitch for Postsaver. Postsaver prolongs the life of wooden fencing posts
and is protected with a patent. They give an extremely short pitch. Premature fencing failure
has not kept the Dragons awake, but as soon as they learn about the product, the
customer’s problem and the level of customer interest around it, several dragons are willing
to invest. However, in the end the entrepreneurs turn the offer down. Topics like expected
market, distribution channels, building awareness for the product and how to convey the
message are topics to discuss based on this video. The website of the firm
(www.postsaver.com) can be used as further illustration material. The slide has a clear
problem-solution orientation.
2. A multiple-day course
To extend the course to a multiple-day course begin with the topics mentioned above and
make two changes: (a) spread the topics of the brief course out over several lectures, e.g.
four. (b) Then, add the following topics in an additional 2-3 lectures:
(i)
developing a brief marketing/sales plan,
(ii)
discuss the marketing instruments from an effectual vantage point, and
(iii)
emphasize the need to develop marketing capabilities for your new firm.
Regarding the marketing instruments you should focus on:
- Product, Experiment to find the right application and configuration. First, keep it
simple. Develop your product line later. Thinking along the concept of augmented
product may help to discover extra features and services to add.
Entrepreneurial marketing,
an effectual approach
By Edwin Nijssen
Available directly from Routledge at:
http://www.routledge.com/books/details/9780415722216/
-
-
-
Price. Highly important. Stress the economic roots and also the psychological
dimension (e.g., signal of quality, compared to what the product does for me, it is
cheap). How can you calculate Break Even Point if you cannot predict sales figures?
(effects on scale and learning effects)
Place. Gaining access to the market place is key as well as preventing yourself from
getting locked in to exclusive deals that turn out to be dead-end streets. Further
understanding the role of channels is important (right amount at right time,
advice/service etc.).
Promotion. Highly important as your new company and application/technology are
reputationless. Explain the need to create rumor to build awareness in a low cost way
and then to move toward building affect focusing on creating the right associations.
In this several days format it is, of course, useful to include several readings and also videos.
In addition you could consider several exercises. These exercises I prefer to base on real life
articles. I generally rely on The New Yorker. It has excellent articles that are well written and
address topics that later get adopted by newspapers and other media.
Recent articles of The New Yorker on entrepreneurs that I use include:
The end of food, May 12, 2014 issue
[http://www.newyorker.com/magazine/2014/05/12/the-end-of-food]. This article discusses the
Startup ‘Soylent’. The entrepreneurs tried to make software and had no time to eat. Looking
for timesaving food they developed this new food-drink which became their business.
Interesting to use for identifying the market (3D Abell schema) but also for having students to
pick a market and develop a 1-2 page marketing plan.
We are a camera - September 22, 2014 issue
[http://www.newyorker.com/magazine/2014/09/22/camera]. This article discusses ‘GoPro’.
After twelve years the startup is going public and will make all involved millionaires. Nick
Woodman devised a crude version of the camera twelve years ago to get photos of himself
surfing. While the world has discovered ‘selfies’ it is now discovering ‘worldies’ – self-shot
videos of the world whilst moving. A market ignored by ordinary camera makers, he created
the option for filming every moment in life. Useful for discussing markets and market
expansion as well as developing a product line. Also useful for role of opinion leaders and
blogs in getting exposure.
Form and Fungus --May 20 2013 issue
[http://www.newyorker.com/magazine/2013/05/20/form-and-fungus]
Student team invented a process that grows all-natural substitutes for plastic from the tissue
of mushrooms. The American startup won a big Dutch grant to develop itself and is
becoming a big success. The natural substitute can help firms reduce their pollution and act
in a socially responsible way. Several big firms already use their product. Again nice to
discuss market issues but also use of reference customers.
Questions can be thought up on the spot or given in advance.
Videos you may want to consider using in class:
Big Night (1996) Directors: Campbell Scott, Stanley Tucci
https://www.youtube.com/watch?v=6Y245eeWNRI
Entrepreneurial marketing,
an effectual approach
By Edwin Nijssen
Available directly from Routledge at:
http://www.routledge.com/books/details/9780415722216/
Plot: On the New Jersey Shore in the 1950s, two Italian immigrant brothers from Abruzzo
own and operate a restaurant called "Paradise." One brother, Primo (Tony Shalhoub), is a
brilliant, perfectionist chef who chafes under their few customers' expectations of
"Americanized" Italian food. The younger brother, Secondo (Tucci), is the restaurant
manager, a man enamored of the possibilities presented by their new endeavor and life in
America. Despite Secondo's efforts and Primo's magnificent food, their restaurant is failing.
Use the video to contrast the approaches of the two restaurants shown in the movie. Should
the product oriented brothers change their positioning and menu (product)? Probably not.
They better keep doing what they do well but should change their marketing. What
assumptions about the market can we make; how big an audience would they need to
survive? There is also a link to educating the market (“first give people what they want, then
later you can give them what you want”).
A bath without water (TED talk; Youtube).
https://www.ted.com/talks/ludwick_marishane_a_bath_without_water. Young entrepreneur
Ludwick Marishane tells the amazing, funny story of how he invented a cheap, clean and
convenient solution: DryBath, the world’s first bath-substituting lotion. Discuss how he finds
out that customers at the bottom of the pyramid buy small quantities and are willing to pay
more for this option; they buy when they need and have money. Another interesting issue is
the fact that, although the product was developed for the poor, there is also a rich market
segment that Ludwick discovers in the (effectuation) process, that is very interested and
eager to buy the product.
Choice, happiness and spaghetti sauce (TED talk; Youtube).
http://www.ted.com/talks/malcolm_gladwell_on_spaghetti_sauce. "Tipping Point" author
Malcolm Gladwell gets inside the food industry's pursuit of the perfect spaghetti sauce —
and makes a larger argument about the nature of choice and happiness. Focus on the part
of the talk that discusses Howard Moskovic --“famous for inventing spaghetti sauce”. He
discovers market segments based on the principle that “the mind does not always know
what the tongue wants”. This video (or excerpt of it) can be used to explain why market
research for really new products is hard, and requires experimentation.
3. Full course
For the format/content suggestions for a full course, please see the file “complimentary
course outline”, available from the publisher website
http://www.routledge.com/books/details/9780415722216/. All teaching materials mentioned
above can be integrated in the teaching of such a full course.
In the full course we use cases/small videos to illustrate concepts but also have students
practice them. In addition we use an article (e.g., those from The New Yorker, e.g. on
Soylent) as a running case for the whole course. Using a basic text with multiple
exercises/assignments linked to it, offers extra structure to the course and a hands-on
experience for students. By selecting an article about a hot and successful startup, students
get motivated but are also able to find a lot of extra materials on the Internet. Students really
like this approach very much!
For the exercises I let students (i) first discuss the product and identify the market (Abell’s
3D). (ii) Then, do market research on the topic (data collection and maybe some interviews
with potential customers for validation), and (iii) finally ask them to develop and defend a
marketing plan. Of course extra (sub)steps can be added as needed.
Ed Nijssen, 22 October 2014.
Entrepreneurial marketing,
an effectual approach
By Edwin Nijssen
Available directly from Routledge at:
http://www.routledge.com/books/details/9780415722216/