Entrepreneurship 1 1 00 Entrepreneur Defined

Entrepreneurship 1 1. 00

Entrepreneur • Defined as: The person taking the risk of owning and operating a business

Entrepreneurship • Defined as: Process • Throughout American history, entrepreneurship has fueled innovation, created new jobs, and satisfied wants and needs in the marketplace.

Entrepreneurship • Entrepreneurs start businesses through a process that includes five key components: the entrepreneur, the environment, the opportunity, the resources to start the business, and the new venture organization.

Entrepreneurship • Entrepreneurs can achieve business success by planning and managing effectively.

Characteristics of entrepreneurs • Commitment and Determination • Opportunity obsession • Tolerance of risk, ambiguity, and uncertainties (they know these negatives will happen) but they are willing to take that chance • Creative, self-reliant, ability to adapt to change • Motivation to excel

Social Nature • Being social is important because “Building a company entails hiring, organizing, and inspiring a collection of people. • Need to – Get funds from people – Buy for your business from people – Sell to people

Entrepreneurially alert • Are always looking for new opportunities, thus able to see an opportunity when it arises.

Entrepreneurs capitalize on • Life experiences • Person’s position in social network (Linked. In) • Their ability to focus on opportunities • Intelligence • The process used to seek and research information – Discovery, Evaluation, and Exploitation

Entrepreneurial process • Process of identifying and starting a business venture, sourcing and organizing the required resources and taking both the risks and rewards associated with the venture. • Discovery • Evaluation • Exploitation

Entrepreneurial Discovery • Scientific discovery – Occurs when a physical or technological observation is made • Circumstantial discovery – Occurs when an observation is made based on specific knowledge of time, place, or circumstance

Discovery • Introduction of a new product or a new quality of a product • Introduction of a new method of production - Use of robotics on an assembly line • Opening of a new market • Conquest of new source of supply of raw materials or components • Reorganization of any industry

New or improved product is most common area of innovation New Improved • New MP 3 Player • MP 3 Player with a scratch proof screen

Discovery, examples • The introduction of a new method of production: Henry Ford’s invention of the assembly line • The opening of a new market: Mc. Donald’s moving into China for the first time (Note that in addition to discovering the new market, it requires an understanding of culture, laws, local buyer preferences and business practices, and a host of contact, communication, and transportation details referred to as "setting up a distribution channel. ")

Discovery, examples • The conquest of a new source of supply of raw materials or components: Moving a shoe manufacturer from the U. S. to Mexico to access cheaper labor Finding a new source of oil previously not discovered • The reorganization of any industry: Several years ago, the U. S. government believed that one telephone company, Bell, had formed a monopoly. The company was broken up, making the way for new, smaller telephone companies to form.

Prototype Definition: a 3 -dimensional version of your vision Here’s why a prototype is helpful to discovery: It enables you to test and refine the functionality of your design. * Sure, your idea works perfectly in theory. It's not until you start physically creating it that you'll encounter flaws in your thinking. That's why another great reason to develop a prototype is to test the functionality of your idea. You'll never know the design issues and challenges until you begin actually taking your idea from theory to reality

Why a prototype • It makes it possible to test the performance of various materials. * For example, your heart may be set on using metal—until you test it and realize that, say, plastic performs better at a lower cost for your particular application. The prototype stage will help you determine the best materials.

Prototype

Why a prototype • It'll help you describe your product more effectively with your team, including your attorney, packaging or marketing expert, engineers and potential business partners. * • It will encourage others to take you more seriously.

Evaluation • Judge • Determine • Look at it’s worth

Exploitation • Bring into the market in order to gain and realize profits • Make the most of the opportunity and thus capitalize on it

Ways that entrepreneurs try to distinguish themselves from their competitors. • Determine your product/ideas major selling advantage: what will make a customer buy you and not a competitor? What makes your product different from the competition? This may be a product feature, type of service provided, etc.

Entrepreneurs Sell Products • Goods – Tangible – Touch in/with hands – Can weigh it • Services – Paying someone to perform a task for you – Intangible – Non-physical • • • Funeral Home Service Dry Cleaning Service University Entertainment Doctor Dentist

Business Example • Offers both a good and a service – Restaurant • Food – Good • Service – cooking your food and serving it to you

What if • This were your restaurant

Entrepreneurs • Sell ideas – “Shoot for what can be not what is…” – http: //www. roxannejoffe. com/2011/04/pointers-steve-jobs-women-businessleaders/

Risk • Uncertainty in profits and business success • See text pp. 30 -31

Types of risks • industry risk (e. g. , complex industry, overserved industry, failing industry, difficult suppliers, etc. ). • market risks (e. g. , competition, ineffectiveness of marketing model, slow market acceptance, etc. ). • product risks affecting a new venture (e. g. , difficulties in transforming idea into marketready product, etc. ).

Types of risks, cont • financial risks usually associated with startup ventures (e. g. , loss of capital, uncertain income, inflation, economic downturns, changes in interest rates, higher costs, bankruptcy, etc. ). • career risks associated with starting a new business (e. g. , unemployment, business failure, etc. ). • emotional risks that entrepreneurs face (e. g. , marital strain, family problems, etc. ).

Persistent • Study from text pp. 34 -35

Curiosity • A desire to know or learn • When an entrepreneur is curious they are Not being nosey • Rather they are seeking to explore new ideas, ventures, research, inquisitive • From freedictionary. com and teacher

Opportunity • • Page 20 text Chapter 3 text Take an idea and turn into a business An idea with commercial value

Venture • • Page 16 text You seek growth Go from local to national to international Incorporate – Dell – Amazon. com – Gap – Coca-Cola

Ideas for a business • Study text pp. 51 -56 – Brainstorming • helps you generate creative solutions to a problem • http: //www. mindtools. com/brainstm. html • See video – “Brainstorm better with James Manktelow & Amy Carlson”

Find your idea • Be ready for anything. Yes, anything. But you cannot consider all possibilities. • Brainstorm for the goal you want to reach • If it piques interest give it a try • Don’t be judgmental but use good judgment • Don’t overfill your brain – it will likely shut down http: //www. youtube. com/watch? v=z. P 4 gyqk 2 WF 8

Environmental Scan • Define: An analysis and evaluation process that businesses use to understand their current environment • Explain why businesses conduct environmental scans: The aim is to identify trends, gaps, events, developments, and issues that will impact the businesses.

Environmental Scan • Doing research from various sources in order to: • Aids in anticipating changes • Answers the question, “Where are we now? ” • Provides a starting point for businesses’ planning of goals, objectives, and actions that answer the question, “Where do we want to be? ”

Environmental scan resources • Interviews with business officers, owners, managers • Comments made by business officers, owners, managers • National and local newspapers • Trade publications • Business magazines • Websites: Hoover’s, Morningstar, brokerage firms, credible financial sites • Observations • Research findings • Input from professional organizations

Seek help • • SCORE SBA Trade associations Attorney Accountant Colleges and Universities' Personal experience (take a hobby and turn into a profitable venture)

Get help from • Local resource such as the Chamber of Commerce • They are interested in bringing businesses into their town or city for the purpose of economic growth (more jobs) •

Economics • With layoffs come rise in unemployment • People have less money to spend on wants • They try to save money but hard to do so • May qualify for unemployment benefits but must show proof of job search • Companies will want Workkeys certification

Just what is a Business Plan • See text and take notes • See text for components of a BP

Why a Business Plan If you plan to approach a financial institution for a loan, apply for a small business grant, pitch your business idea to investors, or enlist the support of a business partner, a business plan is required.

Also, because • A Business Plan Helps You Make Decisions • A Business Plan Can Be a Reality Check • It serves as a guide, a roadmap • It can give you new ideas

Business Plan • Financing Money/Capital • Strategy Plan of action • Feasibility Study Will the proposed project be profitable • Opportunity Favorable activities

Start-up cost • Fixed - examples • Variable – examples • What do costs have to do with profit • What is profit? • At what point do we know we are making a profit?

Break-even • Activity: – Calculate break-even

Major components of a BP

Business Plan • Our focus is on the Marketing Plan part of a Business Plan • http: //www. mplans. com/restaurant_marketi ng_plan/marketing_vision_fc. php

Business ownership • Corporation • Partnership • Sole proprietor

New Products • Brainstorm • Look at all the possibilities based on customer demand • What’s in naming a product – – You will name a new product for your business

Your Market/Customers • Target market/customers • B 2 B • B 2 C • Market concept – putting the needs and wants of your customer first.

Marketing concept interrelates with marketing mix

Product • Product—the goods, services, or ideas a business will offer its customers • a. Marketers conduct research and use their creativity to determine what customers need and how they will meet that need. • Marketers have succeeded with the product element when customers view the product as the best solution to their needs.

Place • Right place at right time • Marketers are successful with the place element when customers can buy a desired product when and where they want. (Channel management, logistics, distribution)

Price • Price—the amount of money a business asks in exchange for its products • a. Marketers must find a good balance between customer value and satisfaction and between company cost and profit.

Promotion • Promotion—letting customers know the product’s value and its benefits that meet customers’ current needs and refers to the various types of communication that marketers use to inform, persuade, or remind customers about their products

Mix elements inter-relate because a change in one affects another • A change to one element affects the other elements • 2. Examples: • a. Improving product features will probably result in price increases. • b. Simplifying the place element will probably result in price decreases. • 3. When marketers assemble the mix, they carefully determine which elements to include and to what degree—keeping in mind that the mix words as a unit.

Target market • A particular group of customers that a business seeks to attract; the customers who fall into a particular target market share similar needs and characteristics. • Businesses identify target markets in order to make products that will effectively meet the needs of the targeted customers.

Mass market • Mass marketing is designing products and directing marketing activities to appeal to the whole market, (some like to say) everyone…but not everyone will buy. • A diverse group • Mass marketing can be used to communicate a broad message to as many customers as possible. • Mass marketing allows a business to produce one product for everyone, which is more cost-effective than producing and marketing several products to several target markets.

Market segmentation • Market segmentation uses the division of a total market into smaller, more specific groups. The needs and concerns of each market segment can be met more directly and carefully.

Market segmentation • Why segment the market? – Cannot reach the whole or entire population

Segment based on: • Demographics

Segment based on: • Psychographics

Psychographics • • Values Motives Attitudes Opinions Interests Activities Personalities Lifestyles

Segment based on: • Behavioral – how consumer respond to a product – Rate of use – Buy as a gift – Benefits derived from using product

Segment based on : • Geographic – state, city, rural, climate, region

SWOT • • Strengths Weaknesses Opportunities Threats • Which are internal and which are external? • Your competition falls under which?

Feasibility study: • Strategic Alignment—Do you want to do it? • Operational—Can you do it? • Marketing—Will your customers want to buy it from you? • Financial—Will it meet your financial goals?

Inside-out • A corporate strategy process that relies on the core competencies of the company to drive change, product development and innovation as opposed to external influences such as market, competition and customer preferences. The assertion by inside-out strategists is that a company achieves greater efficiencies and adapt more quickly to changing circumstances. Read more: http: //www. businessdictionary. com/definition/inside-out-strategy. html#ixzz 2 p. Hb. YCl 6 x

Goals, strategies and tactics • upon goals—where it is they want to achieve. • 4. Example: A restaurant wants to increase this year’s sales by 10% over last year’s sales. • 5.

Strategy • They lay out their plan of action—their strategy—to show they will reach their goal. • Example: The restaurant evaluates its many options and decides to add a kids’ menu to increase sales.

Tactic • Short-term (must be in-line with goal and strategy • Example: Tactics that the restaurant might use: • a. Introduce meals which kids like. • b. Offer a free ice-cream cone to each child selecting a kids’ meal.

What is a marketing plan? A marketing plan is a tool enabling your business to get as much value as possible for any money you spend on marketing. Many businesses choose to approach the market randomly. Unfortunately, this attitude often results in waste of resources. A marketing plan can help structure the actions.

Marketing Plan

Marketing Plan • Parts of a Marketing Plan (see notes)

Identify the components of a marketing plan. • • Executive Summary Situation Analysis (SWOT) Desired Target Marketing Goals and Objectives Marketing Strategies and Programs Financial Plans Performance and Implementation Appendices – charts, graphs

Executive summary • The executive summary serves as an introduction to the marketing plan and helps the reader to understand the purpose of the marketing plan. It contains a brief overview of the marketing plan and focuses only on the most important points of the plan.

Product-services part of the Marketing Plan • Product-mix (Broad or narrow) • Brands • Product life-cycle (Draw chart, label and give characteristics of each stage) • Positioning our product • Market share

What if you are developing a new product? • What will you need to do? – Research (why)? – Obtain a P_____. (Why)?

What agency grants patents?

Product on decline • Explain as: During decline, sales growth becomes negative, profits decline, competition remains high, and the product ultimately reaches its 'death'. • Example: PCs started to become obsolete as laptops, net books, tablets, and smart phones started to enter the market, shifting the emphasis from power to portability. The PC is still used all over the world, but its popularity has declined dramatically.

Activity • Develop a chart showing your company’s product mix – Product lines – Depth – Width – Breadth – Items

Product Mix Strategies • Expansion = adding new products to existing line • Trading up = adding higher quality products and thus increasing price • Trading down = adding lesser quality thus decreasing price • Contraction = taking product from line • Positioning = how customer feel about your product in their minds • Alteration = modify product

Product Positioning • Getting your product/brand/company into the minds of the customer ? Which brand is #1 ? How does product positioning connect to market share?

Product Positioning • Dell computers were not available for customers to purchase directly. Dell’s product positioning strategy began as a distribution channel through resellers, Once the Dell brand was widely acknowledged and valued, they changed their product positioning strategy to provide direct distribution to the customer.

Re-positioning • When a company initiates a re-positioning strategy, it needs to change the expectations of stakeholders, including employees, stockholders, and financial backers. • A company may need to consider a re-positioning strategy if they have a weak brand, if they have not remained competitive in the market, or if there is a change in the economy. • A company may re-position a specific product line, a brand, or the entire organization.

Re-positioning • Apple has successfully repositioned itself as a digital lifestyle provider

Re-positioning • Old Spice has made a concerted effort to reposition its brand from a stodgy aftershave product line to a cool, contemporary array of “fragrant man goods. ” Thanks to its viral video marketing, a whole new audience has embraced this once, old-school cologne.

KFC Re-positioning • KFC rebranded to freshen their look and shed their “fried” image

PLC and Product Mix Strategies • How do the two inter-relate? – For example, at what stage of the PLC would you contract your product? – Answer___________.

Customer defection • Rate at which customers defect or stop the usage of products of a company – How do you retain or prevent customer defection? – We would love to keep you – USP is one way

USP • Unique Selling Proposition – (a. k. a. unique selling point) – How does a company “power-up” the sell of their products, their brand, their company? – For example, Charles Revson, founder of Revlon, always used to say he sold hope, not makeup. Some airlines sell friendly service, while others sell on-time service. Neiman Marcus sells luxury, while Wal-Mart sells bargains

USP and the Marketing Mix • A business can peg its USP on product characteristics, price structure, placement strategy (location and distribution) or promotional strategy • The benefit that a product or service can deliver to customers that is not offered by any competitor: one of the fundamentals of effective marketing and business. http: //www. mshmgi. com/glossary, U, Unique+Selling+Preposition+%28 USP%29. html

USP • Example:

De. Beers A diamond is forever. • There's a reason that this slogan has been around since 1948 and is still in use today. The slogan points out that diamonds, being next to unbreakable, last forever and thus are the ideal symbol for undying love.

Company personality • Found in its –Unique logo –Symbols

Competitive advantage • A competitive advantage is an advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher prices.

Channel of Distribution • The primary purpose of any channel of distribution is to bridge the gap between the producer of a product and its user • Channel of distribution begins with the producers/manufacturers • Each channel member adds value or economic utility to the product. (How? )

The 4 P's of marketing and the distribution: • What the product is and how it meets a customer need • What the price of the product will be • What promotions will be used to sell the product • And what place the product will be sold. • The distribution channel is primarily concerned with this last item (place).

Distribution • aka: Logistics – http: //www. youtube. com/watch? v=m. RAHa_Po 0 Kg – UPS Logistics commercial

Channels of distribution Direct Indirect • Directly from the producer • From Producer to a to the consumer middleman to the customer • No middlemen or intermediaries • Who typically does the wholesaler sell to? • Best to use this channel when selling BIG, bulking • Who does the retailer sell heavy equipment to?

How banks use channel of distribution • Banks have responded by developing bank-by-mail, Automatic Teller Machines (ATMs), and other distribution systems.

Types of distribution • A marketer will consider the three types of distribution and select the one that most closely fits the overall marketing strategy. • There are three basic types of distribution for a marketer to consider: Intensive, selective, and exclusive.

Exclusive distribution • Exclusive distribution. The use of a single or very few outlets. Creates high dealer loyalty and considerable sales support

Selective Distribution • (such as Baskin-Robbins)-an intermediary strategy, with the exact number of outlets in any given market dependent upon market potential, density of population, dispersion of sales, and competitors' distribution policies

Intensive distribution • The manufacturer attempts to get as many intermediaries of a particular type as possible to carry the product (such as candy). Provides for increased sales volume, wider consumer recognition, and considerable impulse purchasing. Low price, low margin, and small order sizes often result.

How can companies keep up? • • So much data So much information SWOT Plans Feasibility studies Financial Customer information On and on

MIM • Marketing Information Management – Cloud Computing

Cloud computing • How Cloud Computing Works • The goal of cloud computing is to apply traditional supercomputing, or high-performance computing power, normally used by military and research facilities, to perform tens of trillions of computations per second, in consumer-oriented applications such as financial portfolios, to deliver personalized information, to provide data storage or to power large, immersive computer games.

Provider of cloud computing • Amazon – The revenue it makes on its cloud computing business, known as Amazon Web Services, which provides the backbone for a growing portion of the internet: about $2. 4 billion a year.

Cloud computing services • Today, hundreds of thousands of customers of all sizes take advantage of these cloud computing services in a diverse set of industries, including healthcare, media, financial services, insurance, real estate, retail, education and the public sector. • Amazon provides these services

Companies using the CLOUD “Unilever’s digital data program now processes genetic sequences twenty times faster and supports ten times as many scientists simultaneously. ” - Pete Keeley Unilever Researchs e. Science IT Lead for Cloud Solutions

Cloud services • Web, Mobile, & Social Apps • Use AWS' Cloud Computing services to power web, mobile, and social apps. • Big Data • Use Cloud Computing to store and process large datasets to solve business problems.

Cloud services, cont • Backup & Storage • Store and retrieve any data, anywhere, any time with AWS’ Cloud Computing services. • Digital Media • Use AWS’ Cloud Computing services to ingest, store, encode, protect, and stream your media.

Cloud services, cont • Enterprise Applications • Run enterprise applications using AWS’ Cloud Computing services. • Gaming • Use AWS' Cloud Computing services to deliver casual or MMO games.

Pricing • In line with competition • Higher than competition • Will not be undersold (lower than competition) • Odd-even • Penetration • Skimming

Pricing objectives • Profit-oriented objectives • Are focused on creating profit for a business • Some businesses set prices that result in the greatest amount of profit. • Other businesses set prices to recover their costs and earn a reasonable profit. • Sales-oriented objectives • Are focused on increasing total income from sales and can be accomplished in two ways: • Charge low prices to increase the volume of sales so that the business has more total income because it sells more products • Charge high prices to increase the dollar value of each sale

Calculate Mark-up • Cost + _______ = Selling Price • So, Selling price – cost = _____. • Cost = $10. 00 • Selling price = $25. 00 • Mark-up = (? )

Promotion • Remind • Persuade • Inform

Promotion • Promotional Mix – Advertising (PRINT AND BROADCAST) and is commonly used to reach masses • TV is (? ) – Personal selling – Sales promotion – Publicity – Public Relations

Promotional Plan • Should have a theme • Is plan PRE-OPENING • Or is plan ONGOING

How does promotion benefit the customer/consumer? • Customers can compare • Informs of products uses – Features or physical characteristics (what we see about the product like it’s size, shape, brand name, price, materials, colors, weight, ) – Benefits (what’s in it for the customer – comfortable, saves money, make life easier, improves self-esteem)

Promotion can be Institutional Product Promotional • • • Company image Concern for community Scholarships Charities Education Public health – fight against obesity Product price Product features Product benefits Sales

Promotional Budget

Sales forecasting • Projection of achievable sales revenue, based on historical sales data, analysis of market surveys and trends, and salespersons' estimates. • Predict sales target or sales goals • (You must be able to calculate) (See notes) Read more: http: //www. businessdictionary. com/definition/sales-forecast. html#ixzz 2 p. Hd. E 5 N 9 R

Quantitative Forecasting: • Quantitative methods of forecasting sales are based on the results of gathering and analyzing all kinds of numerical market data. • Numerical data may come from internal sources such as: – Sales records – Past product/market research – Customer surveys that the company has on hand • Numerical data such as economic trends, population changes, consumer spending, and industry forecasts come from external sources such as government reports, business publications, and trade associations. •

Qualitative Forecasting: • Qualitative, or judgmental, forecasting methods are based on expert opinion and personal experience. • The company prepares its sales forecasts by asking knowledgeable people such as experts in the field, sales personnel, customers, and company executives. • These individuals base their predictions on what they have seen happen in the past as well as no current observations of the economy or of the industry. • This method is especially common when sufficient historical data isn't available, i. e. , for a new business or a less-established market environment.

Review • Notes from Unit 5. 00 on sales forecasting and how to calculate sales

ROI

Marketing Metrics • Used to evaluate the Marketing plan – marketing metrics, marketing dashboard, navigational, and evaluative.

Metrics customer-acquisition metrics (e. g. , awareness levels, purchase-decision drives, rate of customer acquisition, market share, acquisition costs, etc. ). customer-retention metrics (e. g. , retention rate, abandonment rate, brand loyalty, lifetime value [LTV], etc. ). product metrics (e. g. , usability, satisfaction versus expectations, first-time user experience, awareness, purchase rate, price, profit impact, etc. ).

Metric • key financial metrics (e. g. , revenue, gross profit, net profit, return on sales [ROS], return on investment [ROI], return on marketing investment [ROMI], etc. ). • promotional metrics (e. g. , reach, frequency, Gross Rating Points [GRPs], impressions, Cost per Thousand [CPM], coupon redemption rates, costs for coupons and rebates, cost per click, accuracy of coverage, media impressions, etc. ). • pricing metrics (e. g. , optimal price, price premium, percent good value, etc. ).

Dashboard • Information helpful to business managers available on a digital dashboard might include stock prices, weather data, a calendar management function, e-mail access, news feeds and various types of company specific information. Read more: http: //www. businessdictionary. com/definition/digital-dashboard. html#ixzz 2 p. Hcv. Ltg. U

Navigational dashboard • Keeping up with location of

customer contact • Reach • Frequency • CPM

Works cited • • • • http: //candicares. wordpress. com/2012/10/16/never-give-up-never-surrender/ http: //www. wisegeek. org/what-is-a-business-risk. htm#did-you-know http: //www. roxannejoffe. com/2011/04/pointers-steve-jobs-women-business-leaders/ http: //www. google. com/search? aq=&rlz=1 T 4 ADRA_en. US 489&q=business+opportunity+leads&um=1&ie=U TF-8&hl=en&tbm=isch&source=og&sa=N&tab=wi&ei=Jk. CUemf. Non 69 QTB 44 Do. Bg&biw=1600&bih=721&sei=Ouk. CUc. X 8 HY 2 E 9 QSH 04 Gg. BA http: //sbinformation. about. com/od/businessplans/a/why-you-need-a-business-plan. htm http: //www. google. com/search? q=business+plan&hl=en&tbo=d&rlz=1 T 4 ADRA_en. US 489&source=lnms&tb m=isch&sa=X&ei=RJUFUdn 6 BIa. Q 9 g. Sdko. Dw. CQ&ved=0 CAo. Q_AUo. AA&biw=1600&bih=721 Product life cycle picture http: //google search https: //www. boundless. com/marketing/products/product-life-cycles/decline/ http: //sales. about. com/od/leadgeneration/tp/Unique-Selling-Proposition-Examples. htm De Beers http: //www. investmentsandincome. com/investments/de-beers-diamonds-investment. html Customer defection http: //www. cbs-cbs. com/how-i%E 2%80%99 d-love-to-keep-you/ Cloud computing http: //www. webopedia. com/TERM/C/cloud_computing. html Amazon cloud computing http: //aws. amazon. com/free/