Marketing for entrepreneurs Piers Robinson Nuventis
Marketing for Entrepreneurs • • • Objectives Marketing philosophies and definitions The customer and segmentation Understanding the industry Developing a product Developing a market entry strategy
Objectives
Objectives • To ensure you understand the importance of: – Research and analysis of your customer and industry – Segmentation – A ’whole product’ – A ‘USP’ – A market entry strategy
Marketing philosophies/ definitions
Commercial philosophies As markets develop, business philosophies change: • Product led • Sales led • Market led Product Customer Advertising and Selling Market Research Customer Product In order to succeed, new companies must follow ‘market led’ principles
Marketing definitions ‘Marketing is a process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others’…
Marketing definitions ‘Marketing is a system of interacting business activities designed to plan, price, promote and distribute want-satisfying products and services to organizational and household users in a competitive environment at a profit’…
Marketing definitions ‘Marketing is about developing and delivering a product or service to satisfy a need or want in a competitive market’…
Marketing definitions Blah, blah! All of these definitions are valid – but the next one is simple, and highlights the fact that every business function should be focused on the customer…
Marketing definitions ‘Marketing is satisfying customer needs profitably’…
Marketing definitions And finally, if you don’t believe how important ‘marketing’ is… ‘Great devices are invented in the laboratory, great products are invented in the Marketing Department’ Theodore Levitt Editor, Harvard Business Review ‘Technological breakthroughs alone will not enable a company to survive. Marketing makes products’ Robert Noyce, Co-founder, Intel Corporation
RESEARCH
Importance of research • Without research you will not: – fully understand your customer – have a good grasp of other companies in your industry – have adequate information to start a business – win the New Business Challenge
Types of research • Secondary research – Helps you derive a good understanding of your environment – Sources: • • Journals/ publications National press Websites Contacts/ networks Analysts reports Patent searches www. google. co. uk
Types of research • Primary research – Helps you derive a good understanding of your customer/ end user – Types: • Quantitative – number based analysis • Qualitative – anecdotal
Customer & Segmentation
Understanding the customer ‘It’s not about your revolutionary products or services. Successful entrepreneurial ventures are about serving customers and their needs. Not just any customers. Target customers’ John Mullins, ‘The New Business Road Test’
Understanding the customer • Definition of ‘customer’ or ‘market’: ‘The set of actual or potential buyers of a product or service’
‘Segmentation’ Understanding the customer • It is important to ‘segment’ your customer base as users have differing characteristics and behaviours • Think of the appropriate ways to segment your market • Then determine which segments are most appropriate to your business
‘Pen portrait’ • A ‘pen portrait’ can really help you get into the head of your target customer
Segmentation You might have an idea who your customer is… but find your ‘niche’ The global washing machine market Your product/ service A ‘market entry strategy’…? ?
Segmentation You might have an idea who your customer is… but find your ‘niche’ The global washing machine market Households only Your product/ service
Segmentation You might have an idea who your customer is… but find your ‘niche’ The global washing machine market Households only Your product/ service In the UK
Segmentation You might have an idea who your customer is… but find your ‘niche’ The global washing machine market Households only Your product/ service In the UK Earning £ 100 k+ p. a.
Segmentation You might have an idea who your customer is… but find your ‘niche’ The global washing machine market Households only Your product/ service In the UK Earning £ 100 k+ p. a. With current machine over 2 years old
Segmentation You might have an idea who your customer is… but find your ‘niche’ The global washing machine market Households only Your product/ service In the UK Earning £ 100 k+ p. a. With current machine over 2 years old
‘Milestones’ Your ‘milestones’ will help you to reach that customer Milestones Your product/ service T 1 T 2 T 3 T 4
Segmentation methods Factor Consumer markets Industrial markets What are the characteristics of the customer? Age, sex, race Income Family size Life cycle stage Location Lifestyle Vertical industry Geographical location Size of company Technology Profitability Style/ culture of management How will the customer purchase/ use the product? Size/ frequency of purchase Issues with brand loyalty Purpose of use Purchasing behaviour Importance of purchase Source of purchase Application of product Importance of purchase Volume of purchases Frequency of purchase Purchasing procedure Distribution channel What are the users’ specific needs, and preferences Similarity to existing purchases Price elasticity Brand preferences Desired features Quality Performance requirements Assistance from suppliers Brand preferences Desired features Quality Service requirements
So now we know… • How to research the customer • How to segment the market • How to put the customer first Now you must think about the industry and work out how to reach them…
Understanding the INDUSTRY
Understanding the industry • Definition of ‘industry’: The group of companies which ultimately sell to the customer
The industry ‘supply chain’ • The ‘supply chain’ consists of all the companies/ people who will make sure your product/ service get to the customer • You need to know the supply chain intimately, so you can determine where you fit in
The industry ‘supply chain’ Wholesaler/ reseller Supplier Retailer Producer Retailer Customer Where are you in the chain? Consumer
Porter’s Five Forces • Porter’s Five Forces is a classic industry analysis tool • It is a means of identifying the different stakeholders, or ‘forces’, which affect: – The level of competition in an industry – The ability of a company to become powerful in that industry
Porter’s 5 Forces This will help you think about the competitive environment – whatever size the market is Threat of new entrants Suppliers Adapted from M. E. Porter, ‘Competitive Strategy’, Free Press, 1980 Competitive rivalry Substitutes Buyers
Competitor analysis • Every company has competitors • They might be: – A similar product/ service to yours – A ‘substitute’ product/ service – The option to do nothing! • You must understand your competitors intimately
Competitor analysis • • • Who are they? Where are they? What do they offer? What size/ share/ growth rate are they? What are they good at? What are they bad at?
Competitor analysis Competitor Strengths Weaknesses Threat (1 to 5) Your competitive advantage
Critical Success Factors (CSFs) A CSF is something that has to be done right in order to succeed in an industry. Some examples: • • • Food preparation? Retail? Airline industry? Telecoms? Media? Freshness/ hygiene Location/ service Safety/ efficiency Functionality/ speed Content/ reach
Developing a PRODUCT
The Product/ Service continuum Tangible/ physical item Added extras Product Intangible/ experiential offering Warranty/ support Service • Suppliers bolt-on additional products to their core offering to gain competitive advantage • Then they add services to their products to make them more valuable to the customer
Meeting customer needs • Tips – When developing a product/ service, think about the pen portrait to remind yourself of the customers’ needs… – Write down the customer needs – Work out how to solve them – Try to offer a ‘whole solution’
A ‘whole product’ solution Where you can show you understand the customer’s Consulting Hardware business problem… Post-sales Software service and your & support The solution Product Pre-sales services What your incategory competitors have in common with you Peripherals Legacy Connectivity interfaces Where you show you are committed to solving their problem Source: ‘Crossing the Chasm’, Geoffrey Moore
Barriers to entry ‘Barriers to entry’ prevent competitors from stealing your customers. Your barriers could be: • Intellectual property protection: • Patent, trademark, copyright, licence rights • • Exclusive relationship with a supplier/ customer Alliances/ partnerships with other companies A unique proposition/ brand Unique location
Unique Selling Proposition (USP) • A USP helps you to differentiate your product/ service • It might be: – – – – Speed Size Weight Convenience Comfort Enjoyment Safety – – – – Style Strength Quality Functionality Better support Ease of use But NOT price
Some examples of USPs… Company USP - Dyson - Revolutionary solution - Apple operating system - Smarter/ better design - Audi - Build quality - Pret a Manger - Fresher - Ebay - Community - Innocent drinks - Healthier - Harley Davidson - Tribal - Linux - Openly available - Stella Artois - More expensive
Developing a market entry strategy
Strategic development • Do further research to identify the long term opportunities • Then determine your milestones to achieve the long term goals • The roll out plan/ commercialisation plan/ market entry strategy is what most people fall down on!
Milestones • The milestones will help you achieve your mission • They could be in the following categories: – – – Product development Funding Commercial/ market development Team development Etc
Developing the strategy In essence, strategic decisions are about ‘products’ and ‘markets’. The Ansoff Matrix sums it up… New MARKETS Existing Market development Diversification Market penetration Product development New Existing PRODUCTS
Devising your business model • What will your business structure be? – – – Licensing IP Merger Joint venture Partnering Outsourcing In-house development
Devising your business model • In selecting a business model, think about: – Customer need • Who will buy? • What will they buy? • How often will they buy? – Quality of IP (is it a platform technology? ) – Industry CSFs and competitive environment – Company’s capabilities and internal resources (risk profile/ motivation/ experience)
Your first customer • Once you have devised your business model, and identified your segment, select who to target first • It may be: – – Your key customer, or a less significant player A company you have easy access to A company that you perceive to have the greatest need A company you could develop a long term relationship with • Your choice depends upon your product, your risk profile and your strategy
Pricing • Decide how much you are going to charge • Think about – How your price compares to the market average? – Are you going to make enough money? • Note: the more you have ‘differentiated’ your product/ service, the more money you can charge
Partnerships/ alliances • In reality, you will always need the involvement of third parties to get to market • External relationships could be vital: – – – To offer a ‘whole solution’ To provide product development expertise To block potential competitors To enable access to customers/ suppliers To enable focus on core competencies
Questions?
Contacts Who: The Challenge Team (Piers/ John/ Solange) Where: Tanaka Business School (2 nd Floor) Telephone: 020 7594 9199 (x 49199) E mail: challenge@ic. ac. uk URL: www. ec. ms. ic. ac. uk/challenge
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