Chapter 5

Concept & Development of Entrepreneurship

Entrepreneurial Decision Process

Types of Start-up Ventures

Entrepreneurship & Economic Development

Ethics and Social Responsibility

Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-1

The Nature & Importance of Entrepreneurs

Chapter 5

Concept & Development of Entrepreneurship

Entrepreneurial Decision Process

Types of Start-up Ventures

Entrepreneurship & Economic Development

Ethics and Social Responsibility

Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-2

Chapter Learning Objectives

1. To understand the relevance of industry and competitive analysis to the market planning process.

2. To describe the role of marketing research in determining marketing strategy for the marketing plan.

3. To illustrate an effective and feasible procedure for the entrepreneur to follow in engaging in a market research study.

4. To define the steps in preparing the marketing plan.5. To explain the marketing system and its key

components.6. To illustrate different creative strategies that may be

used to differentiate or position the new venture’s products or services.

Chapter 5

Concept & Development of Entrepreneurship

Entrepreneurial Decision Process

Types of Start-up Ventures

Entrepreneurship & Economic Development

Ethics and Social Responsibility

Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-3

Chapter Opening Profile

• Spin Master Ltd.• www.spinmaster.com• Ronnen Harary, Anton Rabie,

Ben Varadi– 30-something Canadians– North American toy market

• Earth Buddy, Mighty Beanz

• Started 10 years ago• Rely on public relations,

unconventional marketing methods, and self-promotion

• Air Hogs– Built a suitcase filled with the

plane, a plastic airline cup, a bag of peanuts, and a barf bag

– Hired college kids to travel to air shows demonstrating the product to airplane enthusiasts

– Appearances on NBC’s Today show and Rosie O’Donnell’s talk show

Chapter 5

Concept & Development of Entrepreneurship

Entrepreneurial Decision Process

Types of Start-up Ventures

Entrepreneurship & Economic Development

Ethics and Social Responsibility

Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-4

Industry/Competitor Analysis

• Industry analysis completed as part of the business plan (covered in Chapter 6)

• Assessment of environmental/industry trends• Porter’s Five Forces Model

• Competitor analysis– Gather information from

different sources– Use figure 5.1 (over)– Use the information to

determine market positioning for the new venture

• Information sources:– Newspaper, magazine

articles– Internet– Catalogues, brochures– Distributors, suppliers– Corporate annual reports– Trade publications

Chapter 5

Concept & Development of Entrepreneurship

Entrepreneurial Decision Process

Types of Start-up Ventures

Entrepreneurship & Economic Development

Ethics and Social Responsibility

Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-5

Competitor Analysis

Chapter 5

Concept & Development of Entrepreneurship

Entrepreneurial Decision Process

Types of Start-up Ventures

Entrepreneurship & Economic Development

Ethics and Social Responsibility

Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-6

Marketing Research for the New Venture

• Gathering information to determine:– Who will buy the product or service?– What is the size of the potential market?– What price should be charged?

Steps in the marketing research process:

1. Define the purpose

2. Gather data from secondary sources

3. Gather information from primary sources

4. Analyze and interpret results

– What is the most appropriate distribution channel?

– What is the most effective promotion strategy to inform and reach potential customers?

Chapter 5

Concept & Development of Entrepreneurship

Entrepreneurial Decision Process

Types of Start-up Ventures

Entrepreneurship & Economic Development

Ethics and Social Responsibility

Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-7

Understanding the Marketing Plan

Establishes how the entrepreneur will effectively compete and operate in the marketplace

Designed to provide answers to 3 basic questions• Where have we been – background• Where do we want to go• How do we get there

• Characteristics of a marketing plan:– Provides a strategy to achieve

mission/goals– Based on facts and valid

assumptions– Appropriate organization– Provides for continuity– Simple and short– Flexibility built-in– Specific performance criteria to

be monitored

Chapter 5

Concept & Development of Entrepreneurship

Entrepreneurial Decision Process

Types of Start-up Ventures

Entrepreneurship & Economic Development

Ethics and Social Responsibility

Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-8

Marketing Research (continued)

• Defining the purpose or objectives:– What marketing decisions are being made? – What information is needed?– Look to the four P’s of marketing strategy

• Gathering data from secondary sources:

– Use free information that has already been gathered by someone else first

– Publicly available information– Commercial sources

• Information sources:

– Statistics Canada– Industry Canada– Departments of labour– Business/economic

development agencies– Local chambers of commerce– Local media

Chapter 5

Concept & Development of Entrepreneurship

Entrepreneurial Decision Process

Types of Start-up Ventures

Entrepreneurship & Economic Development

Ethics and Social Responsibility

Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-9

Marketing Research (continued)

• Gathering data from primary sources:– Collecting information directly from the source– Different methods for different purposes– Can be expensive and time consuming

• Analyzing and interpreting the results:

– What does the data collected mean?

– Compare to research objectives– Use to make better marketing

decisions

• Data collection methods:– Observation– Networking– Focus group discussions– Surveys– Experimentation

Chapter 5

Concept & Development of Entrepreneurship

Entrepreneurial Decision Process

Types of Start-up Ventures

Entrepreneurship & Economic Development

Ethics and Social Responsibility

Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-10

Marketing Plan for a Consumer Products Company

Chapter 5

Concept & Development of Entrepreneurship

Entrepreneurial Decision Process

Types of Start-up Ventures

Entrepreneurship & Economic Development

Ethics and Social Responsibility

Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-11

Marketing Plan for a Consumer Products Company

Chapter 5

Concept & Development of Entrepreneurship

Entrepreneurial Decision Process

Types of Start-up Ventures

Entrepreneurship & Economic Development

Ethics and Social Responsibility

Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-12

Marketing Plan for a Consumer Products Company

Chapter 5

Concept & Development of Entrepreneurship

Entrepreneurial Decision Process

Types of Start-up Ventures

Entrepreneurship & Economic Development

Ethics and Social Responsibility

Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-13

Marketing Plan for a Business-to-Business Company

Chapter 5

Concept & Development of Entrepreneurship

Entrepreneurial Decision Process

Types of Start-up Ventures

Entrepreneurship & Economic Development

Ethics and Social Responsibility

Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-14

Marketing Plan for a Business-to-Business Company

Chapter 5

Concept & Development of Entrepreneurship

Entrepreneurial Decision Process

Types of Start-up Ventures

Entrepreneurship & Economic Development

Ethics and Social Responsibility

Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-15

Marketing Plan for a Service Company

Chapter 5

Concept & Development of Entrepreneurship

Entrepreneurial Decision Process

Types of Start-up Ventures

Entrepreneurship & Economic Development

Ethics and Social Responsibility

Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-16

Marketing Plan for a Service Company

Chapter 5

Concept & Development of Entrepreneurship

Entrepreneurial Decision Process

Types of Start-up Ventures

Entrepreneurship & Economic Development

Ethics and Social Responsibility

Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-17

Characteristics of a Marketing Plan

The marketing plan should be designed to meet certain criteria

• A strategy for accomplishing the company goal and objectives

• Based on facts

• An appropriate organization must be described to implement the marketing plan

• Provide for continuity

• Short and simple

• Flexibility

• Specify performance criteria

Chapter 5

Concept & Development of Entrepreneurship

Entrepreneurial Decision Process

Types of Start-up Ventures

Entrepreneurship & Economic Development

Ethics and Social Responsibility

Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-18

Facts Needed for Market Planning

Chapter 5

Concept & Development of Entrepreneurship

Entrepreneurial Decision Process

Types of Start-up Ventures

Entrepreneurship & Economic Development

Ethics and Social Responsibility

Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-19

Steps in Preparing the Marketing Plan

• Marketing mix (definition): combination of product, price, promotion, and distribution and other marketing activities needed to meet marketing objectives

Chapter 5

Concept & Development of Entrepreneurship

Entrepreneurial Decision Process

Types of Start-up Ventures

Entrepreneurship & Economic Development

Ethics and Social Responsibility

Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-20

Market Segmentation & Targeting

• Breaking a marketplace down into categories of buyers who share similar characteristics

• 5 characteristics of useful segmentation:

– Meaningful– Mutually exclusive

– Measurable– Substantial– Actionable

• Target market: specific group of potential customers toward which the venture aims its marketing plan

• Customer profile:– Demographic variables– Attitudes on price/quality– Where currently shops– Influence of advertising– Quantities and frequency of

purchasing– Why customers buy

Chapter 5

Concept & Development of Entrepreneurship

Entrepreneurial Decision Process

Types of Start-up Ventures

Entrepreneurship & Economic Development

Ethics and Social Responsibility

Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-21

Relationship Marketing

• Building a relationship with the firm’s most profitable customers

• 70% to 80% of profits come from small minority of customers

• Challenge to figure out who they are

• Use of database technology to identify and track

• Communication is key

• Allocation of selling effort to focus on them

• Firing unprofitable customers?

Chapter 5

Concept & Development of Entrepreneurship

Entrepreneurial Decision Process

Types of Start-up Ventures

Entrepreneurship & Economic Development

Ethics and Social Responsibility

Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-22

Marketing Strategy

• Considering Strengths and Weaknesses• Establish goals and objectives for venture• Marketing strategy decisions:• Product or service:

– Physical product

• Pricing: – Costs – Markups or

margins – Competition

– Packaging– Brand– Image– Warranty– Service– Delivery time– Features– Style

Chapter 5

Concept & Development of Entrepreneurship

Entrepreneurial Decision Process

Types of Start-up Ventures

Entrepreneurship & Economic Development

Ethics and Social Responsibility

Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-23

EthicsStealth Marketing

Chapter 5

Concept & Development of Entrepreneurship

Entrepreneurial Decision Process

Types of Start-up Ventures

Entrepreneurship & Economic Development

Ethics and Social Responsibility

Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-24

Major Considerations in Channel Selection

Chapter 5

Concept & Development of Entrepreneurship

Entrepreneurial Decision Process

Types of Start-up Ventures

Entrepreneurship & Economic Development

Ethics and Social Responsibility

Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-25

Promotion

• Promotional campaigns should consist of:

– Determine objectives

– Define customers

– Determine benchmarks

– Profile your target group

– Get the message out

– Develop the message

– Cost it out

– Implement the plan

– Evaluate the plan

• Guerilla marketing:– Pursuing traditional goals of profit

and revenue through unconventional means

– Most bang for buck– Needs creative thinking

• Public relations:– Press kit, events– Speaking opportunities

Chapter 5

Concept & Development of Entrepreneurship

Entrepreneurial Decision Process

Types of Start-up Ventures

Entrepreneurship & Economic Development

Ethics and Social Responsibility

Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-26

Promotion

Get on TV• Know your story• Think Visually• Find the right show• E-mail, don’t call• Consider your timing• Be available

Chapter 5

Concept & Development of Entrepreneurship

Entrepreneurial Decision Process

Types of Start-up Ventures

Entrepreneurship & Economic Development

Ethics and Social Responsibility

Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-27

• Internet strategy:

– Company website

– Blogs

– Direct e-mail

– Banner advertisements

– Affiliate programs

– Participate in online forums or chat groups

– Registration with search engines

• SEO Search Engine Optimization

• Website issues:– Website objective– Website construction– Content– Promotion– Communication– Registration– Purchase and delivery

mechanism– Security– Metrics

Promotion

Chapter 5

Concept & Development of Entrepreneurship

Entrepreneurial Decision Process

Types of Start-up Ventures

Entrepreneurship & Economic Development

Ethics and Social Responsibility

Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-28

Business-to-Business Markets

• Require a different approach than consumer markets

• Products are more expensive, customized, specialized, larger in quantity, and riskier to purchase

• Relies on:

– More direct channel of distribution

– Personal selling

– Trade publications

– Trade shows

Chapter 5

Concept & Development of Entrepreneurship

Entrepreneurial Decision Process

Types of Start-up Ventures

Entrepreneurship & Economic Development

Ethics and Social Responsibility

Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-29

Final Steps

• Budgeting the marketing strategy

• Implementation of the marketing plan

• Why some marketing plans fail:– Lack of a real plan– Lack of an adequate situation

analysis– Unrealistic goals– Unanticipated events

• Monitoring progress of marketing actions

• Contingency planning

Chapter 5

Concept & Development of Entrepreneurship

Entrepreneurial Decision Process

Types of Start-up Ventures

Entrepreneurship & Economic Development

Ethics and Social Responsibility

Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-30

Chapter Closing Comments

1. To understand the relevance of industry and competitive analysis to the market planning process.

2. To describe the role of marketing research in determining marketing strategy for the marketing plan.

3. To illustrate an effective and feasible procedure for the entrepreneur to follow in engaging in a market research study.

4. To define the steps in preparing the marketing plan.5. To explain the marketing system and its key components.6. To illustrate different creative strategies that may be used to

differentiate or position the new venture’s products or services.