Part III – Developing the Part III – Developing the Entrepreneurial Plan Entrepreneurial Plan

Chapter 7 – Environmental Assessment: Chapter 7 – Environmental Assessment: Preparation for a New Venture Preparation for a New VentureChapter 8 – Marketing Research forChapter 8 – Marketing Research for New Ventures New VenturesChapter 9 – Financial Preparation forChapter 9 – Financial Preparation for Entrepreneurial Ventures Entrepreneurial VenturesChapter 10 – Developing an EffectiveChapter 10 – Developing an Effective Business Plan Business Plan

Copyright (c) 2004 by South-Western, a division of Thomson Learning. All rights reserved.

Chapter 8 – Marketing ResearchChapter 8 – Marketing Research For New Ventures For New Ventures

Definition of a MarketDefinition of a Market

A A marketmarket is a group of consumers is a group of consumers (potential customers) who have (potential customers) who have

purchasing power and unsatisfied purchasing power and unsatisfied needs. A new venture will survive needs. A new venture will survive

only if a market exists for its product only if a market exists for its product or service.or service.

Marketing ResearchMarketing Research

Marketing Research involves the Marketing Research involves the gathering of information about a gathering of information about a particular market, followed by particular market, followed by analysis of that information.analysis of that information.

Defining the Research Defining the Research Purpose and ObjectivesPurpose and Objectives

• Gathering Secondary DataGathering Secondary Data

• Gathering Primary DataGathering Primary Data

Developing an Information-Gathering Developing an Information-Gathering InstrumentInstrument

• Make sure each question pertains to a specific Make sure each question pertains to a specific objective in line with the purpose of the study.objective in line with the purpose of the study.

• Place simple questions first and difficult-to-answer Place simple questions first and difficult-to-answer questions later in the questionnaire.questions later in the questionnaire.

• Avoid leading and biased questions.Avoid leading and biased questions.• Give concise but not complete directions in the Give concise but not complete directions in the

questionnaire.questionnaire.• When possible, use scaled questions rather than When possible, use scaled questions rather than

simple yes/no questions to measure intensity of an simple yes/no questions to measure intensity of an attitude or frequency of the experience.attitude or frequency of the experience.

Interpreting and Interpreting and Reporting the Reporting the InformationInformation

Inhibitors to Market ResearchInhibitors to Market Research

• CostCost

• ComplexityComplexity

• Strategic DecisionsStrategic Decisions

• IrrelevancyIrrelevancy

Developing the Developing the Marketing ConceptMarketing Concept

Marketing PhilosophyMarketing Philosophy

• Production-driven philosophyProduction-driven philosophy

• Sales-driven philosophySales-driven philosophy

• Consumer-driven philosophyConsumer-driven philosophy

Market SegmentationMarket SegmentationMarket segmentation is the Market segmentation is the

process of identifying a specific process of identifying a specific set of characteristics that set of characteristics that differentiate one group of differentiate one group of consumers from the rest.consumers from the rest.

Consumer BehaviorConsumer Behavior

Five Major Classifications:Five Major Classifications:

1.1. Convenience goodsConvenience goods

2.2. Shopping goodsShopping goods

3.3. Specialty goodsSpecialty goods

4.4. Unsought goodsUnsought goods

5.5. New productsNew products

Marketing Stages for Growing Marketing Stages for Growing VenturesVentures

Stage 1:Stage 1:EntrepreneurialEntrepreneurialMarketingMarketing

Stage 2:Stage 2:OpportunisticOpportunisticMarketingMarketing

Stage 3:Stage 3:ResponsiveResponsiveMarketingMarketing

Stage 4:Stage 4:DiversifiedDiversifiedMarketingMarketing

MarketingMarketingStrategyStrategy MarketMarket

NicheNicheMarketMarket

PenetrationPenetrationProduct-Product-MarketMarket

Develop-Develop-mentment

New-New-BusinessBusinessDevelop-Develop-

mentment

Marketing PlanningMarketing Planning• Marketing researchMarketing research

• Sales researchSales research

• Marketing information systemMarketing information system

• Sales forecastingSales forecasting

• Marketing plansMarketing plans

• EvaluationEvaluation

TelemarketingTelemarketingAdvantages:Advantages:• ReceptivenessReceptiveness• ImpressionsImpressions• More presentationsMore presentations• Unlimited geographic coverageUnlimited geographic coverage• Better time managementBetter time management• Immediate feedbackImmediate feedback• Better controlBetter control• Less “piracy”Less “piracy”• Lower salary and commissionsLower salary and commissions

TelemarketingTelemarketing

Pitfalls:Pitfalls:

• Poor telephone techniques can defeat the Poor telephone techniques can defeat the telemarketing strategy.telemarketing strategy.

• Dissension between the field sales staff and Dissension between the field sales staff and the telephone sales personnel can arise.the telephone sales personnel can arise.

• Entrepreneurs must be aware of the ever-Entrepreneurs must be aware of the ever-present problem of rapid turnover of present problem of rapid turnover of telephone staff.telephone staff.

Marketing on the InternetMarketing on the Internet• The Internet allows the firm to increase its presence The Internet allows the firm to increase its presence

and brand equity in the marketplace.and brand equity in the marketplace.• The Internet allows the company to cultivate new The Internet allows the company to cultivate new

customers.customers.• The Internet allows Web site visitors to match their The Internet allows Web site visitors to match their

needs with the offerings of the company.needs with the offerings of the company.• The Internet can improve customer service by The Internet can improve customer service by

allowing customers to serve themselves.allowing customers to serve themselves.• The greatest potential for the future is probably in The greatest potential for the future is probably in

direct marketing, where catalogs can be offered direct marketing, where catalogs can be offered online.online.

Pricing StrategiesPricing Strategies

Pricing for the Product Life CyclePricing for the Product Life Cycle

Product Life-Cycle StageProduct Life-Cycle Stage Pricing StrategyPricing Strategy

Introductory StageIntroductory Stage•Unique productUnique product

Skimming – deliberately setting a high priceSkimming – deliberately setting a high price to maximize short-term profits to maximize short-term profits

•Nonunique productNonunique product Penetration – setting prices at such a low levelPenetration – setting prices at such a low level that products are sold at a loss that products are sold at a loss

Growth StageGrowth Stage Consumer Pricing – combining penetration andConsumer Pricing – combining penetration and competitive pricing to gain market share; competitive pricing to gain market share; depends on consumer’s perceived value depends on consumer’s perceived value of product of product

Maturity StageMaturity Stage Demand-Oriented Pricing – a flexible strategyDemand-Oriented Pricing – a flexible strategy that bases pricing decisions on the demand that bases pricing decisions on the demand level for the product level for the product

Decline StageDecline Stage Loss Leader Pricing – pricing the product belowLoss Leader Pricing – pricing the product below cost in an attempt to attract customers to cost in an attempt to attract customers to other products other products