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Entrepreneurial Marketing
Copyright © Florida International University, Miami, FL 33199 www.entrepreneurship.fiu.edu
Marketing the New Venture
Dr. Alan L. CarsrudThe Eugenio Pino & Family
Global Entrepreneurship Center
Florida International University
Entrepreneurial Marketing
Copyright © Florida International University, Miami, FL 33199 www.entrepreneurship.fiu.edu
Basic Marketing Questions• What products or services are you
selling?
• To whom do you sell?
• Does someone represent you or distribute your products or services?
• How do you promote sales?
• How do you price your output?
• What do customers expect?
Entrepreneurial Marketing
Copyright © Florida International University, Miami, FL 33199 www.entrepreneurship.fiu.edu
Remember Terminology
MARKET The set of all actual and potential buyers of a product
POTENTIAL MARKET
The set of consumers who profess a sufficient level of interest in the market offer
AVAILABLE MARKET
The set of consumers who have interest, income, and access to a particular market offer
TARGET MARKET
The part of the available market the company decides to pursue
MARKET DEMAND
The total volume of a product that would be purchased by a defined customer group in a defined geographical area in a defined time period in a defined marketing environment under a defined marketing program
Entrepreneurial Marketing
Copyright © Florida International University, Miami, FL 33199 www.entrepreneurship.fiu.edu
Market Segmentation
What is a market segment?
Why is it important?
Entrepreneurial Marketing
Copyright © Florida International University, Miami, FL 33199 www.entrepreneurship.fiu.edu
What is a “Market Segment”?• Set of potential customers
• Who have similar needs
• Who reference each other when buying
• Are alike in the way they:– Perceive value– View products and services– Purchase products and services
Entrepreneurial Marketing
Copyright © Florida International University, Miami, FL 33199 www.entrepreneurship.fiu.edu
Why Define a Market Segment?
• Easier to understand customer needs
• Focus “whole solution” to a narrower set of customer needs
• Easier to become a leader in a smaller market (Big fish in small pond)
• More effective use of marketing dollars
• Generally more profitable
Entrepreneurial Marketing
Copyright © Florida International University, Miami, FL 33199 www.entrepreneurship.fiu.edu
Markets: Geographic Variables
Region
City ormetro size
Climate
Density
Pacific, Mountain, West North Central, West South Central, East North Central, East South Central, South Atlantic, Middle Atlantic, New EnglandUnder 4,999; 5,000-19,999; 20,000-49,999 . . .1,000,000-3,999,999; 4,000,000 and over
Northern, southern, tropical
Urban, rural, suburban
Entrepreneurial Marketing
Copyright © Florida International University, Miami, FL 33199 www.entrepreneurship.fiu.edu
Markets: Demographic Variables
AgeGender
Family sizeOccupation
EducationNationality
Religion
EthnicityIncome
Entrepreneurial Marketing
Copyright © Florida International University, Miami, FL 33199 www.entrepreneurship.fiu.edu
Lifestyle
Markets: Psychographic Variables
Club memberships
Social activities
TV viewing habits
Hobbies
Vacation preferences
Compulsive
Outgoing
Authoritarian
Ambitious
Personality
Entrepreneurial Marketing
Copyright © Florida International University, Miami, FL 33199 www.entrepreneurship.fiu.edu
Markets: Usage Variables
Occasions
Benefits
Usage rate
User status
Loyalty statusBuyer-readiness stageAttitude toward product
Regular occasion, special occasion
Quality, service, economy, speed
Light user, medium user, heavy user
Nonuser, ex-user, potential, first-time, regular
None, medium, strong, absolute
Unaware, aware, informed, interested, intends to buyEnthusiastic, positive, indifferent, negative, hostile
Entrepreneurial Marketing
Copyright © Florida International University, Miami, FL 33199 www.entrepreneurship.fiu.edu
PIMS: Profit Impact of Marketing Strategies
• Originally a General Electric study
• Now the Strategic Planning Institute
• Studied 2600 business units since 1972
• Evaluated 28 factors related to ROI
• Determined the factor that most affected ROI was market share
Entrepreneurial Marketing
Copyright © Florida International University, Miami, FL 33199 www.entrepreneurship.fiu.edu
PIMS• Firms with market shares over 40% have
an avg. ROI 2 1/2 times more than firms with market shares under 10%
• Increasing market share an additional 10% results in an additional 5 point increase in ROI
Entrepreneurial Marketing
Copyright © Florida International University, Miami, FL 33199 www.entrepreneurship.fiu.edu
Profitability Increases with Market Share
• Market share of up to 10% = 13.2% ROI
• 10% - 20%, ROI = 18.0%
• 20% - 30%, = 23.6%
• 30% - 40%, = 24.4%
• Over 40% market share, ROI = 32.3%
Entrepreneurial Marketing
Copyright © Florida International University, Miami, FL 33199 www.entrepreneurship.fiu.edu
Conclusion:
Don’t enter a new market segments unless you can
capture 25 -30% market share in a few years
Entrepreneurial Marketing
Copyright © Florida International University, Miami, FL 33199 www.entrepreneurship.fiu.edu
Entrepreneurial Strategy:• Define market segment small enough to
allow you to capture 25% to 30% share
• Be a “Big fish in small pond”
• Ideal: Be the only supplier in a very narrowly defined market.
• But: Is the market large enough for future growth?
Entrepreneurial Marketing
Copyright © Florida International University, Miami, FL 33199 www.entrepreneurship.fiu.edu
Product & Service Adoption
Late majorit
y
Early majority
Early adopte
rs
Innovators
Rate
of
ad
op
tion
Laggards
2.5%
13.5%
34% 34%
16%
Entrepreneurial Marketing
Copyright © Florida International University, Miami, FL 33199 www.entrepreneurship.fiu.edu
Marketing to “Innovators”• Product/service must be an innovation
(example internet courses, dating)
• Product/service must be functional, but not perfect
• Draft manuals ok
• Have them beta test
• Want to talk with developers
Entrepreneurial Marketing
Copyright © Florida International University, Miami, FL 33199 www.entrepreneurship.fiu.edu
Marketing To Early Adopter
• Direct sell the “dream”, but clearly define scope & deliverables
• Relate to their specific objectives
• Have them reference other visionaries who have bought; your best salesmen
• Price is secondary: want it right,
complete, quickly & on time
Entrepreneurial Marketing
Copyright © Florida International University, Miami, FL 33199 www.entrepreneurship.fiu.edu
Marketing To “Pragmatists”• Proven product or services, based on standards,
many satisfied customers, market leadership
• Want competition: lower prices, alternatives
• Industry specific seminars and conferences
• Develop long term relationships
• Like one-stop shopping but slow to buy
Entrepreneurial Marketing
Copyright © Florida International University, Miami, FL 33199 www.entrepreneurship.fiu.edu
The “Conservatives”• “Back side” of the curve = 1/3 population• Significant opportunity for sales & profits• Don’t like change• Want only mature whole products or known
services, fully packaged and supported....at a low price
• Buy through known distribution channels
Entrepreneurial Marketing
Copyright © Florida International University, Miami, FL 33199 www.entrepreneurship.fiu.edu
Laggards• Last 1/6 of population = 17%
• Don’t buy anything unless they have to
• Just now buying microwave ovens & VCRs
• Not worth talking about
• Not worth me making this slide!
• Enough said....