entrepreneurial marketing copyright © florida international university, miami, fl 33199 marketing...

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



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?



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



Market Segmentation

What is a market segment?

Why is it important?



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



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



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



Markets: Demographic Variables

AgeGender

Family sizeOccupation

EducationNationality

Religion

EthnicityIncome



Lifestyle

Markets: Psychographic Variables

Club memberships

Social activities

TV viewing habits

Hobbies

Vacation preferences

Compulsive

Outgoing

Authoritarian

Ambitious

Personality



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



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



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



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%



Conclusion:

Don’t enter a new market segments unless you can

capture 25 -30% market share in a few years



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?



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%



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



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



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



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



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....



QUESTIONS?

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