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© Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001 Chapter 5 Start-up: making it happen Entrepreneurship and Small Business Paul Burns Back.

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Presentation on theme: "© Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001 Chapter 5 Start-up: making it happen Entrepreneurship and Small Business Paul Burns Back."— Presentation transcript:

1 © Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001 Chapter 5 Start-up: making it happen Entrepreneurship and Small Business Paul Burns Back to Contents

2 © Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001 Customers buy BENEFITS… not features Marketing Standard benefits Our shop accepts all leading credit cards… which means you can budget for your purchases to suit your pocket.

3 © Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001 Customers buy BENEFITS… not features Marketing Standard benefits Our shop accepts all leading credit cards… which means you can budget for your purchases to suit your pocket. Company benefits Our shop is a family business… which means that you get individual, personal attention from somebody who cares.

4 © Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001 Customers buy BENEFITS… not features Marketing Standard benefits Our shop accepts all leading credit cards… which means you can budget for your purchases to suit your pocket. Company benefits Our shop is a family business… which means that you get individual, personal attention from somebody who cares.

5 © Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001 Customers buy BENEFITS… not features Marketing Standard benefits Our shop accepts all leading credit cards… which means you can budget for your purchases to suit your pocket. Company benefits Our shop is a family business… which means that you get individual, personal attention from somebody who cares. Differential benefits We are sole agents for that product… which means you cant get it anywhere else.

6 © Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001 The marketing mix PRODUCT Design/sizes colours Materials Specification Quality Packaging After-sales service PRICE List price Discounts Payment terms Service/spares prices PLACE Location Retail/wholesale Mail/telephone order Delivery methods PROMOTION Advertising Brochures/data sheets Public relations Personal selling and networks Exhibitions Gift/sales aid PEOPLE

7 © Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001 Generic market strategies COMMODITY SUPPLIER NICHE PLAYER OUTSTANDING SUCCESS MARKET TRADER Broad market Focused market Low cost/price Low differentiation High cost/price High differentiation

8 © Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001 Costs, volume and revenue Fixed costs Output volume Cost or revenue £ Total revenue Total costs BA C M Break-even point Target profit XY

9 © Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001 Contribution analysis 1. Break-even point (£ sales) = Fixed costs Contribution margin (%)

10 © Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001 Sales£1000 Variable costs 600 Contribution£ % Fixed costs 400 Profit£ 0 Break-even example

11 © Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001 Sales£1000 Variable costs 600 Contribution£ % Fixed costs 400 Profit£ 0 Break-even point= 400 = £ Break-even example

12 © Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001 Contribution margin Percentage change in sales volume needed to achieve the same profit after a price change PRICE CHANG E CONTRIBUTION MARGIN 20% 20%30%40% +33%+20%+14%+100%+50%+33% +300%–5%–10% –15%+100%+60%

13 © Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001 Contribution margin Percentage change in sales volume needed to achieve the same profit after a price change PRICE CHANG E CONTRIBUTION MARGIN 20%30%40% +5% – 20% –25% –11% +15% +10%–33%–20% –43%–33%–27% –14% +33%+20%+14%+100%+50%+33% +300%–5%–10% –15%+100%+60%

14 © Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001 The pricing range VariableAverage Value to cost percost per customer unit unit Too lowGoing rateToo high priceprice price Pricing range

15 © Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001 Pricing Skimming Penetration

16 © Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001 Generic market strategies COMMODITY SUPPLIER NICHE PLAYER OUTSTANDING SUCCESS MARKET TRADER Broad market Focused market Low cost/price Low differentiation High cost/price High differentiation

17 © Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001 Customer loyalty ladder Prospect Customer Regular customer Supporter Advocate INCREASING LOYALTY

18 © Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001 Generic market strategies COMMODITY SUPPLIER NICHE PLAYER OUTSTANDING SUCCESS MARKET TRADER Broad market Focused market Low cost/price Low differentiation High cost/price High differentiation

19 © Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001 Segmentation Industrial Type of business Size of business Quantity of purchase Credit worthiness After-sales service Usage rate

20 © Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001 Segmentation Industrial Type of business Size of business Quantity of purchase Credit worthiness After-sales service Usage rate Consumer Socio-economic group Age Sex Home location Occupation Stage in family life-cycle Benefit required

21 © Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001 Relationship v transactional marketing Relationship marketing Encourages close, frequent contact Encourages repeat sales Focus on service Focus on value Focus on quality of total offering Focus on long term Transactional marketing Limited contact Orientated toward single purchase Limited customer service Focus on product/service benefits Focus on product quality Focus on short term

22 © Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001 Entrepreneurial marketing planning Determine future organisational performance objectives Review conventional influences on performance Can marketing conventions deliver performance goals? CONVENTIONAL PLANENTREPRENERIAL PLAN YesNo

23 © Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001 Entrepreneurial marketing planning Map sector conventions Assess scale of entrepreneurial activity Assess entrepreneurial opportunity Assess entrepreneurial capability Define performance objectives Define strategy Develop detailed plan Specify control systems Launch early

24 © Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001 Market research Field research Reflects your needs You control quality Up to date Expensive Takes time Can tell competitors what you are up to Desk research Cheap Quick Good for background Not specific Can be out of date Can be incomplete or inaccurate Advantages Disadvantages

25 © Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001 Market research PersonalTelephonePostal interviewinterview questionnaire Quality of data Quantity of data Speed Response rate Cost high fair fair

26 © Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001 The selling potential matrix Business potential of buyer Attitude of buyer Indifferent Low Friendly Unfriendly HighMedium

27 © Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001 Selling skills Know what customers want Know how to match this to the product/service you have to sell Know how to build up argument that it does indeed meet their requirements Know how to close the sale

28 © Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001 Closing the sale Trial close Alternative close Summary close Concession close Quotation close Direct close

29 © Paul Burns, Entrepreneurship and Small Business, Palgrave, 2001 Forms of business Sole trader Partnerships Limited companies Franchises


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