Entrepreneurial Marketing: An Effectual Approach Prof. Dr. E.J. Nijssen, Eindhoven University of Technology Available from Routledge at: https://www.routledge.com/Entrepreneurial-Marketing-An-Effectual-Approach/Nijssen/p/book/9781138712911 Session 1: Successfully bringing your radical new idea to market

Objectives Introduce entrepreneurship Explain the marketing challenge and need for a sound business model Juxtapose traditional and effectual marketing Define marketing and sales

Entrepreneurs Entrepreneurs are people who See the opportunity for a new product or service Decide to pursue their dream Many focus on their product and hope that in the end customers will line up to buy what they created If it was only that simple…

The challenge entrepreneurs face Level of newness of the idea affects the size of the challenge ahead Changing market categories Customers that first need to get familiar with the new idea and change their behavior to be able to use the product/service efficiently Many new products are – in the eyes of customers – not as good as entrepreneurs claim they are… Healthy skepticism as a customer logic Identify customers that are Interested Willing to cocreate and thus can help determine the right product and features

To succeed you need a business model A business model explains how and why a firm will make money You need A product or service, that is a solution to a problem, customers willing to pay for it (or other sustainable funding, e.g., advertising)

Value exchange process Sustainable sales and profits Business model Selling Manufacturer Customer Needs and wants Consumption process Money exchange Value exchange process Purchasing Validation of value by customer Value creation and delivery process Customer loyalty Sustainable sales and profits R&D, product concept

Core elements of a business model Customer value model Resource and network model Profit model Adapted from Sorescu, Frambach, Singh, Rangaswamy and Bridges (2011)

Testing your business model Narrative test Does the story stick (consistent, logical)? Number test Do the numbers add up? (Are anticipated reveneus higher than costs? What evidence do you have for cost structure, cooperation of middlemen and willingness of customers to pay?)

Traditional marketing Juxtaposing Traditional marketing Effectual marketing Customer- and market-driven product development; outside-in Stable market boundaries; predict change and adapt Top-down segmentation, targeting, positioning; linear Formalized research and intelligence systems Growth-oriented capabilities Well-planned budgets and anticipated effects Product riven; discover and drive the market; inside-out Changing boundaries; embrace uncertainty Iterations in segmentation, positioning Informal networking and feedback via experimentation Survival-oriented capabilities Creative and low cost to allow for affordable loss

Defining marketing and sales Marketing: analyzes the market and makes sure to identify and develop customers based on manifest and latent needs (creating need) So, it is not just promotion or market research Sales: makes the case why our product is the best choice and then aims to make a transaction (filling the need) It involves maintaining and fostering relationships and understanding (and anticipating) customer problems/needs Sales and marketing are complementary functions

Market orientation Implementation of the marketing concept It requires making market-informed decisions based on customer and competitor data that is systematically collected, distributed and used throughout the organization Market orientation drives innovation and has been shown to benefit firm performance, but should be used in a proactive way

Lessons Marketing for radical new products and ideas is difficult because of their impact on product categorizations and required changes in customer behavior Consequently, predictive traditional marketing should be replaced by effectual marketing, embracing uncertainty Marketing and sales are necessary and complementary functions Your new product/service requires a business model, which includes that the product/service offers superior customer value