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Entrepreneurial Marketing

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Presentation on theme: "Entrepreneurial Marketing"— Presentation transcript:

1 Entrepreneurial Marketing
An Effectual approach Prof. Dr. E.J. Nijssen, Eindhoven University of Technology Nijssen, E. (2014). Entrepreneurial Marketing: An Effectual Approach. Routledge. Session 3: Effectual segmention and positioning to maximize the value of your new product Available from Routledge at:

2 Objective lecture Explain that most applications of new technologies tend to underperform for the average customer in the marketplace Introduce a smart way to map the market 3-D Abell model Introduce effectual segmentation and positioning Develop assumptions about best, first segment to attack Create a basis for testing using multiple iterations of experimenting

3 New products often have benefits and drawbacks
WHAT CUSTOMERS INNOVATION GAIN LOSE Electrical cars Clean environment Easy refueling E-books Easy portability Durability Screw-top wine caps Less spoilage Elegance of the experience Wind turbines No polluting energy Unobstructed views Online grocery shopping Home delivery Ability to select freshest products Improvements vs. shortcomings weigh differently Perceptions; relative to reference point Gourville (2006)

4 Cause of the problem New technologies and their applications tend to underperform in beginning (Christenson 1997); they still need to mature and iron out kinks. Such technology development follows normal S shaped curve patterns and obeys to laws of technological progress.

5 Christensen's framework of technological evolution
performance demand at the upper end of the market disruptive technology acceptable range of functionality performance demand at the lower end of the market time technology 2 technology 1 Christensen (1997)

6 Firms/Entrepreneurs generally working with first customers to help "define" the market
upper range Sensemaking processes e.g. work with first customer to define/ seek legitimation acceptable range lower range technology 2 technology 1 time So, we should proactively look for customers who like the new technology’s new benefits but do not mind its drawbacks (which often resolve if the technology matures)

7 Abell’s 3 D representation of the market: Example Restaurants
Customer needs Culinary quality - ambiance Eating out experience Double income no kids Parents with children business people Teenagers Speed/convenience cheap Customer segments Self service Full Service Eg MacDonalds/ Kentucky fried Technologies

8 Please note The technique helps to conceptualize your market and explore boundary conditions It explicitly links supply and demand products are in the matrix; they are the linking mechanism A new technology and its benefits, but alos emerging segments (and their new needs) can be added on axes; So, dynamic orientation. Note: no single solution exists

9 Abell's 3 dimensional market representation and innovation's role
= needs covered by original technology = part of existing needs not/less well covered by new technology = extra, latent needs covered by new technology Customer benefits T(original) T(new) C C C C4 Customer segments Technologies Imagine a market with 4 customer segments (C1 through C4). C1 and C2 are the most demanding customers (most needs/benefits). Imagine that part of their needs are not well covered by the new technology. Who benefits most from the new benefits of the new technology/application?

10 How digital cameras penetrated segment by segment
Customer needs No-print Convenience Speed First target segment is the customer segment with highest fit with technology’s current performance Manual adjustment Prof photogr’s Excellent quality image Amateurs Leisure/fun Analog/chemical Customer segments Digital Technologies

11 How digital camera technology blurred industries
Customer needs No-print Convenience Speed Video Manual adjustment Prof photogr’s Mobile phone market Excellent quality image Amateurs Leisure/fun Analog/chemical Customer segments Digital Webcams Technologies

12 Example: Alternative bicycle
Video: cardboard bicycle (excercise) For About $20, Cardboard Bicycle Could Change The World, Inventor Says..\..\YouTube\cardboard bicyclebicycle.flv Please identify, using the 3D matrix (technology, benefits, customer groups) shown, the (international) market for this product

13 Possible solution; conceptualization
Prestige, personalization, disposable, souvenir…. Drawbacks: Sensitive to side wind Durability  Factor-in in decision sustainable Customer needs low price light durable luggage option comfort Customer segments Poor / Emerging Countries Internal transp’t (warehouse) Adjustable gear (wind/ mountain) Relax/ Leisure Commutor Sports Rentals Easy to ride/transportation Peddle Electrical Peddle recline steel carbon fiber cardboard metal cord Technologies

14 Effectual segmenting, targetting and positioning
Firm competencies and customer value objectives Evolving customer segments Identify customers with highest customer value score of the application & early technology develop’t Benefits of the new application & technology Choice of first target segment Segmentation Targeting Positioning statement Positioning statement

15 Formulating a positioning statement
TECHNOLOGICAL ADVANTAGE: What are the strong points of the new technology, the startup and its application? DISCRIMINATOR: What makes the new application unique? Identify and label the Unique Selling Points compared to competitive alternatives CUSTOMER INSIGHT: Market segment that likes benefits best? Why? What is the unfulfilled need addressed and frustration resolved? Why is this a problem? REASONS TO BELIEVE: Evidence why the application /technology will outperform alternatives (and target segment does not mind draw-backs of the new, evolving technology) Positioning statement

16 Lessons Abell’s 3 D presentation of the market is useful for understanding relationships between technology/suppliers and customers/needs It can be used to explore the impact of a new technology and application on the market and help identify the target segment As new technology enters the market generally from below (underperforming from many existing customers point of view) you need to proactively identify the most attractive customer segment Using positioning the unique aspects (USPs) of the new application can be emphised for the this customer segment Note that the customer segment may involve an new, emerging set of customers

17 The Effectual versus Traditional marketing approach
TRADITIONAL APPROACH Identify latent need New product Satisfaction ASSUMPTIONS Predict future Lineair process EFFECTUAL APPROACH New product Discover application/ customer Satisfaction Unpredictable future Iterative use; experimentation & networking Affordable loss


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