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