1. Chapter 5 Concept & Development of Entrepreneurship Entrepreneurial Decision Process Types of Start-up Ventures Entrepreneurship & Economic Development Ethics and Social Responsibility Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-1 The Nature & Importance of Entrepreneurs

2. Chapter 5 Concept & Development of Entrepreneurship Entrepreneurial Decision Process Types of Start-up Ventures Entrepreneurship & Economic Development Ethics and Social Responsibility Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-2 Chapter Learning Objectives 1.To understand the relevance of industry and competitive analysis to the market planning process. 2.To describe the role of marketing research in determining marketing strategy for the marketing plan. 3.To illustrate an effective and feasible procedure for the entrepreneur to follow in engaging in a market research study. 4.To define the steps in preparing the marketing plan. 5.To explain the marketing system and its key components. 6.To illustrate different creative strategies that may be used to differentiate or position the new venture’s products or services.

3. Chapter 5 Concept & Development of Entrepreneurship Entrepreneurial Decision Process Types of Start-up Ventures Entrepreneurship & Economic Development Ethics and Social Responsibility Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-3 Chapter Opening Profile Spin Master Ltd. www.spinmaster.com Ronnen Harary, Anton Rabie, Ben Varadi –30-something Canadians –North American toy market Earth Buddy, Mighty Beanz Started 10 years ago Rely on public relations, unconventional marketing methods, and self-promotion Air Hogs –Built a suitcase filled with the plane, a plastic airline cup, a bag of peanuts, and a barf bag –Hired college kids to travel to air shows demonstrating the product to airplane enthusiasts –Appearances on NBC’s Today show and Rosie O’Donnell’s talk show

4. Chapter 5 Concept & Development of Entrepreneurship Entrepreneurial Decision Process Types of Start-up Ventures Entrepreneurship & Economic Development Ethics and Social Responsibility Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-4 Industry/Competitor Analysis Industry analysis completed as part of the business plan (covered in Chapter 6) Assessment of environmental/industry trends Porter’s Five Forces Model Competitor analysis –Gather information from different sources –Use figure 5.1 (over) –Use the information to determine market positioning for the new venture Information sources: –Newspaper, magazine articles –Internet –Catalogues, brochures –Distributors, suppliers –Corporate annual reports –Trade publications

5. Chapter 5 Concept & Development of Entrepreneurship Entrepreneurial Decision Process Types of Start-up Ventures Entrepreneurship & Economic Development Ethics and Social Responsibility Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-5 Competitor Analysis

6. Chapter 5 Concept & Development of Entrepreneurship Entrepreneurial Decision Process Types of Start-up Ventures Entrepreneurship & Economic Development Ethics and Social Responsibility Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-6 Marketing Research for the New Venture Gathering information to determine: –Who will buy the product or service? –What is the size of the potential market? –What price should be charged? Steps in the marketing research process: 1.Define the purpose 2.Gather data from secondary sources 3.Gather information from primary sources 4.Analyze and interpret results –What is the most appropriate distribution channel? –What is the most effective promotion strategy to inform and reach potential customers?

7. Chapter 5 Concept & Development of Entrepreneurship Entrepreneurial Decision Process Types of Start-up Ventures Entrepreneurship & Economic Development Ethics and Social Responsibility Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-7 Understanding the Marketing Plan Establishes how the entrepreneur will effectively compete and operate in the marketplace Designed to provide answers to 3 basic questions Where have we been – background Where do we want to go How do we get there Characteristics of a marketing plan: –Provides a strategy to achieve mission/goals –Based on facts and valid assumptions –Appropriate organization –Provides for continuity –Simple and short –Flexibility built-in –Specific performance criteria to be monitored

8. Chapter 5 Concept & Development of Entrepreneurship Entrepreneurial Decision Process Types of Start-up Ventures Entrepreneurship & Economic Development Ethics and Social Responsibility Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-8 Marketing Research (continued ) Defining the purpose or objectives: –What marketing decisions are being made? –What information is needed? –Look to the four P’s of marketing strategy Gathering data from secondary sources: –Use free information that has already been gathered by someone else first –Publicly available information –Commercial sources Information sources : –Statistics Canada –Industry Canada –Departments of labour –Business/economic development agencies –Local chambers of commerce –Local media

9. Chapter 5 Concept & Development of Entrepreneurship Entrepreneurial Decision Process Types of Start-up Ventures Entrepreneurship & Economic Development Ethics and Social Responsibility Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-9 Marketing Research (continued) Gathering data from primary sources: –Collecting information directly from the source –Different methods for different purposes –Can be expensive and time consuming Analyzing and interpreting the results: –What does the data collected mean? –Compare to research objectives –Use to make better marketing decisions Data collection methods: –Observation –Networking –Focus group discussions –Surveys –Experimentation

10. Chapter 5 Concept & Development of Entrepreneurship Entrepreneurial Decision Process Types of Start-up Ventures Entrepreneurship & Economic Development Ethics and Social Responsibility Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-10 Marketing Plan for a Consumer Products Company

11. Chapter 5 Concept & Development of Entrepreneurship Entrepreneurial Decision Process Types of Start-up Ventures Entrepreneurship & Economic Development Ethics and Social Responsibility Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-11 Marketing Plan for a Consumer Products Company

12. Chapter 5 Concept & Development of Entrepreneurship Entrepreneurial Decision Process Types of Start-up Ventures Entrepreneurship & Economic Development Ethics and Social Responsibility Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-12 Marketing Plan for a Consumer Products Company

13. Chapter 5 Concept & Development of Entrepreneurship Entrepreneurial Decision Process Types of Start-up Ventures Entrepreneurship & Economic Development Ethics and Social Responsibility Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-13 Marketing Plan for a Business-to-Business Company

14. Chapter 5 Concept & Development of Entrepreneurship Entrepreneurial Decision Process Types of Start-up Ventures Entrepreneurship & Economic Development Ethics and Social Responsibility Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-14 Marketing Plan for a Business-to-Business Company

15. Chapter 5 Concept & Development of Entrepreneurship Entrepreneurial Decision Process Types of Start-up Ventures Entrepreneurship & Economic Development Ethics and Social Responsibility Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-15 Marketing Plan for a Service Company

16. Chapter 5 Concept & Development of Entrepreneurship Entrepreneurial Decision Process Types of Start-up Ventures Entrepreneurship & Economic Development Ethics and Social Responsibility Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-16 Marketing Plan for a Service Company

17. Chapter 5 Concept & Development of Entrepreneurship Entrepreneurial Decision Process Types of Start-up Ventures Entrepreneurship & Economic Development Ethics and Social Responsibility Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-17 Characteristics of a Marketing Plan The marketing plan should be designed to meet certain criteria A strategy for accomplishing the company goal and objectives Based on facts An appropriate organization must be described to implement the marketing plan Provide for continuity Short and simple Flexibility Specify performance criteria

18. Chapter 5 Concept & Development of Entrepreneurship Entrepreneurial Decision Process Types of Start-up Ventures Entrepreneurship & Economic Development Ethics and Social Responsibility Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-18 Facts Needed for Market Planning

19. Chapter 5 Concept & Development of Entrepreneurship Entrepreneurial Decision Process Types of Start-up Ventures Entrepreneurship & Economic Development Ethics and Social Responsibility Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-19 Steps in Preparing the Marketing Plan Marketing mix (definition): combination of product, price, promotion, and distribution and other marketing activities needed to meet marketing objectives

20. Chapter 5 Concept & Development of Entrepreneurship Entrepreneurial Decision Process Types of Start-up Ventures Entrepreneurship & Economic Development Ethics and Social Responsibility Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-20 Market Segmentation & Targeting Breaking a marketplace down into categories of buyers who share similar characteristics 5 characteristics of useful segmentation : –Meaningful –Mutually exclusive –Measurable –Substantial –Actionable Target market: specific group of potential customers toward which the venture aims its marketing plan Customer profile: –Demographic variables –Attitudes on price/quality –Where currently shops –Influence of advertising –Quantities and frequency of purchasing –Why customers buy

21. Chapter 5 Concept & Development of Entrepreneurship Entrepreneurial Decision Process Types of Start-up Ventures Entrepreneurship & Economic Development Ethics and Social Responsibility Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-21 Relationship Marketing Building a relationship with the firm’s most profitable customers 70% to 80% of profits come from small minority of customers Challenge to figure out who they are Use of database technology to identify and track Communication is key Allocation of selling effort to focus on them Firing unprofitable customers?

22. Chapter 5 Concept & Development of Entrepreneurship Entrepreneurial Decision Process Types of Start-up Ventures Entrepreneurship & Economic Development Ethics and Social Responsibility Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-22 Marketing Strategy Considering Strengths and Weaknesses Establish goals and objectives for venture Marketing strategy decisions: Product or service: –Physical product Pricing: –Costs –Markups or margins –Competition –Packaging –Brand –Image –Warranty –Service –Delivery time –Features –Style

23. Chapter 5 Concept & Development of Entrepreneurship Entrepreneurial Decision Process Types of Start-up Ventures Entrepreneurship & Economic Development Ethics and Social Responsibility Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-23 Ethics Stealth Marketing

24. Chapter 5 Concept & Development of Entrepreneurship Entrepreneurial Decision Process Types of Start-up Ventures Entrepreneurship & Economic Development Ethics and Social Responsibility Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-24 Major Considerations in Channel Selection

25. Chapter 5 Concept & Development of Entrepreneurship Entrepreneurial Decision Process Types of Start-up Ventures Entrepreneurship & Economic Development Ethics and Social Responsibility Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-25 Promotion Promotional campaigns should consist of: –Determine objectives –Define customers –Determine benchmarks –Profile your target group –Get the message out –Develop the message –Cost it out –Implement the plan –Evaluate the plan Guerilla marketing: –Pursuing traditional goals of profit and revenue through unconventional means –Most bang for buck –Needs creative thinking Public relations: –Press kit, events –Speaking opportunities

26. Chapter 5 Concept & Development of Entrepreneurship Entrepreneurial Decision Process Types of Start-up Ventures Entrepreneurship & Economic Development Ethics and Social Responsibility Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-26 Promotion Get on TV Know your story Think Visually Find the right show E-mail, don’t call Consider your timing Be available

27. Chapter 5 Concept & Development of Entrepreneurship Entrepreneurial Decision Process Types of Start-up Ventures Entrepreneurship & Economic Development Ethics and Social Responsibility Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-27 Internet strategy: –Company website –Blogs –Direct e-mail –Banner advertisements –Affiliate programs –Participate in online forums or chat groups –Registration with search engines SEO Search Engine Optimization Website issues: –Website objective –Website construction –Content –Promotion –Communication –Registration –Purchase and delivery mechanism –Security –Metrics Promotion

28. Chapter 5 Concept & Development of Entrepreneurship Entrepreneurial Decision Process Types of Start-up Ventures Entrepreneurship & Economic Development Ethics and Social Responsibility Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-28 Business-to-Business Markets Require a different approach than consumer markets Products are more expensive, customized, specialized, larger in quantity, and riskier to purchase Relies on: –More direct channel of distribution –Personal selling –Trade publications –Trade shows

29. Chapter 5 Concept & Development of Entrepreneurship Entrepreneurial Decision Process Types of Start-up Ventures Entrepreneurship & Economic Development Ethics and Social Responsibility Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-29 Final Steps Budgeting the marketing strategy Implementation of the marketing plan Why some marketing plans fail: –Lack of a real plan –Lack of an adequate situation analysis –Unrealistic goals –Unanticipated events Monitoring progress of marketing actions Contingency planning

30. Chapter 5 Concept & Development of Entrepreneurship Entrepreneurial Decision Process Types of Start-up Ventures Entrepreneurship & Economic Development Ethics and Social Responsibility Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 5-30 Chapter Closing Comments 1.To understand the relevance of industry and competitive analysis to the market planning process. 2.To describe the role of marketing research in determining marketing strategy for the marketing plan. 3.To illustrate an effective and feasible procedure for the entrepreneur to follow in engaging in a market research study. 4.To define the steps in preparing the marketing plan. 5.To explain the marketing system and its key components. 6.To illustrate different creative strategies that may be used to differentiate or position the new venture’s products or services.