Entrepreneurship and New Product Development

1
Entrepreneurship and New Product Development

• Marketing

2
Objectives

• Competition and Competitive Strategy
• Image
• Differentiation
• The 4 Ps Product Price Place Promotion
• SWOT

3
Competition

• A competitor is a business that provide the same
  goods or services as yours or an alternative

4
Questions to ask yourself about your competition

• What are the alternatives for your products or
  services?
• Who makes/sells these alternatives?
• What range of products or services do they have?
• What kind of choices do they offer customers?

5
Questions to ask yourself about your competition

• How broad is their range?
• What are their target groups?
• What are their future prospects?
• What are they good at and what are they not so
  good at?

6
Questions to ask yourself about your competition

• What strategies have they used to establish their
  market position?
• market nicheing strategies?
• agressive market penetration strategies?
• reputation and word of mouth?
• What about potential competiton?

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Porters 5 Forces 5 forces that determine
competitiveness in any industry
Barriers to entry Economies of scale Product
differentiation Capital requirements Legal
agreements Switch costs
Power of suppliersConcentration Extent of
substitutes Importance of supplier Extent of
differentiation Forward integration
Power of buyers Number/concentration Extent of
differentiation Switch costs Margins they
earn Backward integration
Competitive rivalry Number and size of
firms Industry growth Extent of
differentiation Capacity increments Exit barriers
Threat of substitutes Changing technologyChanging
market Changing tastes Switch costs Extent of
differentiation
8
Image

• Image is a way to distinguish a business from the
  competition
• Image is increasingly important and a business
  needs to pay attention to the image it wants to
  project
• Reputation is more important than Image!

9
Differentiation

• Differentiation is about being different and
  distinctive
• Differentiation can come about through function,
  design, quality, performance, technology,
  channels of distribution, etc
• Differentiation is facilitated by clear branding
• In a world where products and services are often
  all too homogeneous, a good brand is a powerful
  marketing tool that must be the cornerstone of
  any differentiation strategy

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The 4Ps of the Marketing Mix

• Product
• Price
• Place
• Promotion

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Product

• A product is not only the product itself but also
  the services and intangibles that surround it
• What range of choices do you offer your customer?
• What extras do you offer?
• What do you do that others dont offer?

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Product
Services
Intangibles
Quality Perceptioms
Before Sales Service
After Sales Service
Value Perceptioms
During Sales Service
Organisation
Function
Price
Delivery
Design
Product
Warranties
Reputation
Availability
Packaging
Features
Brand Name
Efficacy
Add-Ons
Guarantees
Advice
Other User Recommendations
Finance
Corporate Image
13
Product
20 of the Impact but 80 of the Costs
80 of the Impact but 20 of the Costs
Product Surround
Core Product
14
Price

• The price charged will determine the margins
• Price is closely associated with the quality and
  credibility of the product or service
• Once a price is established it is very difficult
  to increase it without losing customers

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Price

• Many start-ups are uncertain about how to set
  prices
• How do you establish the price of a product or
  service?

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Cost-Plus Pricing

• Cost-plus pricing takes the total cost of
  producing a product and divides it by the number
  of units produced to arrive at the average cost
  of production. To this is added a target mark-up.
  
• The fact that a proportion of the costs are
  likely to be fixed needs to be taken into
  consideration

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Costs, Volume and Revenue
Cost or Revenue
Total Revenue
Profit
Breakeven Point
Total Costs
Fixed Costs
Output Volume
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Terminology

• Overhead Costs
• Variable Costs
• Fixed Costs
• Contribution
• Total Contribution
• Contribution Margin
• Break-even
• Skimming
• Penetration

19
Place

• Location
• Layout
• Delivery or distribution
• Channels of distribution
• Routes to market
• mail order, telephone, internet

20
Promotion

• Direct Mail
• Personal Selling
• Public Relations
• Publicity and Advertising
• Leaflets and brochures
• Point of sale displays
• The Internet

21
SWOT Analysis

• Strengths Weaknesses Opportunities Treats
• Usually presented as a series of short bullet
  points so that the reader can quickly see the
  main strengths and weaknesses of the business and
  opportunity