Unique Marketing Issues for Entrepreneurial Firms

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Unique Marketing Issues for Entrepreneurial Firms

• Bruce R. Barringer
• University of Central Florida

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Selecting a Market and Establishing a Brand

• Important Question That All Startups Must Address
• Who are our customers, and how will we appeal to
  them
• The Answer to This Question is a Three-Part
  Process
• Segmenting the market, selecting or developing a
  niche within a target market, and establishing a
  unique position in the target market.

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Importance of A Clearly Defined Target Market
There are so many fitness companies that it is
dog-eat-dog in the general fitness industry. The
only hope for the average small fitness provider
is that they focus on something and do that
better than anyone else. Gary Heavin,
Curves International
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Target Market

• Target Market
• A firms target market is the limited group of
  individuals or businesses that it goes after, or
  tries to appeal to.
• It is important that a firm first chooses its
  target market and positions itself within its
  target market, because virtually all of its
  marketing decisions hinge on these critical
  initial choices.

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Segmenting the Market

• Market Segmentation
• Determining the different potential target
  markets in an industry.
• This is important, because a new firm typically
  only has enough resources to target one market
  segment, at least initially.
• Markets can be segmented in a number of different
  ways, including product type, price point and
  customers served.

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Segmentation of Computer Industry
Handheld Computer
PC
Workstations
Laptop
Mainframes
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Selecting a Target Market

• Selecting a Target Market
• Once a firm has segmented the market, the next
  step is to select a target market, as Curves did
  in the opening example.
• Niche Market
• Most firms target a niche within the target
  market.
• A niche market is a place within a market segment
  that represents a narrower group of customers
  with similar interests.
• Palm vs. RIM example

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Palm vs. RIM Example
Computer Industry Market Segments
Target Market Selected
Niches in Target Market
Handheld Computers
Handheld Computers
Consumer
Palm
PC
Business
RIM
Laptop
Workstation
Mainframe
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Establishing a Unique Position

• Position
• After selecting a target market, the firms next
  step is to establish a position within it that
  differentiates it from its competitors.
• From a marketing perspective, this translates
  into the image or the way a firm wants to be
  perceived by its customers.
• A firm establishes a unique position in its
  customers minds by consistently drawing
  attention to two or three of its products
  attributes that define the essence of what the
  product is and what separates it from its
  competitors.

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Attributes Curves Highlights in ItsPositioning
Strategy

• Attributes of Curves Positioning Strategy
• It features a 30-minute workout
• It offers its members lots of emotional support
• It is just for women
• Result
• By choosing its emphasis carefully, Curves
  creates an image of itself in the minds of its
  potential customers.
• It hopes that this image is appealing to its
  target market, and that its customers will be
  able to easily differentiate what it has to offer
  from what its competitors offer.

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Tag Lines

• Tag Line
• Firms often develop tag lines to reinforce the
  position they have staked out in their market,
  which is a phrase that is used consistently in a
  companys literature, advertisements, promotions,
  stationary and even invoices.

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Key Marketing Issues For New Ventures

• Selling Benefits Rather Than Features
• Many entrepreneurs make the mistake of
  positioning their companys products or services
  on features rather than benefits.

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Features vs. Benefits Illustration
Features or Benefits?
Features or Benefits?
Our cellphones are equipped with sufficient
memory to store 100 phone numbers.
Our cellphone lets you store up to 100 phone
numbers, giving you the phone numbers of your
family and your friends at your fingertips.
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Establishing a Brand

• Brand
• A brand is a set of attributes positive or
  negative that people associate with a company.
• These attributes can be positive, such as
  trustworthy, innovative, dependable, or
  easy-to-deal with.
• Or they can be negative, such as cheap,
  unreliable, arrogant or difficult-to-deal with.
• A brand is a promise that a company makes to its
  customers.

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Building a Brand From Scratch

• Challenge
• Startups must build a brand from scratch.
• One of the keys is to create a strong personality
  for the firm that appeals to the chosen target
  market.

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Buzz

• Buzz
• Creating buzz means creating awareness and a
  sense of anticipation about a company and its
  offering.

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Example of a Firm That Created Buzz
One of the great things we did when we first
launched MyCIO.com is that we draped our entire
11 story building on Highway 101 with the
MyCIO.com logo. It was the worlds largest
billboard. The City of San Jose wasnt very
happy with us for doing it, but they let us keep
it up for a month. Everyone that I called after
we ran that giant billboard I received a return
call back from. Zach Nelson,
founder of MyCIO.com
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Cobranding

• Cobranding
• Refers to a relationship between two or more
  firms where the firms brands promote each other.

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The Four Ps of Marketing for New Ventures

• Product
• Price
• Promotion
• Place (or distribution)

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Product

• Product
• A firms product, in the context of its marketing
  mix, is the good or service it offers to its
  target market.
• A product is something that takes on physical
  form
• A service is an activity or benefit that is
  intangible and does not take on a physical form
• Determining the product or service to be sold is
  central to the firms entire marketing effort

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Core Product vs. Actual Product

• Core Product
• The product itself, such as a CD that contains an
  antivirus program.
• Actual Product
• The actual product, which is what the customer
  buys, may have up to five attributes a quality
  level, features, design, a brand name and
  packaging.

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Initial Product Rollout

• Initial Rollout
• The initial rollout is one of the most critical
  times in the marketing of a new product.
• Reference Account
• Is an early user of a firms product who is
  willing to give a testimonial regarding his or
  her experience with the product.

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Price

• Price
• Is the amount of money consumers pay to buy a
  product. It is the only element of the marketing
  mix that produces revenue.

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Cost-Based vs. Value-Based Pricing

• Cost-Based Pricing
• The list price is determined by adding a markup
  percentage to the products cost.
• Value-Based Pricing
• The list price is determined by estimating what
  consumers are willing to pay for the product, and
  then backing off a bit to provide a cushion.

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Promotion

• Promotion
• Refers to the activities it takes to communicate
  the merits of a product to its target market.
• Ultimately, the goal of these activities is to
  persuade people to buy the product.

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Advertising

• Advertising
• Is making people aware of a product or service in
  hopes of persuading them to buy it.
• Major goals
• Raise customer awareness of a product
• Explain a products comparative benefits
• Create associations between a product and a
  certain lifestyle.

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Advertising

• Advertising
• Major weaknesses of advertising
• Low credibility
• The possibility that a high percentage of the
  people who see the ad will not be interested
• Message clutter (meaning that after hearing or
  reading so many ads people simply turn out)
• Relatively costly compared to other forms of
  promotion
• The perception that advertising is intrusive

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Public Relations

• Public Relations
• Refers to efforts to establish and maintain a
  companys image with the public.
• The major difference between public relations and
  advertising is that public relations is not paid
  for directly.

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Public Relations Techniques

• Press release
• News conference
• Media coverage
• Articles in the industry press and periodicals
• Civic, social and community involvement

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Place (or Distribution)

• Distribution
• Encompasses all of the activities that move a
  firms product from its place of origin to the
  consumer.
• A distribution channel is the route a product
  takes from the place it is made to the customer
  who is the end-user.

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Selling Direct vs. Selling Through Intermediaries

• Selling Direct
• Many firms sell direct to customers.
• Major advantage
• Being able to control the process of moving their
  products from their place of origin to the
  end-user instead of relying on third parties.
• Major disadvantage
• Ties up more capital (and time) to facilitate the
  process.
• A firm must find its own buyers, because it must
  own its own retail locations or field its own
  sales force.

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Selling Through Intermediaries

• Selling Through Intermediaries
• Firms that sell through intermediaries typically
  pass off their products to wholesalers, who place
  them in retail outlets to be sold.
• Major Advantage
• The firm does not need to own as much of the
  distribution channel.
• Major Disadvantage
• May lose partial control of its products

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Channel Conflict

• Channel Conflict
• Occurs when two or more separate marketing
  channels are in conflict over their roles in
  selling a firms products and services.