Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
72 Cards in this Set
- Front
- Back
|
Marketing philosophy
3 types |
Production-driven
Sales-driven Consumer-driven |
|
|
3 factors that influence marketing philosophy
|
Competitive pressure
Entrepreneur’s experience & abilities Short-term focus of sales |
|
|
Effective market segmentation is...
|
Based on consumers’ needs, attitudes and behaviors that continuously evolve and change
Based on market conditions that always change |
|
|
Pricing strategies – factors to consider
|
Degree of competitive pressure
Availability of sufficient supply Seasonal or cyclical changes in demand Costs of distribution Economic conditions |
|
|
How to make your case in 30 seconds or less
|
Goal is not to sell – but to proceed to next step, to open doors
Know your subject – be able to describe it in 1 sentence Know your audience – make pitch that will benefit audience Organize info. – make it easy to understand Attention-getting opening Be clear, do not use jargon, emotional appeals Pause |
|
|
How to pitch a brilliant idea
|
No objective measure for a good idea.
“Catchers” are subjective – stereotype “pitchers.” Successful pitchers induce catchers to be collaborators, collaboration seen as “seductive.” |
|
|
Showrunner
|
Combine creative thinking and passion
“Practical intelligence” – what will contribute to business success. Engage catcher in pitch, get catcher to respond to some memory and interact |
|
|
Artist
|
Passion and enthusiasm, less conformist dress, shy or socially awkward
Enthrall the audience |
|
|
Neophyte
|
Plead ignorance
Exploit power differential – ask catcher for help |
|
|
Analysis of ideas
|
Too much analysis harmful – by the time opportunity investigated, it may no longer exist
Successful entrepreneurs spend little time researching and analyzing |
|
|
Approach to analysis
|
Screen opportunities quickly
Analysis focused on few important issues Act before analysis done, be ready to change course |
|
|
New ventures...
|
New ventures usually started to solve problems founder faced as customer or employee
e.g. Netflix, founder paid dues to Blockbuster 71% of ideas replicate or modify aspect of previous employment |
|
|
Big idea vs. niche
|
i. Big ideas need big money and strong organizations.
ii. Market niche does not need extraordinary ideas – just aware of customer needs 1. Little capital, small organization, limited by distributors and producers |
|
|
external change
|
i. Exploit opportunity in new/changing industry, rather than entering mature industry
ii. Difficult to take customers in mature industry creates opportunity, e.g. real estate market |
|
|
1. Market shakeout
|
market forces shaken out weak technologies, strategies, and organizations
|
|
|
g. Proprietary assets vs. hustle
|
i. Proprietary – assets it owns, patents, brands
ii. Hustle – creative new strategy, good service, contacts, reputations |
|
|
h. Gauge attractiveness
|
ii. Favor: not capital intensive, profit margins to sustain rapid growth, simple operations, low fixed costs, reward for entrepreneur
|
|
|
i. Parsimonious planning and analysis
|
i. Enough research and analysis as useful
ii. Some uncertainties cannot be resolved iii. Avoid research that can’t be acted on iv. Devote more time to operations than strategic planning |
|
|
market research
a. 3 questions: |
i. Is business concept viable from market and technical perspective?
ii. What are risks and info. holes? How can these be minimized? iii. Is strategy and business model likely to succeed? |
|
|
Market Research process
|
i. Interviews, secondary research, primary research, review data, revise assumptions
|
|
|
d. Groups most worth pursuing
|
i. Underserved
ii. Dissatisfied iii. Most likely to make 1st time purchase |
|
|
b. Traditional nondemographic traits/Psychographics
|
values, tastes, preferences
human types, e.g. Joe Six-Pack. Weak at predicting what these people are likely to purchase. |
|
|
Drivers of commercial activity
|
i. Purchasing history
ii. Product loyalty iii. Propensity to trade-up iv. Informed by attitudes and values to view particular offerings differently |
|
|
Marketing - Meaningful data
|
i. Which benefits and features matter to customer
ii. Which customers will pay higher price iii. What are relative advantages and disadvantages customers identify |
|
|
i. Conjoint analysis
|
present consumers with combo. of features, ask willingness to pay if given feature is removed
|
|
|
j. Market segmentations are dynamic
|
i. Concentrate on needs, attitudes, and behavior – which change quickly
ii. Shaped by market conditions – economy, niches, technology – change rapidly iii. Focus on 1-2 issues, redraw often |
|
|
k. Gravity of decision
|
i. Evaluate expectations of consumers. Some decisions inconsequential, others momentous.
ii. Shallow end – save time, effort, money. Toiletries. iii. Middle end – quality, design, complexity, status. Cars. iv. Deep end – emotional investment and core values. Homes |
|
|
Facebook Business model
|
i. Local announcements
ii. Banner ads iii. Sponsored groups by corporations |
|
|
Facebook Potential growth
|
i. License Facebook platform to other groups to develop own Facebook
ii. Open Facebook to 3rd party applications |
|
|
Facebook Success
|
i. Daily retention rate equal to email. 2/3 of users visit site every day.
ii. Largest photo-sharing site online iii. 7th most trafficked site online |
|
|
Linear Air alternative
|
i. Commercial flights – professionals who depended on face-to-face meetings with clients
ii. Corporate jets – executives. Cost $40 million. iii. Fractional ownership – individual purchase fractional ownership in plane, right to X number of flight hours per year. 10-100x cost of commercial flight, less than corporate jet. |
|
|
Linear Air next steps
|
i. Pricing – currently customers reserve entire plane, price per hour. Competitors offering per-seat pricing based on miles travelled and flexibility of passenger; hope to fill plane with few demanding customers and many flexible customers.
ii. Relocation – traditional charters charged to “deadhead” flights, flights to relocate w/o passenger. Air taxi competitors did not charge to deadhead flights. iii. Customers – how would level of pricing affect customers? Would air taxi replace 1st class flights or private jets? |
|
|
Linear Air expansion
|
1. Expand in Northeast to reach minimum efficient scale sooner.
2. Expand to Southeast to capitalize on public awareness of competitors 3. Expand to California to capitalize on large population, large market for premium commercial airline traffic, and limited air taxi competition |
|
|
Existing companies have 3 disadvantages to serving new markets:
|
Core rigidities
Tyranny of the current market User myopia |
|
|
Core rigidities
|
Companies do well at things they are accustomed to doing, not new things
|
|
|
Tyranny of the current market
|
Companies have hard time coming up with new products for new markets because they listen to their customers of current products. Listening to existing customers makes it difficult to come up with new products for new markets.
|
|
|
User myopia
|
Customers of existing firms can only see narrow needs. See own need, but not need of others.
|
|
|
Conjoint analysis
|
Asks individuals to express preferences for various products, products designed to be on low or high end of certain key dimensions
People believe they can explain why they behave, but they can’t People’s preferences in experiment indicate their actual preferences – what features are important |
|
|
Market size
|
i. Enter large market – don’t draw much attention from competitors
ii. Enter growing market – don’t have to take customers from existing firms, can take new customers |
|
|
S-Curve
|
i. When products are first introduced, they are inferior to alternatives on many dimensions: quality, performance, etc.
1. Entrepreneurs need capital to sustain them through this period 2. Established firms will not compete with new firms at this level ii. Initial improvement is slow because learning new things is difficult. iii. Rapid improvement in performance continues for a while 1. Identifying this point is important for entrepreneurs iv. Improvement reaches level of diminishing returns, more effort yields little benefit |
|
|
Different groups adopt products for different reasons
|
1. Innovators/early adopters: insensitive to price, “need” new products, like trying new
2. Early majority: practicality, good reviews 3. Late majority: well-established product, value outweighs costs 4. Laggards: only adopt when old product is no longer available |
|
|
How to cross chasm?
|
1. Solve customer problem
2. Focus on single niche – cannot solve complete problem if focused on many niches 3. Communicate w/ customers so they understand company solution |
|
|
Customers need product if it:
|
a. Improves productivity
b. Reduces cost c. Gives them something they could not have before |
|
|
Technical standard
|
Agreed-upon basis on which product operates, e.g. railroad track gauge, Windows.
|
|
|
How to achieve technical standard?
|
1. Discount product when new to attract more customers – high volume
2. Build relationships with producers of complementary products, e.g. VCR/VHS 3. Get to market quickly rather than with best version |
|
|
Competitive advantage
|
Attribute that allows a firm, and not its competitors, to profit from an opportunity.
i. Done in two ways: 1. Keep others from learning about opportunity or understanding idea 2. Barriers to block others from exploiting the opportunity |
|
|
Trade secret
|
1. Intellectual property that is not patented
2. Process others have yet to discover 3. Must prove it provides competitive advantage |
|
|
Causal ambiguity
|
1. Keep others from understanding how to exploit the opp’ty, even if they know it exists.
2. Others do not understand “causal” process that allows entrepreneur to exploit opp’ty. |
|
|
Tacit knowledge
|
1. Knowledge that is not written down or codified, e.g. KFC recipe
|
|
|
Barriers
|
i. Gain control over key resources
ii. Patent – right by govt to be only party to use invention for specific period of time iii. Government permit – right by govt to be only party to do something in particular geographic location iv. Reputation – create goodwill to prevent shifts to new firms v. Innovation – keep service ahead of alternatives |
|
|
Market-based modes of exploiting opportunities
|
Different parts of business owned by different entities, connected by contract.
|
|
|
Why do Market-based modes of exploiting opportunities?
|
1. Opp’ty might be too short-lived for startup to assemble entire value chain to exploit it.
2. 1st mover advantage – in a race to be first to enter market 3. Network externalities – quick to market to increase value from more users 4. Identifier of opp’ty not the best to exploit it. Other party may have better capital, knowledge, etc. Better capabilities. 5. More common if patented – patents reduce disclosure problems. |
|
|
Alliances and partnerships
|
i. Entrepreneur gains access to already developed assets.
ii. Access to capital. iii. Legitimacy/Credibility – persuade others that idea is valuable. |
|
|
Earn legitimacy:
|
i. Conform to exiting rules and norms
ii. Imitate routines of existing firms iii. Join in trade associations iv. Obtain certification from reputable authority |
|
|
Reverse engineering
|
purchase competitor’s product, take it apart, figure it out, produce same thing.
|
|
|
Patent
|
right granted by national gov’t to monopoly on invention for 20 years, in return for disclosing how invention works. Must be novel, not obvious, and useful. Must be secret at time of patent, never published in world.
|
|
|
Provisional patent application
|
marks start of patent application process, little disclosure, provides initial protection while regular patent is processed (takes up to 2 years).
|
|
|
Trade secret
|
Piece of knowledge that confers an advantage on a firm and is protected by nondisclosure. E.g. production processes, customer lists, food recipes.
i. Patents and trade secrets mutually exclusive. ii. Protect competitive advantage w/o disclosure. |
|
|
Drawbacks to trade secrets
|
1. Must be secret to be valuable
2. No monopoly right 3. Must show loss of competitive advantage to claim damages |
|
|
Trademark
|
Word, phrase, symbol, or design that distinguishes one company from another.
i. Obtained by use or application ii. Belongs to 1st to use or apply |
|
|
Copyright
|
i. Protection to author of original work of literary, dramatic, musical, artistic, and intellectual work.
ii. Protects for 100 years after death of author |
|
|
1st mover advantage
|
i. Benefit the 1st to offer product
ii. Lead time – benefits generated by doing something before another party iii. Obtain control of scarce assets before others iv. Network externalities – product more valuable as more use it v. High switching costs benefit 1st mover vi. People who are content with status quo vii. Reputations are important |
|
|
Sole proprietorship
|
1 individual, simple, low cost, pass through, unlimited liability (all personal assets), no continuity
|
|
|
Partnership
|
2 or more people, simple, low cost, pass through, unlimited liability, no continuity
|
|
|
Partnership agreement
|
How profits divided, how decisions made, how disputes resolved, how partnership resolved
|
|
|
Limited partnership
|
General partners and limited partners, limited forego right to manage
|
|
|
LLP
|
All partners limited partners, limited liability, pass through
|
|
|
C-Corp
|
Limited liability, ability to attract capital, shares transferable, complex, expensive, double taxation (not pass through), continuity
|
|
|
S-Corp
|
C-Corp with pass through
i. Must be domestic US corp., all shareholders US citizens, one class of common stock, no more than 75 shareholders. |
|
|
LLC
|
Pass through, more than 75 shareholders, several classes of stock, foreign shareholders
i. Can offer only 2: limited liability, continuity, free transferability of shares, centralized management |
|
|
Franchising Pros
|
1. Training and support
2. Standard product and service 3. National advertising 4. Buying power – economies of scale 5. Financial assistance 6. Site selection an territorial protection 7. Business model that works |
|
|
Franchising Cons
|
1. Franchise fees and royalties
2. Enforced standardization 3. Restricted freedom over purchasing and product lines 4. Poor training programs 5. Market saturation 6. Lower ability to coordinate across individual units |
