Entrepreneurial Marketing Course Introduction College of Engineering University of California, Berkeley
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Entrepreneurial Marketing Course Introduction College of Engineering University of California, Berkeley Scope of Marketing Course Marketing Modules Module 1 Market Definition, Customer Segmentation & Competition (5C’s) Module 2 Product Development, Positioning & Pricing (PRODUCT) (PRICE) Module 3 Marketing Communications (PROMOTION) Module 4 Distribution & Sales Channel Development (PLACE) Conclusion Putting it All Together Module 1: Market Selection, Customer Segmentation & Competition Entrepreneurial Marketing Marketing is an Exchange Process Company Customer Understanding the Customer Who are They? Personal characteristics Product usage patterns Why do They Buy? Needs Purchase Motivations What do They Buy? How do They Buy? Decision-making unit (DMU) Decision-making process “Whole” Product or Service Set of product and nonproduct capabilities that meet buying objective Set apart from competition Where do They Buy? Appropriate channel design Model for Marketing Decision-Making: 5 C’s & 4 P’s Context Competition Collaborators Competitive Advantage Shared Interests Company Customer Core Competencies Unmet Needs Target Market Assess the Situation Segmentation Concept Customers differ in the benefit they expect to receive from a product/service While not all customers are heterogeneous, there are often CLUSTERS of customers that are Segmentation = cluster of (nearly) similar customers Goal: Identify factors that separate CLUSTERS Geographic – country, urban/rural, region, etc. Demographic – age, sex, income, education, industry, size of organization Psychographic – personality traits, perceptual style, attitudes, reference group, social role Product Benefits/Usage – needs, frequency of use, loyalty, performance requirements Decision Process – shopping patterns, info search, media habits, price sensitivity Positioning Positioning = Managing the product and its presentation to fit a predetermined place in the mind of the customer Positioning = Market + Competitive Segmentation Differentiation Positioning Statement For target market , COMPANY/PRODUCT is, among competitive set , single most important claim , because single most important support. Elements of a “Great” Positioning Company Fit with company strategy Fit with company capabilities Fit with corporate culture Fit with product strategy Fit with physical product Fit with brand personality / brand essence Customer Credible Relevant Unique Durable Emotionally appealing Context Fit with trends Unique vs. Competition Customer Decision-Making Multiple players & roles (DMU) Motivations, power, perceptions of each? Initiator Influencer Decider Purchaser Gatekeeper User Customer Decision-Making Process Decision-making Process DMU Identify Need Create Biz Case Case Approval RFI Vendor Review Initiator Gatekeeper Influencer Decider Purchaser Users Time …. Key Themes: The 5 C’s & 4 P’s of marketing -- All Customer behavior – Microfridge, Wildfire, CardioThoracic Customer segmentation – Wildfire, Sealed Air, Documentum, Biopure Positioning – Wildfire, Sealed Air Decision making unit (DMU) and decision making process (DMP) – Microfridge, Wildfire, CardioThoracic Competitive landscape – All Module 2: Product Policy, Positioning & Pricing Entrepreneurial Marketing Model for Marketing Decision-Making: 5 C’s & 4 P’s Assess the Situation (5 C’s) Select Target Market Define Marketing Mix (4P’s) Target Market Product Price Place Promotion Product Adoption Lifecycle Pragmatists Stick with the herd Visionaries Move ahead of the herd Techies “Try it” The Chasm Conservatives Move only when necessary Skeptics No way Lifecycle Stages Early Adopters Early Majority Product Product proliferation innovation Stake out dominant Build primary market share demand Channel Market development education Product line Price skimming extensions to fund growth Achieve economic scale Late Majority Market Maturity Survive industry shakeout Superior distribution / availability Strong trade promotions Penetration pricing Low-cost producer Horizontal vs. Vertical Strategies Horizontal Platform or toolkit for wide range of business problems Pursue full array of market opportunities Need technology partners to fill product gaps Sell to IT Sell to visionaries Each sale is starting from scratch (until cross the chasm) Vertical Solutions to specific business problems Decline deals outside of vertical Need system integrators to customize & integrate Sell to business person directly affected Sell to pragmatists Easier follow-on sales in vertical due to references Whole Product “The Whole Product” = Physical Product + All Associated Factors (services, partners, warranties, guarantees, image, training, etc.) required to fulfill customer buying criteria Pricing Concepts Our Product / Service Capabilities Value of “Perfect Substitute” Gap Gap Marketing & Sales Efforts Customer Perceived Value Input into Pricing Strategy Competitor Product / Service Capabilities Pricing: Internal & External Factors Internal Factors Objectives of the Firm Marketing Mix strategy Costs External Factors Nature of the market Demand Competition Channel pressures Pricing Decisions Pricing Strategies Market Skimming Image/brand supports high price Solving high-value need with limited substitutes Small/limited initial buyer set Competition cannot get in and undercut Limited manufacturing capacity High fixed cost at low volumes Market Penetration Costs go down with volume (economies of scale) Market is price sensitive High chance of competition entering quickly Have sufficient manufacturing capacity Large immediate demand Bonoma’s Vegematic Pricing Model Competitors Prices Customer’s Perceived Value Skim Pricing Feasible Price Range Penetration Pricing Company’s Variable Costs Key Themes: Product innovation & development process – CardioThoracic Whole Product – Microfrige, Documentum, CardioThoracic Horizontal vs. Vertical markets – Documentum Multi-product line management – Wildfire, Sealed Air, Biopure Pricing economics & math – Sealed Air, Biopure Go-to-Market considerations – All Technology adoption lifecycle -- All Modules 3 & 4: Promotion & Place Assess the Situation (5 C’s) Select Target Market Define Marketing Mix (4P’s) Target Market Product Price Place Promotion Assignment 3: Product, Positioning & Pricing Plans Company Customer Direct competitors Alternates / Substitutes Product Customer problem / pain points Value proposition to solve pain points Target market segment(s) Positioning statement(s) for those segments Competition Why are you in business and how do you make money? Core competencies (people, know-how, etc.) Features/Advantages/Benefits Pricing Pricing approach – skim, penetration, other Pricing stucture/level