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 & CompetitionEntrepreneurial 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

How do They Buy? Decision-making unit

(DMU) Decision-making process

What do They Buy? “Whole” Product or Service Set of product and non-

product capabilities that meet buying objective

Set apart from competition

Where do They Buy? Appropriate channel design

Context

Model for Marketing Decision-Making:5 C’s & 4 P’s

CompanyCore Competencies

CustomerUnmet Needs

CompetitionCompetitive Advantage

CollaboratorsShared Interests

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

UserGatekeeperPurchaser

Customer Decision-Making Process

InitiatorGatekeeperInfluencerDeciderPurchaserUsers

Identify Need Create Biz Case Case Approval RFI Vendor Review ….

Time

DMU

Decision-making Process

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

Assess the Situation (5 C’s)

Model for Marketing Decision-Making:5 C’s & 4 P’s

Target MarketSelect TargetMarket

DefineMarketingMix (4P’s)

Product

Price Promotion

Place

Techies“Try it”

VisionariesMove ahead of the herd

PragmatistsStick with the herd

ConservativesMove only when necessary

SkepticsNo way

The Chasm

Product Adoption Lifecycle

The Chasm

Lifecycle Stages

Early Adopters Product

innovation Build primary

demand Market

education Price skimming

to fund growth

Early Majority Product proliferation Stake out dominant

market share Channel

development Product line

extensions Achieve economic

scale

Late Majority Market Maturity Survive industry

shakeout Superior distribution

/ availability Strong trade

promotions Penetration pricing Low-cost producer

Horizontal vs. Vertical StrategiesHorizontal 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

Input intoPricing Strategy

Input intoPricing Strategy

Pricing Concepts

OurProduct / Service

Capabilities

OurProduct / Service

Capabilities

Value of “Perfect Substitute”

Value of “Perfect Substitute”

CustomerPerceived Value

CustomerPerceived Value

Gap

CompetitorProduct / Service

Capabilities

CompetitorProduct / Service

Capabilities

Marketing & Sales Efforts

Marketing & Sales Efforts

Gap

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

Company’s VariableCosts

Customer’sPerceived

Value

Penetration Pricing

Skim Pricing

Competitors Prices

FeasiblePrice Range

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

Assess the Situation (5 C’s)

Modules 3 & 4: Promotion & Place

Target MarketSelect TargetMarket

DefineMarketingMix (4P’s)

Product

Price Promotion

Place

Assignment 3: Product, Positioning & Pricing Plans

Company Why are you in business and how do you make money? Core competencies (people, know-how, etc.)

Customer Customer problem / pain points Value proposition to solve pain points Target market segment(s) Positioning statement(s) for those segments

Competition Direct competitors Alternates / Substitutes

Product Features/Advantages/Benefits

Pricing Pricing approach – skim, penetration, other Pricing stucture/level