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Entrepreneurial Marketing

Entrepreneurial Marketing. Nijssen, E. (2014).  Entrepreneurial Marketing: An Effectual Approach . Routledge. Session 3: Effectual segmention and positioning to maximize the value of your new product. An Effectual approach Prof. Dr. E.J. Nijssen,

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Entrepreneurial Marketing

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  1. EntrepreneurialMarketing Nijssen, E. (2014). Entrepreneurial Marketing: An Effectual Approach. Routledge. Session 3: Effectualsegmention and positioning to maximize the value of yournew product AnEffectualapproach Prof. Dr. E.J. Nijssen, Eindhoven University of Technology Available from Routledge at: http://www.routledge.com/books/details/9780415722216/

  2. Objectivelecture • Explainthat most applications of newtechnologiestend to underperformfor the average customer in the marketplace • Introduce a smart way to map the market • 3-D Abell model • Introduceeffectualsegmentation and positioning • Developassumptionsabout best, first segment to attack • Create a basis fortestingusing multiple iterations of experimenting

  3. New productsoften have benefits and drawbacks WHAT CUSTOMERS INNOVATION GAIN LOSE Electricalcars Clean environment Easy refueling E-books Easy portabilityDurability Screw-topwine caps LessspoilageElegance of the experience Wind turbines No pollutingenergyUnobstructed views Online groceryshopping Home deliveryAbility to select freshestproducts Improvements vs. shortcomingsweighdifferently Perceptions; relative to reference point Gourville (2006)

  4. Cause of the problem • New technologies and theirapplicationstend to underperform in beginning (Christenson 1997); theystillneed to mature and iron out kinks. • Suchtechnologydevelopmentfollowsnormal S shaped curve patterns and obeys to laws of technologicalprogress.

  5. Christensen'sframework of technologicalevolution performance demand at the upper end of the market disruptivetechnology acceptable range of functionality performance demand at the lower end of the market time technology 2 technology 1 Christensen (1997)

  6. Firms/Entrepreneurs generally working with first customers to help "define" the market upper range Sensemaking processes e.g. work with first customer to define/ seek legitimation acceptable range lower range technology 2 technology 1 time So, we shouldproactively look forcustomerswholike the newtechnology’snewbenefitsbut do notmindits drawbacks (whichoftenresolveif the technologymatures)

  7. Abell’s 3 D representation of the market: Example Restaurants Customer needs Culinary quality - - - - - ambiance Eating out experience Double income no kids Parents with children business people Teenagers Speed/convenience cheap Customersegments Self service Full Service Eg MacDonalds/ Kentuckyfried Technologies

  8. Please note • The techniquehelps to conceptualizeyourmarket and exploreboundaryconditions • Itexplicitly links supply and demand • products are in the matrix; they are the linkingmechanism • A newtechnology and itsbenefits, butalosemergingsegments (and theirnewneeds) canbeaddedonaxes; So, dynamicorientation. • Note: no single solutionexists

  9. Abell's 3 dimensionalmarketrepresentation and innovation'srole = needscoveredbyoriginaltechnology = part of existingneedsnot/lesswellcoveredbynewtechnology = extra, latent needscoveredbynewtechnology Customerbenefits T(original) T(new) C1 C2 C3 C4 Customersegments Technologies Imagine a market with 4 customer segments (C1 through C4). C1 and C2 are the most demanding customers (most needs/benefits). Imagine that part of their needs are not well covered by the new technology. Who benefits most from the new benefits of the new technology/application?

  10. How digital cameraspenetrated segment by segment Customer needs No-print Convenience Speed First target segment is the customer segment withhighest fit withtechnology’scurrent performance Manualadjustment Prof photogr’s Amateurs Excellent quality image Leisure/fun Analog/chemical Customer segments Digital Technologies

  11. How digital camera technologyblurred industries Customer needs No-print Convenience Speed Video Manualadjustment Prof photogr’s Mobile phone market Amateurs Excellent quality image Leisure/fun Analog/chemical Customer segments Digital Webcams Technologies

  12. Example: Alternative bicycle Video: cardboardbicycle(excercise) Pleaseidentify, using the 3D matrix (technology, benefits, customergroups) shown, the (international) marketforthis product For About $20, Cardboard Bicycle Could Change The World, Inventor Says..\..\YouTube\cardboard bicyclebicycle.flv

  13. Possible solution; conceptualization Prestige, personalization, disposable, souvenir…. • Drawbacks: • Sensitive to side wind • Durability • … •  Factor-in in decision sustainable Customer needs low price light durable luggageoption comfort Customer segments Poor/ Emerging Countries Internaltransp’t(warehouse) Relax/ Leisure Adjustablegear (wind/ mountain) Sports Rentals Commutor Peddle Easy to ride/transportation Peddle recline steel Electrical cardboard carbon fiber metal cord Technologies

  14. SegmentationTargeting Evolving customer segments Firm competencies and customer value objectives Identify customers with highest customer value score of the application & early technology develop’t Choice of first target segment Positioning statement Benefits of the new application & technology Effectualsegmenting, targetting and positioning Positioning statement

  15. TECHNOLOGICAL ADVANTAGE: What are the strong points of the new technology, the startup and its application? DISCRIMINATOR: What makes the new application unique? Identify and label the Unique Selling Points compared to competitive alternatives Positioning statement CUSTOMER INSIGHT: Market segment that likes benefits best? Why? What is the unfulfilled need addressed and frustration resolved? Why is this a problem? REASONS TO BELIEVE: Evidence why the application /technology will outperform alternatives (and target segment does not mind draw-backs of the new, evolving technology) Formulating a positioning statement

  16. Lessons • Abell’s 3 D presentation of the market is usefulforunderstandingrelationshipsbetweentechnology/suppliers and customers/needs • Itcanbeused to explore the impact of a newtechnology and applicationon the market and help identify the target segment • As newtechnology enters the marketgenerallyfrombelow (underperformingfrommanyexistingcustomers point of view) youneed to proactivelyidentify the most attractivecustomer segment • Usingpositioning the uniqueaspects (USPs) of the newapplicationcanbeemphisedfor the thiscustomer segment • Notethat the customer segment mayinvolveannew, emerging set of customers

  17. The Effectual versus Traditional marketing approach TRADITIONAL APPROACH • ASSUMPTIONS • Predictfuture • Lineair process New product Identify latent need Satisfaction EFFECTUAL APPROACH • Unpredictablefuture • Iterativeuse; experimentation • & networking • Affordable loss New product Discover application/ customer Satisfaction

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