Transcript Elements of Product/Market Strategy - Session #4

E145/STS173
Workshop B
Entrepreneurial Marketing
Tom Byers and Jeff Rosenberger
Stanford University
Copyright © 2004 by the Board of Trustees of the Leland Stanford Junior University
and Stanford Technology Ventures Program (STVP). This document may be
reproduced for educational purposes only.
Agenda and Objectives
“Companies that create the future do more than satisfy
customers, they constantly amaze them.”
~ Hamel and Prahalad
I.
Mini-lecture
•
What is Entrepreneurial Marketing?
•
How Can a Venture “Cross the Chasm”?
•
Positioning and Penetration Strategies
II. Positioning Examples
“Market Analysis” Versus “Marketing”
Step #1: Opportunity Recognition (Market Analysis)
– Identify a Market Need
– Examine the Competitive Dynamics of the Industry
– Determine Growth Potential
Step #2: Marketing Strategy
–
–
–
–
Develop a Unique Positioning
Develop Marketing Objectives
Build a Set of Penetration Strategies (e.g., Pricing, Promotion)
Support through Sales and Execution
What is Marketing Anyway?
• Marketing must be more than a sales support
function. Not just ad tag lines. In all kinds of
businesses, it must satisfy “the needs of the
customer by means of the product and the whole
cluster of things associated with creating, delivering,
and finally consuming it.”
• Especially in high technology venturing, marketing
must “invent complete products and drive them to
commanding positions in defensible market
segments.”
Reference: Levitt and Davidow
Why is Marketing So Challenging
in a High-Technology Start-Up?
Most Famous Model … Geoff Moore’s
“Technology Adoption Life Cycle”
Tornado
Main Street
Try to Name a
Discontinuous
Innovation (or
Disruptive
Technology)
Where Do You Fit
When It Comes to
New Technologies?
Bowling Alley
Source: Moore (1995), Inside the Tornado
So How Does a Startup Cross the Chasm?
1. Put Your Eggs in One Basket …
Target Market Segments.
2. Then Deliver a 100% Solution To Them …
A Whole Product.
An Example of the Power of Segmentation and Target
Marketing: Pedigree Petfoods in UK
Dog’s Role
Segment
Brand
Price/100 gr.
Dog as a substitute child?
Super Premium
Dog as a family member
Premium
Chum
8.7 pence
Dog as a companion
Moderate
Pal and Bounce
6.4 & 7.9 pence
Dog as an animal
Economy
Chappie
6.3 pence
Reference: A. Ryans
Segmentation and the UK Dog Food Market:
Pedigree’s Super Premium Strategy
• Target Market? Intense relationships, own smaller dogs,
older and urban females
• Benefits? Very best product that can be bought,
reassurance, confidence, leads to an enhanced relationship
• Name? Mr. Dog (later Caesar)
• Product? Very high quality ingredients, wide variety of
flavors, special packaging
• Price? 17.7 to 30.7 pence per 100 grams
• Advertising? Dog bringing newspaper, slippers, etc.
Results: Fours years later, it had a 10% share of the total dog food
market. The total super premium segment of the market was about 15%
-- about 10% coming from dog food brands and about 5% coming from
fresh foods. In addition, Pedigree's premium brand retained its market
share.
Whole Product: The 100% Solution or
Ecosystem
Connectivity
Installation
& Training
Etc.
Platforms
Support
Software
Program
Consulting
Reference: Ted Levitt, Bill Davidow
Key Decisions:
Which Pieces Do
We Do and Which
Do Our Partners
Do?
What is the Single Most Important
Concept in a Marketing Strategy?
Positioning (a.k.a. the “Elevator Pitch”)
Positioning Template
• Sentence #1
For (target customer)
who (statement of the need or opportunity),
the (product/service name) is a (product/service
category)
that (statement of benefit).
• Sentence #2
Unlike (primary competitive alternative),
our product (statement of primary differentiation).
Positioning Drives Penetration Strategies
1. Promotion and Communication
(including branding and
permission-based marketing)
2. Pricing and Business Model
(including viral marketing)
3. Sales and Distribution
(including affiliate marketing)
A Short Checklist for Effective
Entrepreneurial Marketing …
Relationships Matter!
1. How will you get close to customers?
2. How will you leverage alliances and partnerships?
3. How will you influence the infrastructure or the
industry’s key “players”?
4. What is your international strategy (global markets)?
Positioning Example: Handspring Visor
For busy individuals
who need a way to organize, manage, and
communicate,
the Handspring Visor is an all-purpose handheld
computer, based on the proven Palm OS,
that offers simplicity of use, portability,
personalization, connectivity, and functionality.
Unlike the Palm Pilot,
our product offers flexibility and expandability
due to the springboard technology.
Now You Try It
• Sentence #1
For (target customer)
who (statement of the need or opportunity),
the (product/service name) is a (product/service
category)
that (statement of benefit).
• Sentence #2
Unlike (primary competitive alternative),
our product (statement of primary differentiation).