summary bab 11

Selecting a Market and Establishing a Position in the Market

·        Important Questions That All Startups Must Ask

o   In order to succeed, a new firm must address this important issue: Who are our customers are how will we appeal to them?

o   A well-managed start-up approaches this query by following a three-step process:

§  Segmenting the market.

§  Selecting a target market.

§  Establishing a unique position in the target market

The Process of Selecting a Target Market and Positioning Strategy

·        Segmentating the market

·        Selecting target market

·        Crafting a unique positioning strategy

·        Involves studying a firm’s industry and determining the different target markets in that industry.

Segmenting the Market

·         Markets can be segmented in a number of different ways, including

o   Product type

o   Price point

o   Customers served

Selecting a Target Market

•      Once a firm has segmented the market, a target market must be chosen.      

•      The market must be sufficiently attractive and the firm must have the capability to serve it

•       The Netbook segment of the computer industry is new, and is being targeted by startups

Establishing a Unique Position

•      After selecting a target market, the firm’s next step is to establish a  “position” within the market that differentiates it from its rivals.

•       A “position” is the part of a market that the firm is claiming as its own.

•       A firm establishing a unique position in its customers’ minds by drawing attention to two or  three of the product’s attributes.

positioning

o     Firms often develop a “tagline” to reinforce the position they have staked out in their market, or a phrase that is used consistently in a company’s literature and thus becomes associated with the company.

o   An example is Nike’s familiar tagline, “Just do it.”

§  The beauty of this simple three-word expression is that it applies equally to a 21-year-old triathlete and a 65-year-old mall walker.

·        Selling Benefits Rather Than Features

o   Many entrepreneur make the mistake of positioning their company’s products or services on features rather than benefits.

o   A positioning or marketing strategy that focuses on the features of a product, such as its technical merits, is usually much less effective than a campaign focusing on what the merits of the product can do.

o   Consider the example of the following slide. 

Establishing a Brand

·        Establishing a Brand

o   A brand is the set of attributes—positive or negative—that people associated with a company.

§  These attributes can be positive, such as trustworthy, dependable, or easy to deal with.

§  Or they can be negative, such as cheap, unreliable, or difficult to deal with.

o   The customer loyalty a company creates through its brand is one of its most valuable assets.

·        Brand Management

o   Some companies monitor the integrity of their brands through a program called “brand management.”

·        Establishing a Brand

o   So how does a firm establish a brand?

§  On a philosophical level, a firm must have meaning in its customer’s lives.  It must create value—something for which customers are willing to pay.

§  On a more practical level, brands are built through a number of techniques, including advertising, public relations, sponsorships, support of social causes, and good performance.

§  A firm’s name, logo, Web site design, and even its letterhead are part of its brand. 

·        Power of a Strong Brand

o   Ultimately, a strong brand can be a very powerful asset for a firm. 

·        Cobranding

o   A technique that companies use to strengthen their brands is to enter into a cobranding arrangements with other firms.

o   Cobranding refers to a relationship between two or more firms where the firm’s brands promote each another.

THE FOUR PS OF MARKETING FOR NEW VENTURES

•     Product

•     Price

•     Promotion

•     place ( distribution )

Financial Management

Financial Management

•       Financial Management

–      Financial management deals with two things: raising money and managing a company’s finances in a way that achieves the highest rate of return

–      Chapter 10 focuses on raising money.  

Financial Objectives of a Firm

1.      Profitability

·       Is the ability to earn a profit : Many start-ups are not profitable during their first one to three years while they are training employees and building their brands.

2.      Liquidity

·       Is a company’s ability to meet its short-term financial obligations :  Even if a firm is profitable, it is often a challenge to keep enough money in the bank to meet its routine obligations in a timely manner.

3.      Efficiency

·       Is how productively a firm utilizes its assets relative to its revenue and its profits. Southwest Airlines, for example, uses its assets very productively.  Its turnaround time, or the time its airplanes sit on the ground while they are being unloaded and reloaded, is the lowest in the airline industry.

4.      Stability

·       Is the strength and vigor of the firm’s overall financial posture : For a firm to be stable, it must not only earn a profit and remain liquid but also keep its debt in check.

Financial Statements

1.      Historical Financial Statements

·       Reflect past performance and are usually prepared on a quarterly and annual basis.

           2. Pro Forms Financial Statements

·       Are projections for future periods based on forecasts and are typically completed for

Important of Keeping a Good Records

The first step towards prudent financial management is keeping good records.

Industry & Competitors Analysis

Rangkuman Introduction to Entrepreneurship

Industry & Competitors Analysis

•       Industry

–     An industry is a group of firms producing a similar product or service, such as airlines, fitness drinks, furniture, or electronic games.

•       Industry Analysis

–     Is business research that focuses on the potential of an industry.

Techniques Available to Assess Industry

Assesing Industry Attractive

·      Study enviromental and business trends

·      The Five Competitive Forces Model

1.   New entrants

2.   Suppliers

3.   Substitutes

4.   Buyers

5.   Rivalry among existing firm

Threat of substitutes

·      Pricw that consumers are willing to pay of a product depends in part on the availability of subtitute products.

Threat of new entrants

·      If the firms in an industry are highly profitable, the industry becomes a magnet to new entrants

Rivalry among existing firms

·      The major determinant of industry profitability is the level of competition among existing firms

Bargaining powers of suppliers

·      Suppliers can suppress the profitability of the indsutries to which they sell by raising prices or reducing the quality of the components the provide

Bargaining power of buyers

·      Buyer can suppress the profitability ogf the industries from which they purchase by demanding price consessions or increases in quality

First application of the five forces model

·      The five forces model can be used to assess the attractiveness of an idustry by determining the level of threat to industry profitability for each of the forces

Second application of the five forces model

·      A new firm can apply the five forces model to help determine whether it should enter an industry is by using the model to answer several kew questions

Industry types and the opportunities the offer

·      Emerging industries : industries in which standard operating producedures have yet to be developed

·      Fragmented industries : industries that are characterized by a large number of firms of appoximately equal size

Competitor analysis

What is a competitor analysis?

·      A competitor analysis is a detailed analysis of a firm’s competition

Indentifiying competitors

·      Direct competitors

·      Indirect competitors

·      Future competitors

Sources of competitive intelligence

·      Colleting competitive intelligence : to complete a competitive analysis grid, a firm must first understand the strategies and behaviors of its competitors

Completing a competitive analysis grid

·      Competitive analysis grid : a tool for organizing the informatiin a firms collects about its competitors

developing a business model

Rangkuman Introducing to Entrepreneurship

Developing an Effective Business Model

What is a business model?

·      Model

A model is a plan or diagram that’s used to make or describe something

·      Business model

A firm’s business model is its plan or diagram for how it competes, uses its resources, structures its relationships, interfaces with customer, and creates value to sustain itself on the basis of the profits it generates

The Importance of business model

·      Serves as an ongoing extension of feasibility analys. A

·      Focuses attention on how all the elements of a business fit together and constitute a working whole

Diversity of business models

·      There is no standard business model for an industry or for a target market within an industry

Components of a business model

Four components of a business model

·      Core startegy : describes how a firm competes relative to its competitors

·      Strategic resources : its has affects its business model substantially

·      Partnership network : new ventures, in particular, typically do not have the resources to perform key roles

·      Customer interface : the way a firm interacts with its customer hinges on how it chooses to compete

Developing an effective business model

Developing successful Business Ideas

Business Models and Their Importance

It’s a plan or recipe for how it creates, delivers, and captures value for its stakeholders.

Theres three elements that mentions above:

·       Intial validation of the business idea

·       Preparation of the business model

·       Fleshing out the operational details of the company

General Categoris of Business Models

1.    Standar Business Model

Standard Business model depict existing plans or recipes firms can use to determine how they will create, deliver, and capture value for their stake holders

2.    Disruptive Business Model

Disruptive business model, which are rare, are ones that do not fit the profile of a standard business model, and are impactful enough that they disrupt or cahnge the way business is conducted in an industry or an important niche within an industry

The Barriger/Ireland Business Model Template

·      Core Startegy

Describe how the firm plans to compete relative to its competitors

·      Resources

Are the inputs a firm uses to produce, sell, distribute, and service a product or service

·      Financials

This is the only section of a firm’s business model that describes hot it earns moneythus

·      Operation

Are both integral to a firm’s overall business model and represent the day to day heartbeat of a firm

Introduction to Entrepreneur

Feasibility Analysis

·       Feasibility analysis is the process of determining whether a business idea is viable.

·       It is the preliminary evaluation of a business idea, conducted for the purpose of determining whether the idea is worth pursuing.

When To Conduct a Feasibility Analysis

•        Timing of Feasibility Analysis

The proper time to conduct a feasibility analysis is early in thinking through the prospects for a new business.

The thought is to screen ideas before a lot of resources are spent on them

•        Components of a Properly Conducted Feasibility Analysis

A properly conducted feasibility analysis includes four separate components, as discussed in the following slides

Forms of Feasibility Analysis

·       Product/Service Feasibility : Is an assessment of the overall appeal of the product or service being proposed.

·       Industry/Target Feasibility : Is an assessment of the overall appeal of the industry and the target market for the proposed business.

·       Organizational Feasibility : Is conducted to determine whether a proposed business has sufficient management expertise, organizational competence, and resources to successfully launch a business.

·       Financial Feasibility : Is the final component of a comprehensive feasibility analysis