Entrepreneurial Marketing & FinanceCourse Website: www.ieor.berkeley.edu/~ieor190b/index.htm

Stacey Lawson & Ian Sobieski

225B Bechtel

stacey_lawson@berkeley.edu

ian@bandangels.com

Office Hours:

M 2:30-3:30

GSI: Wen-Yu Liao

1116 Etcheverry

wenyul@ieor.berkeley.edu

Office Hours:

W2:30-3:30

What is Entrepreneurship? Entrepreneurship is a management and leadership style that

involves pursuing opportunities without regard to resources currently controlled

Any attempt at new business or new venture creation, such as self-employment, a new business organization, or the expansion of an existing business, by and individual, a team, or an established business.

A way of thinking and acting that is opportunity obsessed, holistic in approach and leadership balanced for the purpose of value creation.

An entrepreneur is a highly creative person who marshals scarce resources to pursue opportunities that bring about large-scale change

References: Harvard Business School and Babson College, London School of Business

Entrepreneurship takes many forms…Entrepreneurship New venture Bootstrapped or

externally financed Organize required

resources to bring to bear

Intrapreneurship New internal project,

division, operating unit, joint venture, etc.

Financial & human resources identified from internal or external sources

My Experience with Entrepreneurship Founder & President of InPart Started and grew PLM software division of

PTC to $300M annual revenue Started new ERM division at Siebel Systems

and grew to $100M annual revenue Acquired 4 companies during various roles Limited Partner in 5 venture capital funds Have been board member, advisor, or

investor in 20+ early stage companies

What is Marketing? “Taking actions to create, grow, maintain or defend markets.”

“Identifying the particular wants and needs of a target market of customers, and then going about satisfying those customers better than the competitors.”

“Process by which a firm creates value for its chosen customers.“

“A group of related business activities aimed at satisfying customer demand for goods and services.”

References: Peter Drucker, Geoffrey Moore, web sources

Entrepreneurial + Marketing

Relentlessly pursuing opportunities without regard to resources currently controlled….

by

…identifying the particular needs of target customers, and then satisfying those customers better than the competition

Biggest Issues VC’s Identify Don’t know how to segment market and position

solution in a compelling way Don’t understand patterns of adoption --

pragmatists won’t buy unless they have to!

Major focus of Entrepreneurial Marketing: Selecting target market and positioning product in

customer’s minds Specifying the plan for marketing activities to achieve

desired customer perception & behavior

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

Understanding the Customer

Company Customer

Firm/Manager owns Understanding:• The who, what, where, why, & how of customer behavior• How to translate these into offerings and marketing mix

Customer owns Behavior:• Perception of fit between company’s offerings and their own need• Ability to act

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

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

• What are our core competencies?• Who has specific, relevant expertise?• Who works in the venture? Advises? Invests?• What is the value of the venture’s offerings?• Who can supply “whole product” expertise?

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

• Who are current & potential competitors?• What are their strengths & weaknesses?• What is our differentiation?• How does the value of our offerings compare?

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

• What is the macro-economic environment (regulatory, legal, technological, cultural, etc.)?• What changes are taking place in the industry?• What will this market look like long-term?

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

• Who are the most important partners?• How should we motivate them?• Who has relationships with our buyer?• What should our channel look like?• Who is best cultural fit?

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

• What are the customer’s attributes?• What is the customer’s need/pain?• What is the customer buying process?• Who is involved in the process?• What do they require in a “whole product”?• Where do they wish to buy?

Assess the Situation (5 C’s)

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

Target MarketSelect TargetMarket

• Customer Segmentation• Competitive Differentiation• Company & Product Positioning

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

Assess the Situation (5 C’s)

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

Target Market

DefineMarketingMix (4P’s)

Product

Price Promotion

Place• Total package of benefits obtained by the customer• “Whole Product”

Select TargetMarket

Assess the Situation (5 C’s)

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

Target Market

Product

Price Promotion

Place• Perceived value represents maximum price customer is willing to pay

DefineMarketingMix (4P’s)

Select TargetMarket

Assess the Situation (5 C’s)

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

Target Market

Product

Price Promotion

Place• Communication with customers to build awareness, knowledge, interest, trial, and repeat purchase

DefineMarketingMix (4P’s)

Select TargetMarket

Assess the Situation (5 C’s)

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

Target Market

Product

Price Promotion

Place• Channel structure and “go-to-market” approach

DefineMarketingMix (4P’s)

Select TargetMarket

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

Assess the Situation (5 C’s)

Managing It Over Time

Target Market

Product

Price Promotion

Place

Change (Good and Bad news)

Anticipation ResponseExperiments

IterationLearning

Lawson adapted from Lassiter & Sahlman

DefineMarketingMix (4 P’s)

Select TargetMarket

Scope of Marketing Course

Marketing Modules

Module 1 Market Definition, Customer Segmentation & Competition (5C’s, TARGET MARKET)

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

Why Use Case Method?

"We cannot teach people anything; we can only help them discover it within themselves."

~ Galileo Galilei (1564-1642) great Italian astronomer, mathematician, & physicist

Why Use Case Method? Some concepts are best shown through

example Context matters -- what works in one situation

might not work in another You get to be the manager in 20+ companies

this semester Feel the nuance and complexity of the

situation, but boil down to key issue(s) Over time, will help with pattern recognition

Case Preparation

Assignment questions on syllabus/website Opening study question is often, “what should

the protagonist do?” Put yourself in the shoes of the protagonist Prepare until you have an action plan ….and be willing to bet your career on it More learning comes from being wrong, than

being right Note: See “Guide to Cracking Cases”

Class Preparation Expectations Minimum of 2 hrs. preparation for each class

Typically assigned a Case & Note/Reading for each session

Focus on Cases Use whatever time left over to read Notes Notes will provide structures/frameworks to

guide our class discussion

Case Preparation Tactics/StepsSkim the reading/note quickly for new concepts

1. Skim the case quickly

2. Re-read the case carefully

3. Decide what the issues are (case questions)

4. Decide what analysis will inform the issues

5. Complete analysis

6. Choose a course of action/plan

7. Test the plan

Re-read the reading/note if have time

End of Class Sessions

Unlike much of your engineering curriculum, there will not always be a “right” answer

Business is messy, don’t expect a tidy solution

Let the lessons settle in over time Will share outcomes where possible; guest

speakers can offer insights

Grading

40% -- Class Participation and Assignments 20% -- Midterm Group Project & Presentation 20% -- Final Group Project & Presentation 20% -- Final Exam

How will participation be evaluated? 40% of grade based on class attendance &

participation Your participation in critical to the process – requires

good preparation QUALITY + Quantity Provide your viewpoint with supporting facts or

analysis to back it up Very few “right” answers LISTEN to your fellow classmates -- take the

discussion forward, not backward

Group Assignments & Projects Groups of 5 Pick your own groups Pick a concept for a new venture that you

believe could be a viable company OK to use a concept you’ve already been

exploring We’ll take the marketing/sales and finance

portions of plan to the next level

Assignments & Group Projects

Deliverables Date

1 Submit Resume 1/23

2 Concept for New Venture 2/1

3 Product, Positioning Pricing Plan 2/15

4 Communications Plan 2/27

5 Integrated Marketing Plan (incl. Sales & Distribution Plan) 3/8

Marketing Presentations 3/8 & 3/13

6 P&L, Capitalization Table 4/17

7 Balance Sheet 4/24

8 Integrated Financial Plan 5/1

Funding Presentations 5/1 & 5/3

Preparation for Monday Reading for today: Note on Marketing Strategy

Prep for Monday Case: Microfridge Reading: Market Segmentation, Target Market Selection

and Product Positioning Assignment 1 Due: Submit Resume Create a name card and bring to every class Class starts at 4:10 – late-comers not admitted

Accessing HBS Case Materials: http://www.hbsp.com/relay.jhtml?name=cp&c=c93260

Entrepreneurial Marketer of the Week "I never perfected an invention that I did not

think about in terms of the service it might give others... I find out what the world needs, then I proceed to invent."

- Thomas Edison