Description
Within this detailed explanation pertaining to marketing in an entrepreneurial context.
1
1
Peter F. Drucker, The Practice of Management (New York: Harper & Row, 1954);
George S. Day, “The Capabilities of Market-Driven Organizations,” Journal of
Marketing 58 (October 1994): 37–52.
1
Marketing in an
Entrepreneurial Context
S
o, you want to be an entrepreneur! That’s great. It can be a
challenging and rewarding experience. And if I asked you why
you wanted to be an entrepreneur, I bet many of you would say it is
because you want to make money. Well, that is the first mistake
most entrepreneurs make. In fact, the actual purpose of an
enterprise is not to make money. Instead, experts tell us that the
actual purpose of an enterprise is the creation and retention of
satisfied customers.
1
How well you perform these vital tasks will
be reflected in the level of profitability of your enterprise. In other
words, your profit is simply the scorecard with respect to howwell
you stay wedded to your real purpose.
You must understand this important point or your entre-
preneurial career is likely to be truncated. Moreover, it is critical
for you to understand marketing’s role in creating and retaining
satisfied customers. Simply put, it is marketing that enables you to
discover, create, arouse, and satisfy customer needs and wants. In
entrepreneurial terms, we often say that a successful enterprise is
built by a smart entrepreneur who finds a source of “market pain”
and creates a “unique” way to cure it!
For example, consider the young entrepreneurs who started
Three Dog Bakery. Dan Dye and Mark Beckloff recognized that the
dog treat category was a multibillion-dollar category in the United
States and growing at a double-digit rate. They were also smart
enough to recognize another key trend: dog as family member. That
is, particular owners of dogs viewed themselves as “pet parents”
and wanted only the very best for their dogs, including healthy,
all-natural, and tasty treats. But many pet parents were unhappy
(“market pain”) with current products being marketed. The
solution was to offer the pet parents an “innovative dog bakery”
where dog owners could come (with their dogs) and buy products
that they trusted and that their dogs would love.
The result was a tremendous success. The company has opened
up franchise-owned stores all across America and also distributes
its dog treats through major retail chains, including Kroger, Wal-
Mart, Costco, and Hannafords. The company is planning to triple
the number of stores and double factory sales over the next three
years. And, like many good, socially conscious entrepreneurs, the
founders of Three Dog Bakery have also started a nonprofit
foundation (Gracie Foundation) for neglected and abused dogs.
Three Dog Bakery is an example of a successful entrepreneurial
startup that was based on a key concept in marketing—
discovering customer needs and satisfying them. Or, as we say,
finding a source of market pain and finding a unique way to
alleviate that pain!
Marketing: Defined
Many people are confused or have misconceptions about the concept
of marketing. First, do not confuse marketing with advertising,
selling, or common sense. Although advertising is one of the more
visible forms of marketing, it is but one small element of marketing.
Marketing is not selling. In fact, some experts suggest that if
entrepreneurs engage in effective marketing, it can reduce the need
for selling. Marketing is not simply common sense. While good
2 MARKETINGFOR ENTREPRENEURS
2
Regis McKenna, “Marketing Is Everything,” Harvard Business Review (January–
February 1991): 65–79.
3
“AMAAdopts NewDefinitionof Marketing,” Marketing News, September 15, 2004, 1.
entrepreneurs are often perceptive and intuitive, these traits alone are
not sufficient for making successful marketing decisions. Effective
marketing requires intimate knowledge and understanding of
consumers andcompetition that goes beyondsimple common sense.
Second, be wary of the many misconceptions about marketing,
including many negative ones. For example, marketing is not huck-
sterism; it is not selling unwanted things and taking the customer’s
money. Nor is marketing about manipulating, fooling, or tricking
the customer.
2
Instead, marketing is an organizational function and a
set of processes for creating, communicating, and delivering value to
customers and for managing customer relationships in ways that
benefit the organization and its stakeholders.
3
This definition stresses
the importance of customer value and customer relationships. As an
entrepreneur, your business must create and deliver customer value.
Moreover, to retain customers, you must focus on developing long-
term relationships with them. If you do, you will find that these
customers will remain loyal to your enterprise and can be a valuable
resource in recommending your business to others.
The Seven Steps in the Marketing Process
As an entrepreneur, you will have to understand and follow the
seven steps in the marketing process to create and sustain a
successful venture:
1. Identify and understand customer needs.
2. Develop products, services, or experiences to meet those needs.
3. Price the products, services, or experiences effectively.
4. Informcustomers that these products, services, or experiences exist.
5. Deliver the products, services, or experiences efficiently and conven-
iently for the customer.
6. Ensure customer satisfaction during and after the exchange process.
7. Build long-termrelationships with the customers.
Chapter 1 • Marketing in an Entrepreneurial Context 3
David Schomer knows something about the importance of entrepreneurial
marketing. One of the key steps he has taken to ensure the success of his $1.7
million business is to focus on rigorous staff training to ensure that the
customer receives outstanding service and products and a superior customer
experience. This has resulted in high customer loyalty to the business. He also
says that his pursuit of gourmet coffee perfection resonates with a customer
base that is looking for an expression of crafts manship that chains like
Starbucks cannot provide. Thus, he says he has no desire to turn Vivace into
the next Starbucks. Instead, he aims for manageable and sustained growth.
And, he states, “I make coffee for people who love coffee.” But like many other
successful entrepreneurs, Schomer is not complacent and continues to find
new ways to create and market goods of extraordinarily high quality.
Accordingly, he deserves to be in the entrepreneurial marketing spotlight!
4
ENTREPRENEURIAL MARKETING SPOTLIGHT
Why Marketing in New Ventures Is Different
Marketing in an entrepreneurial context is different from an
established corporation. As an entrepreneur, you will face different
marketing issues compared to executives in a corporate environment.
For example, unlike your corporate counterparts:
• The entrepreneur must use marketing to identify new products, ser-
vices, or experiences to market to new customers and not simply
use it to sell existing products and services to existing customers.
• The entrepreneur must use marketing to obtain his or her “first cus-
tomer” (gain the first dollar of business) and not simply manage an
existing customer base.
4
Adapted from Entrepreneur Power Plays (New York: McGraw-Hill, 2008).
David Schomer, founder of Expresso Vivace Roasteria in Seattle,
Washington, has mastered many of these steps in the marketing
process and therefore finds himself in the Entrepreneurial
Marketing Spotlight!
4 MARKETING FOR ENTREPRENEURS
• The entrepreneur must use marketing to build a new brand and not
simply manage an existing brand.
• The entrepreneur must use marketing to establish effective mar-
keting channels of distribution and not simply manage existing
distribution methods.
• The entrepreneur must use marketing to establish initial price
points for his or her offerings and not simply manage current
prices for existing offerings.
• The entrepreneur must use marketing communications to per-
suade customers to try his or her offerings and not simply remind
customers to continue to buy.
• The entrepreneur, because of resource scarcity, must find creative
ways to leverage his or her marketing efforts, especially early in the
venture startup phase.
Unfortunately, venture failure continues to be the rule and
not the exception. But marketing can help you improve your odds
of venture success. It can help provide you with a solid
understanding of customers and markets, identify and validate
the right opportunity, and determine how best to capitalize on that
opportunity. One of the biggest problems faced by many
entrepreneurs is the tendency to chase “too many rabbits.” In other
words, you must focus and try not to be all things to all people.
Marketing can provide this focus. In short, it can help you zero in
on the right customers—your target market—the specific group
of customers toward which you direct your marketing efforts
or marketing program. It is marketing—specifically, marketing
research—that allows you to determine this target market and then
enables you to configure your marketing program.
Using Marketing to
Discover and Satisfy Customer Needs
It is important for you to recognize that if you wish to improve your
odds of venture success, you must use marketing to discover and
satisfy customer needs. The discovery process sounds simple but it
is not. Thousands of ventures fail every year in the United States,
Chapter 1 • Marketing in an Entrepreneurial Context 5
6 MARKETING FOR ENTREPRENEURS
and in many cases, the failure is a direct result of the entrepreneur
failing to carefully examine customers’ needs or simply misreading
those needs. Granted, it is often difficult to get a precise reading
on what the customer needs. But as an entrepreneur, you have to be
willing to be persistent and creative to uncover customer needs.
One of the best ways to do so is to go into the market to talk with
and listen to customers. Through dialogue and active engagement
with the customer, you will gain an understanding of the customer.
In the entrepreneurship field, we often refer to this process as
obtaining “the voice of the consumer.” Voice of consumer research
will be discussed later as an important part of finding and evaluating
business opportunities.
After properly discovering customer needs, the entrepreneur
must begin the task of designing his or her business to satisfy those
needs. In fact, recent research involving forty-five successful entre -
preneurs revealed that delivering customer satisfaction was a key
imperative for venture success.
5
But, as stated earlier, your venture
cannot satisfy all consumers’ needs, so you must concen trate your
efforts on a specific group of potential customers—your target
market. Selecting the proper target market involves the process of
market segmentation—placing customers into groups (segments)
that (1) have common needs and (2) will respond to a specific
marketing offer. We will discuss segmentation in depth in Chapter 5.
For now, it is sufficient that you know that you will select a given
segment (or segments) to pursue—your target market(s)—and
create the marketing offer, designed to appeal to the target market
and satisfy its needs. This marketing offering is called your
marketing mix. The marketing mix is what gets integrated into a
tangible marketing program that your business will use to gain and
keep customers. For product-based ventures, your marketing
mix consists of five elements, or 5Ps: product, price, promotion,
place, and people. For a service-based venture, the marketing mix
5
Frederick G. Crane and Jeffrey E. Sohl, “Imperatives for Venture Success:
Entrepreneurs Speak,” International Journal of Entrepreneurship and Innovation 5,
no. 2 (2004): 99–106.
consists of eight elements, or 8Ps: product, price, promotion, place,
people, physical evidence, process, and productivity.
The 5Ps of Product-Based Ventures
A marketing program for a product-based venture—a venture
that markets “tangible” or physical products—would consist of a
combination of five marketing mix elements. The 5Ps are used to
create, communicate, and deliver value to your customer:
• Product: The product to satisfy the customer’s needs
• Price: The cost to the customer
• Promotion: The means of communication between you and the customer
• Place: The means of getting the product into the customer’s hands
• People: The individuals who will work with you and your venture
Figure 1.1 shows the 5Ps for Sephora, a very successful beauty
and skincare enterprise.
Chapter 1 • Marketing in an Entrepreneurial Context 7
Product: Broad range of quality skincare, makeup, and fragrances for women
and men (nationally branded and private label)
Price: Above market
Promotion: Public relations, catalogs, and customer loyalty program
Place: More than 500 stores in fourteen countries, online (www.sephora.com),
and 1-877-Sephora
People: Highly trained, knowledgeable, and customer-centric consultants
FIGURE 1.1 The 5Ps for Sephora
Sephora has a unique open-sell environment with more than
200 brands plus Sephora’s private label. The company emphasizes
training of its people and even opened Sephora University in
San Francisco to educate its personnel on both products and
customer relations. The company has achieved outstanding year-
over-year sales growth since its launch.
6
Christopher Lovelock and Jochen Wirtz, Services Marketing, 5th ed. (Upper
Saddle River, NJ: Pearson, 2004).
8 MARKETING FOR ENTREPRENEURS
The 8Ps of Service-Based Ventures
A marketing program for a service-based venture—a venture
that markets “intangibles”—would consist of a combination of
eight marketing mix elements (8Ps):
6
• Product: The product (service) to satisfy the customer’s needs
• Price: The cost to the customer
• Promotion: The means of communication between you and the customer
• Place: The means of getting the product into the customer’s hands
• People: The individuals who will work with you and your venture
• Physical evidence: The “tangibles” that surround your service
• Process: The way the service is created and delivered
• Productivity: Balancing service output with service quality
Figure 1.2 shows the 8Ps for Southwest Airlines, one of the most
successful entrepreneurial airline startups in America. In fact,
Southwest Airlines went from a small startup with just a few
planes to a major carrier in less than twenty years. It has also been
the most consistently profitable airline in the United States and has
achieved high levels of customer satisfaction year after year.
Market Fulfillment Versus Market Creation
It is safe to state that most new ventures are based on the concept
of market fulfillment. That is, the entrepreneur enters an “existing
market” and uses the conventional marketing process. But some
new ventures are based on “market creation”—creating a new
market that did not currently exist. In this case, the consumers
generally have no idea about a need for such a new product,
service, or experience.
In the case of market fulfillment, the conventional marketing
process of discovering and satisfying customer needs really does
Product: Low cost, no frills, convenience, point-to-point airline passenger
service
Price: Low prices, below market
Promotion: Broad range of marketing communications, including broadcast
television
Place: Major markets but often in secondary airports adjacent to major
airports to keep costs down
People: Specific emphasis on training to achieve excellent customer service
Physical evidence: Keeping the planes clean and safe; allowing employees to
dress casually and strong branding, color language, etc.
Process: Using the same plane type to make it easier for employees to
manage operations and making it easy and simple to fly with Southwest,
including online booking
Productivity: Key emphasis on a fifteen-minute turnaround time (getting the
plane ready after landing and getting it back in the air safely)
FIGURE 1.2 The 8Ps for Southwest Airlines
Chapter 1 • Marketing in an Entrepreneurial Context 9
work quite well. But it does not work so well when an entrepreneur
is attempting to create entirely new markets.
7
Henry Ford, famous
automobile pioneer, once said, “If I asked the customer what they
really wanted, they’d have said a faster horse!”
Basically, Ford was telling us that when we try to discover what
customers want, they will often simply ask for better versions of
existing products. But this approach will not help an entrepreneur
who wishes to produce breakthrough or new-to-world innovations.
These concepts are radically different and are sometimes beyond
the imagination of the customers. Thus, customers may not recog -
nize that they need or want such innovative concepts. For example,
FedEx created the overnight package delivery market, a market
that did not previously exist and a market that customers did not
7
Frederick G. Crane and Marc H. Meyer, “Why Corporate America Cannot
Innovate,” Working Paper, Northeastern University, 2008.
know could exist. CNN created the 24/7 cable news market,
and again, customers did not imagine such an offering being
developed. A more recent example is the “flying car.” The
Terrafugia Transition is a two-seat aircraft designed to take off and
land at local airports and drive on any road. According to
entrepreneur and creator Carl Dietrich, this product changes the
world of personal mobility. Travel can now become a hassle-free
integrated land-air experience. It will be available on the market in
2011, and forty people have already made a deposit on the $195,000
flying car!
8
So, in short, entrepreneurs of new-to-world concepts really have
no market at the time of invention; they have to create one. In doing
so, these entrepreneurs go beyond the conventional marketing
process and often create markets with enormous potential for
sustained growth.
The External Marketing Environment
Most entrepreneurs believe they are clearly in control regarding
the type of business they wish to operate and how they operate it.
However, businesses do not operate in a vacuum. In fact, a host of
factors or forces in the marketing environment are largely beyond
the control of the entrepreneur. These forces can be placed into five
groups: social, economic, technological, competitive, and regula -
tory forces. Examples are what consumers themselves want and
need, changing technology, the state of the economy in terms of
whether it is expanding or contracting, actions that competitors
take, and government restrictions. These external forces may serve
as accelerators or brakes on marketing, sometimes expanding a
venture’s marketing opportunities and at other times restricting
them. Importantly, successful entrepreneurs evaluate these forces to
determine what business opportunities such forces might provide.
And entrepreneurs continue to monitor these forces to determine
how best to adapt their businesses to survive and grow.
8
Personal interview with Carl Dietrich, creator of the Terrafugia Transition, 2009.
10 MARKETING FOR ENTREPRENEURS
Chapter 1 • Marketing in an Entrepreneurial Context 11
This is in contrast to other, typically unsuccessful, entrepreneurs
who treat these external forces as rigid, absolute constraints that are
entirely outside their influence. These entrepreneurs simply fail to
anticipate and respond to these external forces. But successful
entrepreneurs who are forward looking and action oriented do
take advantage of these external forces. In other words, they find
opportunities that are created by these external forces by aligning
their enterprise to capitalize on these forces. For example, one
entrepreneur saw the rising incidence of obesity in America, an
external factor seemingly beyond his control. But by observing and
analyzing this trend, he developed a “plus size” retail clothing
business and became a successful entrepreneur. Another entrepreneur
noticed the aging population of America, especially the growth in the
grandparent population who wanted to stay connected with their
grandchildren. Capitalizing on this trend, the entrepreneur rolled out
a new online business called “grandparents.com.”
Five Forces in the Entrepreneurial Marketing Environment
As mentioned, there are five environmental forces in entre -
preneurial marketing: social, economic, technological, competitive,
and regulatory forces.
Social Forces
Social forces include the characteristics of the population, as well
as its values and its behavior. Changes in these forces can have
a dramatic impact on what opportunities are available to the
entrepreneur. For example, there have been some major demogra -
phic shifts in the United States, including growing ethnic diversity
and an aging population. If current trends continue, niche
marketing opportunities based on ethnicity and age will continue
to emerge. For example, some entrepreneurs have built their
businesses to appeal directly to specific generational cohorts (i.e.,
for age groups such as seniors, baby boomers, Generation X,
Generation Y)—adult diapers for seniors and wireless communi -
cation devices for Gen Y. Other entrepreneurs have launched
12 MARKETING FOR ENTREPRENEURS
businesses to appeal to specific ethnic groups, particularly ethnic
food businesses.
A second social force is culture, and in recent years, Americans
have experienced notable cultural changes that have affected
consumer attitudes and values. For example, with more working
women, the number of tasks to do is expanding, while the time
available to do them is shrinking. This has led to the phenomenon
of time poverty. Entrepreneurs are responding to this trend by
creating ventures that help alleviate or reduce the consumer’s time
poverty such as delivery services, online shopping businesses, and
ready-to-eat foods. Another emerging cultural trend is that
Americans are becoming more experiential. That is, they are
seeking new experiences and are willing to try new things,
including travel, new forms of entertainment, and dining.
Economic Forces
Another environmental force is the nature of our economy.
Entrepreneurs must recognize what is happening at the macro -
economic level of the economy, such as whether the economy is
growing as well as determining the state of consumer confidence
in the economy, which will affect business and consumer spending.
At the microeconomic level, entrepreneurs must determine if the
consumer actually has the ability to buy particular products
and/or services. Many Americans have seen erosion of their actual
spending power, and this has led to a trend called customer value
consciousness. Many entrepreneurs have successfully built
businesses to respond to this trend such as “dollar store” retail
formats.
Technological Forces
Another environmental force is dramatic technological change.
In fact, new technologies are forever changing the way consumers
shop and what they buy. Moreover, new technologies are
enabling entrepreneurs to create unique new businesses or
enhance how they can conduct their businesses. One of the most
important technologies that has changed the marketing landscape
is the Internet. Entirely new entrepreneurial enterprises have
Chapter 1 • Marketing in an Entrepreneurial Context 13
been built around the Internet—pure-play e-businesses that exist
only in an electronic marketplace. A good example is Craigslist
with its electronic classified ad business. Other brick-and-mortar
enterprises also leverage the Internet as part of their overall
marketing efforts.
The Internet has also given rise to a host of new businesses built
upon the concept of electronic social networks/communities such
as MySpace and Facebook as well as electronic trading businesses
such as eBay. Finally, wireless communication technology is also
enabling consumers to stay connected to the Internet 24/7 regardless
of where they are, and this is providing new opportunities for
entrepreneurs wishing to provide goods and services to this mobile
population.
Competitive Forces
Competitive forces in the external marketing environment are
very important for the entrepreneur to consider. The first thing
every successful entrepreneur realizes is that there is always some
form of current competition in the marketplace. So, if you seek
funding for your enterprise, never go to a bank, angel, or private
equity firm and state that your business has “no competition.”
In one way or another, it certainly does. Therefore, competition
should be considered broadly as any alternative that could satisfy a
specific customer’s needs. This includes a variety of forms of
competition ranging from pure (direct) competition—where every
company offers a similar product to a similar customer—to total
budget competition—where customers consider spending their
scarce resources across seemingly dissimilar offerings (e.g., spend
money on an MBA vs. buying a new boat). The trend in America in
terms of competition is that most industries and markets are highly
competitive, and the consumer has tremendous choice in terms of
providers. Therefore, an entrepreneur has to determine “how to
compete” and “how to differentiate” his or her business from the
existing competitors. We will discuss competition in more detail in
Chapter 4. But for now, you must recognize that competition is an
external force that will surely affect the type of business you will
build and the competitive strategy you craft. For example, most
14 MARKETING FOR ENTREPRENEURS
entrepreneurial startups do not have the size and scale to compete
on price, so most attempt to compete on a nonprice dimension
emphasizing some clearly superior performance deemed valuable
to the customer (e.g., great customer service).
Regulatory Forces
Entrepreneurs must also be conscious of the fact that regulatory
forces can influence the nature or scope of opportunities in the
marketplace. Regulations consist of restrictions that local, state, and
federal laws place on business with respect to the conduct of its
activities. Regulation exists to protect companies and consumers and
ensure a competitive marketplace. New regulations and deregulation
can both provide opportunities for entrepreneurs. Deregulation of
several industries over the past few decades has led to the emergence
of new enterprises. For example, deregulation of the U.S. telecom
industry allowed for the startup of new long-distance telephone
companies and later on the development of numerous wireless
phone companies. Similarly, deregulation of the U.S. airline industry
produced opportunities for many regional airline startups, including
Southwest Airlines and JetBlue. Greater regulation has also provided
opportunities for entrepreneurs. For example, when the Environ -
mental Protection Agency enacted stronger regulations to ensure
cleaner air and water, many companies turned to entrepreneurs for
new technologies to ensure compliance.
Environmental Scanning
Environmental scanning is the process of continually acquiring
information on the external marketing environment to identify and
interpret potential trends that may lead to entrepreneurial business
opportunities. Entrepreneurs engage in environmental scanning to
uncover opportunities that others may miss or ignore. Many refer
to the environmental scanning process as “trendspotting.” For
some entrepreneurs, the goal is to discover “the next big thing” or
at least identify market trends that might lead to the development
and launching of a new enterprise.
One of the things you will have to understand as you attempt to
engage in environmental scanning is determining what is a true
9
Based on a speech delivered at the University of New Hampshire, fall 2004.
Chapter 1 • Marketing in an Entrepreneurial Context 15
trend. A trend is the specific or general direction that a society is
headed, which transforms things from what they are today to
something different in the future. A trend makes a difference in the
way people live and work. Trends are enduring phenomena that are
radically affecting the way consumers behave in the marketplace
and/or the way we do business. Trends create major structural
changes in society: sociocultural, economic, or technological. A trend
is different from a fad, which comes and goes quickly. A fad does not
change society, but a trend does. Environmental scanning is an
important skill for entrepreneurs to possess. To become a good
scanner, you will have to do the following:
9
• Adjust your reading, listening, and viewing habits. This means
focusing on things of substance and relevance to your goal of
becoming an entrepreneur. Of particular importance is becoming
a broad-based reader to discover societal trends that underpin market
behavior. You need to make a commitment to scan for information
that will provide clues about possible marketing opportunities.
• Network with the right people. This means staying engaged with
knowledgeable and informed individuals and to remain open to
learn from these people. One expert suggests that you “take a neu-
roscientist, sociologist, psychologist, or artist to lunch.” These
people can provide insight into human behavior, how markets
develop, and how consumers think and feel about their experi-
ences in the marketplace. Networking also involves being tapped
into your community to keep in touch with trends that are affecting
the people who might become your customers.
• Be self-observant. This means spending time discovering what
makes you tick, what is important to you, and what challenges or
problems you face. You might not be the typical consumer, but this
is a good exercise in uncovering what possible trends are driving
your behavior. You can then determine whether what affects you
may also affect others.
• Challenge your assumptions. In many cases, there are traditions in
society and/or in particular industries that may have outlived their
usefulness. For example, there is an American tradition for school-age
16 MARKETING FOR ENTREPRENEURS
students to have a two-month summer vacation. And most people
do not know why this tradition persists. Well, it is a carryover from
the agrarian society when children in farming families took time off
from school to help harvest the crops. Today, many educational insti-
tutions are challenging this tradition, and this has led to entrepre -
neurial opportunities such as private schools offering year-long
programs or innovative summer learning programs.
• Spend time watching and talking with customers. This is perhaps one
of the most important steps in the environmental scanning process.
Good environmental scanners focus their time on interacting with
customers to determine their current and future needs. Successful
entrepreneurs, in fact, pinpoint not only where customers are
today (in terms of needs) but where they are heading in the future.
What is also important is to recognize that not all trends affect all
consumers or affect them in the same way. Moreover, for each
trend you might identify, there may be other “countervailing”
trends that might be important for you to consider. For example, a
novice environmental scanner might conclude that the United
States is experiencing a health consciousness trend. But this may be
only partly true. Many Americans are more concerned about their
health, and this has opened up opportunities for entrepreneurs
who provide health-oriented goods and services. But clearly not all
Americans have embraced health consciousness since many
individuals remain overweight in this country. Accordingly, some
entrepreneurs are building businesses to cater to overweight
individuals, including plus-size clothing companies.
Finally, good environmental scanners not only interpret trends
but also act on trends that offer the best business opportunities. This
is illustrated by the Noah principle. That is, “Predicting rain doesn’t
count, building arks does.” Thus, environmental scanning requires
both market vigilance and marketing action.
An Environmental Scan of the United States
An environmental scan of the U.S. marketplace might uncover
key trends, such as those listed in Figure 1.3. These trends are
categorized under the five environmental forces discussed earlier.
Social Growing ethnic diversity
Aging
Time poverty
Value consciousness
Eco-consciousness
Economic Growth in electronic commerce economy
Shift toward an experience economy
Technological Diffusion of digital and mobile technologies
Growth in biotechnology and nanotechnology
Advances in medicine and medical treatments
Competitive Increase in global competition
Emergence of China and India as global competitors
Mergers and acquisitions to improve competitiveness
Emergence of entrepreneurial enterprises
Regulatory Increased protection for intellectual property
Increased emphasis on free trade
Deregulation to encourage competition
FIGURE 1.3 An Environmental Scan of the United States
Chapter 1 • Marketing in an Entrepreneurial Context 17
Although the list of trends is far from complete, it reveals the
breadth of an environmental scan—from the growing ethnic
diversity of the American population to the shift to the experience
economy to the increasing use of new technologies. As you
examine the trends listed in Figure 1.3, you should be able to think
about the implications of such trends and whether you can find
opportunities that will stem from these trends.
As an entrepreneur, you have to understand marketing and its
role in achieving venture success. Marketing helps you identify the
right opportunity, and it plays a pivotal role in capitalizing on that
opportunity. It is also critical that you understand the external
marketing environment and recognize the opportunities and
constraints it can place on your enterprise. Staying close to the
market is the best way to ensure that you are building your
enterprise on a solid foundation.
KEY TAKEAWAYS
• Understand marketing and its central importance to entrepreneurial success.
• Use marketing to find a source of existing “market pain” and craft a unique way to
cure it. Or, use marketing to create an entirely new market.
• Use marketing to zero in on the “right customer”—your target market.
• Go into the market to talk with and listen to customers (obtain the voice of consumer).
• Became an environmental scanner and discover truly sustainable marketing
opportunities.
ENTREPRENEURIAL EXERCISE
Engage in some environmental scanning through broad-based reading or other means.
Spot some trends. What are they? What type of marketing opportunities do these trends
offer the potential entrepreneur? Now, make a list of two to three opportunities, and go
into the market and talk to five to six potential customers to get their feedback on the
opportunities. Do the customers agree there is an opportunity or not?
KEY TERMS
18 MARKETING FOR ENTREPRENEURS
• Marketing 3
• Target market 5
• Market segmentation 6
• Marketing mix 6
• 5Ps 6
• 8Ps 7
• Five environmental forces 11
• Environmental scanning 14
doc_797153046.pdf
Within this detailed explanation pertaining to marketing in an entrepreneurial context.
1
1
Peter F. Drucker, The Practice of Management (New York: Harper & Row, 1954);
George S. Day, “The Capabilities of Market-Driven Organizations,” Journal of
Marketing 58 (October 1994): 37–52.
1
Marketing in an
Entrepreneurial Context
S
o, you want to be an entrepreneur! That’s great. It can be a
challenging and rewarding experience. And if I asked you why
you wanted to be an entrepreneur, I bet many of you would say it is
because you want to make money. Well, that is the first mistake
most entrepreneurs make. In fact, the actual purpose of an
enterprise is not to make money. Instead, experts tell us that the
actual purpose of an enterprise is the creation and retention of
satisfied customers.
1
How well you perform these vital tasks will
be reflected in the level of profitability of your enterprise. In other
words, your profit is simply the scorecard with respect to howwell
you stay wedded to your real purpose.
You must understand this important point or your entre-
preneurial career is likely to be truncated. Moreover, it is critical
for you to understand marketing’s role in creating and retaining
satisfied customers. Simply put, it is marketing that enables you to
discover, create, arouse, and satisfy customer needs and wants. In
entrepreneurial terms, we often say that a successful enterprise is
built by a smart entrepreneur who finds a source of “market pain”
and creates a “unique” way to cure it!
For example, consider the young entrepreneurs who started
Three Dog Bakery. Dan Dye and Mark Beckloff recognized that the
dog treat category was a multibillion-dollar category in the United
States and growing at a double-digit rate. They were also smart
enough to recognize another key trend: dog as family member. That
is, particular owners of dogs viewed themselves as “pet parents”
and wanted only the very best for their dogs, including healthy,
all-natural, and tasty treats. But many pet parents were unhappy
(“market pain”) with current products being marketed. The
solution was to offer the pet parents an “innovative dog bakery”
where dog owners could come (with their dogs) and buy products
that they trusted and that their dogs would love.
The result was a tremendous success. The company has opened
up franchise-owned stores all across America and also distributes
its dog treats through major retail chains, including Kroger, Wal-
Mart, Costco, and Hannafords. The company is planning to triple
the number of stores and double factory sales over the next three
years. And, like many good, socially conscious entrepreneurs, the
founders of Three Dog Bakery have also started a nonprofit
foundation (Gracie Foundation) for neglected and abused dogs.
Three Dog Bakery is an example of a successful entrepreneurial
startup that was based on a key concept in marketing—
discovering customer needs and satisfying them. Or, as we say,
finding a source of market pain and finding a unique way to
alleviate that pain!
Marketing: Defined
Many people are confused or have misconceptions about the concept
of marketing. First, do not confuse marketing with advertising,
selling, or common sense. Although advertising is one of the more
visible forms of marketing, it is but one small element of marketing.
Marketing is not selling. In fact, some experts suggest that if
entrepreneurs engage in effective marketing, it can reduce the need
for selling. Marketing is not simply common sense. While good
2 MARKETINGFOR ENTREPRENEURS
2
Regis McKenna, “Marketing Is Everything,” Harvard Business Review (January–
February 1991): 65–79.
3
“AMAAdopts NewDefinitionof Marketing,” Marketing News, September 15, 2004, 1.
entrepreneurs are often perceptive and intuitive, these traits alone are
not sufficient for making successful marketing decisions. Effective
marketing requires intimate knowledge and understanding of
consumers andcompetition that goes beyondsimple common sense.
Second, be wary of the many misconceptions about marketing,
including many negative ones. For example, marketing is not huck-
sterism; it is not selling unwanted things and taking the customer’s
money. Nor is marketing about manipulating, fooling, or tricking
the customer.
2
Instead, marketing is an organizational function and a
set of processes for creating, communicating, and delivering value to
customers and for managing customer relationships in ways that
benefit the organization and its stakeholders.
3
This definition stresses
the importance of customer value and customer relationships. As an
entrepreneur, your business must create and deliver customer value.
Moreover, to retain customers, you must focus on developing long-
term relationships with them. If you do, you will find that these
customers will remain loyal to your enterprise and can be a valuable
resource in recommending your business to others.
The Seven Steps in the Marketing Process
As an entrepreneur, you will have to understand and follow the
seven steps in the marketing process to create and sustain a
successful venture:
1. Identify and understand customer needs.
2. Develop products, services, or experiences to meet those needs.
3. Price the products, services, or experiences effectively.
4. Informcustomers that these products, services, or experiences exist.
5. Deliver the products, services, or experiences efficiently and conven-
iently for the customer.
6. Ensure customer satisfaction during and after the exchange process.
7. Build long-termrelationships with the customers.
Chapter 1 • Marketing in an Entrepreneurial Context 3
David Schomer knows something about the importance of entrepreneurial
marketing. One of the key steps he has taken to ensure the success of his $1.7
million business is to focus on rigorous staff training to ensure that the
customer receives outstanding service and products and a superior customer
experience. This has resulted in high customer loyalty to the business. He also
says that his pursuit of gourmet coffee perfection resonates with a customer
base that is looking for an expression of crafts manship that chains like
Starbucks cannot provide. Thus, he says he has no desire to turn Vivace into
the next Starbucks. Instead, he aims for manageable and sustained growth.
And, he states, “I make coffee for people who love coffee.” But like many other
successful entrepreneurs, Schomer is not complacent and continues to find
new ways to create and market goods of extraordinarily high quality.
Accordingly, he deserves to be in the entrepreneurial marketing spotlight!
4
ENTREPRENEURIAL MARKETING SPOTLIGHT
Why Marketing in New Ventures Is Different
Marketing in an entrepreneurial context is different from an
established corporation. As an entrepreneur, you will face different
marketing issues compared to executives in a corporate environment.
For example, unlike your corporate counterparts:
• The entrepreneur must use marketing to identify new products, ser-
vices, or experiences to market to new customers and not simply
use it to sell existing products and services to existing customers.
• The entrepreneur must use marketing to obtain his or her “first cus-
tomer” (gain the first dollar of business) and not simply manage an
existing customer base.
4
Adapted from Entrepreneur Power Plays (New York: McGraw-Hill, 2008).
David Schomer, founder of Expresso Vivace Roasteria in Seattle,
Washington, has mastered many of these steps in the marketing
process and therefore finds himself in the Entrepreneurial
Marketing Spotlight!
4 MARKETING FOR ENTREPRENEURS
• The entrepreneur must use marketing to build a new brand and not
simply manage an existing brand.
• The entrepreneur must use marketing to establish effective mar-
keting channels of distribution and not simply manage existing
distribution methods.
• The entrepreneur must use marketing to establish initial price
points for his or her offerings and not simply manage current
prices for existing offerings.
• The entrepreneur must use marketing communications to per-
suade customers to try his or her offerings and not simply remind
customers to continue to buy.
• The entrepreneur, because of resource scarcity, must find creative
ways to leverage his or her marketing efforts, especially early in the
venture startup phase.
Unfortunately, venture failure continues to be the rule and
not the exception. But marketing can help you improve your odds
of venture success. It can help provide you with a solid
understanding of customers and markets, identify and validate
the right opportunity, and determine how best to capitalize on that
opportunity. One of the biggest problems faced by many
entrepreneurs is the tendency to chase “too many rabbits.” In other
words, you must focus and try not to be all things to all people.
Marketing can provide this focus. In short, it can help you zero in
on the right customers—your target market—the specific group
of customers toward which you direct your marketing efforts
or marketing program. It is marketing—specifically, marketing
research—that allows you to determine this target market and then
enables you to configure your marketing program.
Using Marketing to
Discover and Satisfy Customer Needs
It is important for you to recognize that if you wish to improve your
odds of venture success, you must use marketing to discover and
satisfy customer needs. The discovery process sounds simple but it
is not. Thousands of ventures fail every year in the United States,
Chapter 1 • Marketing in an Entrepreneurial Context 5
6 MARKETING FOR ENTREPRENEURS
and in many cases, the failure is a direct result of the entrepreneur
failing to carefully examine customers’ needs or simply misreading
those needs. Granted, it is often difficult to get a precise reading
on what the customer needs. But as an entrepreneur, you have to be
willing to be persistent and creative to uncover customer needs.
One of the best ways to do so is to go into the market to talk with
and listen to customers. Through dialogue and active engagement
with the customer, you will gain an understanding of the customer.
In the entrepreneurship field, we often refer to this process as
obtaining “the voice of the consumer.” Voice of consumer research
will be discussed later as an important part of finding and evaluating
business opportunities.
After properly discovering customer needs, the entrepreneur
must begin the task of designing his or her business to satisfy those
needs. In fact, recent research involving forty-five successful entre -
preneurs revealed that delivering customer satisfaction was a key
imperative for venture success.
5
But, as stated earlier, your venture
cannot satisfy all consumers’ needs, so you must concen trate your
efforts on a specific group of potential customers—your target
market. Selecting the proper target market involves the process of
market segmentation—placing customers into groups (segments)
that (1) have common needs and (2) will respond to a specific
marketing offer. We will discuss segmentation in depth in Chapter 5.
For now, it is sufficient that you know that you will select a given
segment (or segments) to pursue—your target market(s)—and
create the marketing offer, designed to appeal to the target market
and satisfy its needs. This marketing offering is called your
marketing mix. The marketing mix is what gets integrated into a
tangible marketing program that your business will use to gain and
keep customers. For product-based ventures, your marketing
mix consists of five elements, or 5Ps: product, price, promotion,
place, and people. For a service-based venture, the marketing mix
5
Frederick G. Crane and Jeffrey E. Sohl, “Imperatives for Venture Success:
Entrepreneurs Speak,” International Journal of Entrepreneurship and Innovation 5,
no. 2 (2004): 99–106.
consists of eight elements, or 8Ps: product, price, promotion, place,
people, physical evidence, process, and productivity.
The 5Ps of Product-Based Ventures
A marketing program for a product-based venture—a venture
that markets “tangible” or physical products—would consist of a
combination of five marketing mix elements. The 5Ps are used to
create, communicate, and deliver value to your customer:
• Product: The product to satisfy the customer’s needs
• Price: The cost to the customer
• Promotion: The means of communication between you and the customer
• Place: The means of getting the product into the customer’s hands
• People: The individuals who will work with you and your venture
Figure 1.1 shows the 5Ps for Sephora, a very successful beauty
and skincare enterprise.
Chapter 1 • Marketing in an Entrepreneurial Context 7
Product: Broad range of quality skincare, makeup, and fragrances for women
and men (nationally branded and private label)
Price: Above market
Promotion: Public relations, catalogs, and customer loyalty program
Place: More than 500 stores in fourteen countries, online (www.sephora.com),
and 1-877-Sephora
People: Highly trained, knowledgeable, and customer-centric consultants
FIGURE 1.1 The 5Ps for Sephora
Sephora has a unique open-sell environment with more than
200 brands plus Sephora’s private label. The company emphasizes
training of its people and even opened Sephora University in
San Francisco to educate its personnel on both products and
customer relations. The company has achieved outstanding year-
over-year sales growth since its launch.
6
Christopher Lovelock and Jochen Wirtz, Services Marketing, 5th ed. (Upper
Saddle River, NJ: Pearson, 2004).
8 MARKETING FOR ENTREPRENEURS
The 8Ps of Service-Based Ventures
A marketing program for a service-based venture—a venture
that markets “intangibles”—would consist of a combination of
eight marketing mix elements (8Ps):
6
• Product: The product (service) to satisfy the customer’s needs
• Price: The cost to the customer
• Promotion: The means of communication between you and the customer
• Place: The means of getting the product into the customer’s hands
• People: The individuals who will work with you and your venture
• Physical evidence: The “tangibles” that surround your service
• Process: The way the service is created and delivered
• Productivity: Balancing service output with service quality
Figure 1.2 shows the 8Ps for Southwest Airlines, one of the most
successful entrepreneurial airline startups in America. In fact,
Southwest Airlines went from a small startup with just a few
planes to a major carrier in less than twenty years. It has also been
the most consistently profitable airline in the United States and has
achieved high levels of customer satisfaction year after year.
Market Fulfillment Versus Market Creation
It is safe to state that most new ventures are based on the concept
of market fulfillment. That is, the entrepreneur enters an “existing
market” and uses the conventional marketing process. But some
new ventures are based on “market creation”—creating a new
market that did not currently exist. In this case, the consumers
generally have no idea about a need for such a new product,
service, or experience.
In the case of market fulfillment, the conventional marketing
process of discovering and satisfying customer needs really does
Product: Low cost, no frills, convenience, point-to-point airline passenger
service
Price: Low prices, below market
Promotion: Broad range of marketing communications, including broadcast
television
Place: Major markets but often in secondary airports adjacent to major
airports to keep costs down
People: Specific emphasis on training to achieve excellent customer service
Physical evidence: Keeping the planes clean and safe; allowing employees to
dress casually and strong branding, color language, etc.
Process: Using the same plane type to make it easier for employees to
manage operations and making it easy and simple to fly with Southwest,
including online booking
Productivity: Key emphasis on a fifteen-minute turnaround time (getting the
plane ready after landing and getting it back in the air safely)
FIGURE 1.2 The 8Ps for Southwest Airlines
Chapter 1 • Marketing in an Entrepreneurial Context 9
work quite well. But it does not work so well when an entrepreneur
is attempting to create entirely new markets.
7
Henry Ford, famous
automobile pioneer, once said, “If I asked the customer what they
really wanted, they’d have said a faster horse!”
Basically, Ford was telling us that when we try to discover what
customers want, they will often simply ask for better versions of
existing products. But this approach will not help an entrepreneur
who wishes to produce breakthrough or new-to-world innovations.
These concepts are radically different and are sometimes beyond
the imagination of the customers. Thus, customers may not recog -
nize that they need or want such innovative concepts. For example,
FedEx created the overnight package delivery market, a market
that did not previously exist and a market that customers did not
7
Frederick G. Crane and Marc H. Meyer, “Why Corporate America Cannot
Innovate,” Working Paper, Northeastern University, 2008.
know could exist. CNN created the 24/7 cable news market,
and again, customers did not imagine such an offering being
developed. A more recent example is the “flying car.” The
Terrafugia Transition is a two-seat aircraft designed to take off and
land at local airports and drive on any road. According to
entrepreneur and creator Carl Dietrich, this product changes the
world of personal mobility. Travel can now become a hassle-free
integrated land-air experience. It will be available on the market in
2011, and forty people have already made a deposit on the $195,000
flying car!
8
So, in short, entrepreneurs of new-to-world concepts really have
no market at the time of invention; they have to create one. In doing
so, these entrepreneurs go beyond the conventional marketing
process and often create markets with enormous potential for
sustained growth.
The External Marketing Environment
Most entrepreneurs believe they are clearly in control regarding
the type of business they wish to operate and how they operate it.
However, businesses do not operate in a vacuum. In fact, a host of
factors or forces in the marketing environment are largely beyond
the control of the entrepreneur. These forces can be placed into five
groups: social, economic, technological, competitive, and regula -
tory forces. Examples are what consumers themselves want and
need, changing technology, the state of the economy in terms of
whether it is expanding or contracting, actions that competitors
take, and government restrictions. These external forces may serve
as accelerators or brakes on marketing, sometimes expanding a
venture’s marketing opportunities and at other times restricting
them. Importantly, successful entrepreneurs evaluate these forces to
determine what business opportunities such forces might provide.
And entrepreneurs continue to monitor these forces to determine
how best to adapt their businesses to survive and grow.
8
Personal interview with Carl Dietrich, creator of the Terrafugia Transition, 2009.
10 MARKETING FOR ENTREPRENEURS
Chapter 1 • Marketing in an Entrepreneurial Context 11
This is in contrast to other, typically unsuccessful, entrepreneurs
who treat these external forces as rigid, absolute constraints that are
entirely outside their influence. These entrepreneurs simply fail to
anticipate and respond to these external forces. But successful
entrepreneurs who are forward looking and action oriented do
take advantage of these external forces. In other words, they find
opportunities that are created by these external forces by aligning
their enterprise to capitalize on these forces. For example, one
entrepreneur saw the rising incidence of obesity in America, an
external factor seemingly beyond his control. But by observing and
analyzing this trend, he developed a “plus size” retail clothing
business and became a successful entrepreneur. Another entrepreneur
noticed the aging population of America, especially the growth in the
grandparent population who wanted to stay connected with their
grandchildren. Capitalizing on this trend, the entrepreneur rolled out
a new online business called “grandparents.com.”
Five Forces in the Entrepreneurial Marketing Environment
As mentioned, there are five environmental forces in entre -
preneurial marketing: social, economic, technological, competitive,
and regulatory forces.
Social Forces
Social forces include the characteristics of the population, as well
as its values and its behavior. Changes in these forces can have
a dramatic impact on what opportunities are available to the
entrepreneur. For example, there have been some major demogra -
phic shifts in the United States, including growing ethnic diversity
and an aging population. If current trends continue, niche
marketing opportunities based on ethnicity and age will continue
to emerge. For example, some entrepreneurs have built their
businesses to appeal directly to specific generational cohorts (i.e.,
for age groups such as seniors, baby boomers, Generation X,
Generation Y)—adult diapers for seniors and wireless communi -
cation devices for Gen Y. Other entrepreneurs have launched
12 MARKETING FOR ENTREPRENEURS
businesses to appeal to specific ethnic groups, particularly ethnic
food businesses.
A second social force is culture, and in recent years, Americans
have experienced notable cultural changes that have affected
consumer attitudes and values. For example, with more working
women, the number of tasks to do is expanding, while the time
available to do them is shrinking. This has led to the phenomenon
of time poverty. Entrepreneurs are responding to this trend by
creating ventures that help alleviate or reduce the consumer’s time
poverty such as delivery services, online shopping businesses, and
ready-to-eat foods. Another emerging cultural trend is that
Americans are becoming more experiential. That is, they are
seeking new experiences and are willing to try new things,
including travel, new forms of entertainment, and dining.
Economic Forces
Another environmental force is the nature of our economy.
Entrepreneurs must recognize what is happening at the macro -
economic level of the economy, such as whether the economy is
growing as well as determining the state of consumer confidence
in the economy, which will affect business and consumer spending.
At the microeconomic level, entrepreneurs must determine if the
consumer actually has the ability to buy particular products
and/or services. Many Americans have seen erosion of their actual
spending power, and this has led to a trend called customer value
consciousness. Many entrepreneurs have successfully built
businesses to respond to this trend such as “dollar store” retail
formats.
Technological Forces
Another environmental force is dramatic technological change.
In fact, new technologies are forever changing the way consumers
shop and what they buy. Moreover, new technologies are
enabling entrepreneurs to create unique new businesses or
enhance how they can conduct their businesses. One of the most
important technologies that has changed the marketing landscape
is the Internet. Entirely new entrepreneurial enterprises have
Chapter 1 • Marketing in an Entrepreneurial Context 13
been built around the Internet—pure-play e-businesses that exist
only in an electronic marketplace. A good example is Craigslist
with its electronic classified ad business. Other brick-and-mortar
enterprises also leverage the Internet as part of their overall
marketing efforts.
The Internet has also given rise to a host of new businesses built
upon the concept of electronic social networks/communities such
as MySpace and Facebook as well as electronic trading businesses
such as eBay. Finally, wireless communication technology is also
enabling consumers to stay connected to the Internet 24/7 regardless
of where they are, and this is providing new opportunities for
entrepreneurs wishing to provide goods and services to this mobile
population.
Competitive Forces
Competitive forces in the external marketing environment are
very important for the entrepreneur to consider. The first thing
every successful entrepreneur realizes is that there is always some
form of current competition in the marketplace. So, if you seek
funding for your enterprise, never go to a bank, angel, or private
equity firm and state that your business has “no competition.”
In one way or another, it certainly does. Therefore, competition
should be considered broadly as any alternative that could satisfy a
specific customer’s needs. This includes a variety of forms of
competition ranging from pure (direct) competition—where every
company offers a similar product to a similar customer—to total
budget competition—where customers consider spending their
scarce resources across seemingly dissimilar offerings (e.g., spend
money on an MBA vs. buying a new boat). The trend in America in
terms of competition is that most industries and markets are highly
competitive, and the consumer has tremendous choice in terms of
providers. Therefore, an entrepreneur has to determine “how to
compete” and “how to differentiate” his or her business from the
existing competitors. We will discuss competition in more detail in
Chapter 4. But for now, you must recognize that competition is an
external force that will surely affect the type of business you will
build and the competitive strategy you craft. For example, most
14 MARKETING FOR ENTREPRENEURS
entrepreneurial startups do not have the size and scale to compete
on price, so most attempt to compete on a nonprice dimension
emphasizing some clearly superior performance deemed valuable
to the customer (e.g., great customer service).
Regulatory Forces
Entrepreneurs must also be conscious of the fact that regulatory
forces can influence the nature or scope of opportunities in the
marketplace. Regulations consist of restrictions that local, state, and
federal laws place on business with respect to the conduct of its
activities. Regulation exists to protect companies and consumers and
ensure a competitive marketplace. New regulations and deregulation
can both provide opportunities for entrepreneurs. Deregulation of
several industries over the past few decades has led to the emergence
of new enterprises. For example, deregulation of the U.S. telecom
industry allowed for the startup of new long-distance telephone
companies and later on the development of numerous wireless
phone companies. Similarly, deregulation of the U.S. airline industry
produced opportunities for many regional airline startups, including
Southwest Airlines and JetBlue. Greater regulation has also provided
opportunities for entrepreneurs. For example, when the Environ -
mental Protection Agency enacted stronger regulations to ensure
cleaner air and water, many companies turned to entrepreneurs for
new technologies to ensure compliance.
Environmental Scanning
Environmental scanning is the process of continually acquiring
information on the external marketing environment to identify and
interpret potential trends that may lead to entrepreneurial business
opportunities. Entrepreneurs engage in environmental scanning to
uncover opportunities that others may miss or ignore. Many refer
to the environmental scanning process as “trendspotting.” For
some entrepreneurs, the goal is to discover “the next big thing” or
at least identify market trends that might lead to the development
and launching of a new enterprise.
One of the things you will have to understand as you attempt to
engage in environmental scanning is determining what is a true
9
Based on a speech delivered at the University of New Hampshire, fall 2004.
Chapter 1 • Marketing in an Entrepreneurial Context 15
trend. A trend is the specific or general direction that a society is
headed, which transforms things from what they are today to
something different in the future. A trend makes a difference in the
way people live and work. Trends are enduring phenomena that are
radically affecting the way consumers behave in the marketplace
and/or the way we do business. Trends create major structural
changes in society: sociocultural, economic, or technological. A trend
is different from a fad, which comes and goes quickly. A fad does not
change society, but a trend does. Environmental scanning is an
important skill for entrepreneurs to possess. To become a good
scanner, you will have to do the following:
9
• Adjust your reading, listening, and viewing habits. This means
focusing on things of substance and relevance to your goal of
becoming an entrepreneur. Of particular importance is becoming
a broad-based reader to discover societal trends that underpin market
behavior. You need to make a commitment to scan for information
that will provide clues about possible marketing opportunities.
• Network with the right people. This means staying engaged with
knowledgeable and informed individuals and to remain open to
learn from these people. One expert suggests that you “take a neu-
roscientist, sociologist, psychologist, or artist to lunch.” These
people can provide insight into human behavior, how markets
develop, and how consumers think and feel about their experi-
ences in the marketplace. Networking also involves being tapped
into your community to keep in touch with trends that are affecting
the people who might become your customers.
• Be self-observant. This means spending time discovering what
makes you tick, what is important to you, and what challenges or
problems you face. You might not be the typical consumer, but this
is a good exercise in uncovering what possible trends are driving
your behavior. You can then determine whether what affects you
may also affect others.
• Challenge your assumptions. In many cases, there are traditions in
society and/or in particular industries that may have outlived their
usefulness. For example, there is an American tradition for school-age
16 MARKETING FOR ENTREPRENEURS
students to have a two-month summer vacation. And most people
do not know why this tradition persists. Well, it is a carryover from
the agrarian society when children in farming families took time off
from school to help harvest the crops. Today, many educational insti-
tutions are challenging this tradition, and this has led to entrepre -
neurial opportunities such as private schools offering year-long
programs or innovative summer learning programs.
• Spend time watching and talking with customers. This is perhaps one
of the most important steps in the environmental scanning process.
Good environmental scanners focus their time on interacting with
customers to determine their current and future needs. Successful
entrepreneurs, in fact, pinpoint not only where customers are
today (in terms of needs) but where they are heading in the future.
What is also important is to recognize that not all trends affect all
consumers or affect them in the same way. Moreover, for each
trend you might identify, there may be other “countervailing”
trends that might be important for you to consider. For example, a
novice environmental scanner might conclude that the United
States is experiencing a health consciousness trend. But this may be
only partly true. Many Americans are more concerned about their
health, and this has opened up opportunities for entrepreneurs
who provide health-oriented goods and services. But clearly not all
Americans have embraced health consciousness since many
individuals remain overweight in this country. Accordingly, some
entrepreneurs are building businesses to cater to overweight
individuals, including plus-size clothing companies.
Finally, good environmental scanners not only interpret trends
but also act on trends that offer the best business opportunities. This
is illustrated by the Noah principle. That is, “Predicting rain doesn’t
count, building arks does.” Thus, environmental scanning requires
both market vigilance and marketing action.
An Environmental Scan of the United States
An environmental scan of the U.S. marketplace might uncover
key trends, such as those listed in Figure 1.3. These trends are
categorized under the five environmental forces discussed earlier.
Social Growing ethnic diversity
Aging
Time poverty
Value consciousness
Eco-consciousness
Economic Growth in electronic commerce economy
Shift toward an experience economy
Technological Diffusion of digital and mobile technologies
Growth in biotechnology and nanotechnology
Advances in medicine and medical treatments
Competitive Increase in global competition
Emergence of China and India as global competitors
Mergers and acquisitions to improve competitiveness
Emergence of entrepreneurial enterprises
Regulatory Increased protection for intellectual property
Increased emphasis on free trade
Deregulation to encourage competition
FIGURE 1.3 An Environmental Scan of the United States
Chapter 1 • Marketing in an Entrepreneurial Context 17
Although the list of trends is far from complete, it reveals the
breadth of an environmental scan—from the growing ethnic
diversity of the American population to the shift to the experience
economy to the increasing use of new technologies. As you
examine the trends listed in Figure 1.3, you should be able to think
about the implications of such trends and whether you can find
opportunities that will stem from these trends.
As an entrepreneur, you have to understand marketing and its
role in achieving venture success. Marketing helps you identify the
right opportunity, and it plays a pivotal role in capitalizing on that
opportunity. It is also critical that you understand the external
marketing environment and recognize the opportunities and
constraints it can place on your enterprise. Staying close to the
market is the best way to ensure that you are building your
enterprise on a solid foundation.
KEY TAKEAWAYS
• Understand marketing and its central importance to entrepreneurial success.
• Use marketing to find a source of existing “market pain” and craft a unique way to
cure it. Or, use marketing to create an entirely new market.
• Use marketing to zero in on the “right customer”—your target market.
• Go into the market to talk with and listen to customers (obtain the voice of consumer).
• Became an environmental scanner and discover truly sustainable marketing
opportunities.
ENTREPRENEURIAL EXERCISE
Engage in some environmental scanning through broad-based reading or other means.
Spot some trends. What are they? What type of marketing opportunities do these trends
offer the potential entrepreneur? Now, make a list of two to three opportunities, and go
into the market and talk to five to six potential customers to get their feedback on the
opportunities. Do the customers agree there is an opportunity or not?
KEY TERMS
18 MARKETING FOR ENTREPRENEURS
• Marketing 3
• Target market 5
• Market segmentation 6
• Marketing mix 6
• 5Ps 6
• 8Ps 7
• Five environmental forces 11
• Environmental scanning 14
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