Minshall Flashcards
Draw and explain the opportunity cycle of enterprise
Companies start with a business idea.
To do something with it they need to invest in resources. (land, factories, people, machinery)
Coupled with suppliers (raw material and parts to make product) this allows productive activity (making the thing) to take place, which creates value (business model and marketing).
Sometimes a co-producer may be required to make complementary products (DVDs)
Customers purchase this value, which gives the company returns, and also attracts competition.
Some of the returns may need to be distributed back in investors. Accumulating enough returns means the business can invest in new resources and go around again.
Going round represents growth of the company.
What are the strategic challenges in managing the growth of a long established firm vs. a small entrepreneurial one?
Disruptive innovations – long established very good at listening to customers wants and needs. A new technology may come along that satisfies companies in new ways. (innovators dilemma)
Liability of newness – threat for new entrants because they have no yet proven themselves and have limited resources
Ansoff matrix of how firms grow
MARKET PENETRATION: Rebranding and changing consumers’ mind-set is challenging. E.g. Skoda turned their car from uncool to practical
PRODUCT DEVELOPMENT: Requires developing new capabilities: more difficult for new firms because of liability of newness, no brand name. yet trying to compete in existing markets. Large companies face “CANNABILISATION”
MARKET DEVELOPMENT: Small companies are more agile. Moving to new market may bring new legislation and cultures
DIVERSIFICATION: huge risk, large firms might be limited by PATH DEPENDENCY
IP mgmt.: need for resources, patent is as good as ability to enforce. Small companies looking for investment have challenge of trying to keep the tech secret, while showing investors to gain trust. Large companies can enter patent war
What are the operational challenges in managing the growth of a long-established firm vs. a small entrepreneurial one?
Resource constraints for small companies. Cash flow issues therefore difficult to invest in R&D. This is liability of newness for operations. Difficulty of finding investment/resources when they have no reputation/brand/track record.
Path dependency: challenge for large companies (resources, expertise, core competencies)
Lock in: large companies get “locked in” to a way of doing things. Less agile, slower decision process.
Market information: large companies might miss the opportunity if a new market is created. They are too focused on existing customers and markets (DISRUPTIVE INNOVATION). Smaller companies might need to make decisions based on assumptions. In a new market small companies might have an advantage over large companies as they are agile and not LOCKED IN.
What are the organisational challenges in managing the growth of a long-established firm vs. a small entrepreneurial one?
Penrose constraint: there is a limit to managers’ time and abilities, when small companies grow larger managers will eventually not have the time or ability to manage the large company anymore. E.g. domino
Bureaucracy in large companies delays decision making and actions
Smaller companies might face issues because their chaotic “hands-on” approach might not be able to cope with growth
Large companies often outsource activities which causes them to lose control. This can be a challenge for decision making
Larger companies might just be active internationally and need to maintain oversight in different countries
What are differences in characteristics between a small and large company?
Start up
Informal, ad hoc processes
Few systems
Heroic individual efforts; chaotic activities
Many creator, innovator types
Mgmt style is informal and hands on
Verbal communication and memory
Market info from intuition, insights and beliefs
Limited competitor awareness limited IPR protection
Established company
Formal processes
Many systems
Cross functional teams; delegated authority; coherence
Managed balance between types; clear job descriptions
Greater use of written communication
Market info from experience and research
Very aware of competitors, strategic use of IPR
What are the different aspects that affect the conversion of inputs into outputs?
Aspects that affect conversion of inputs into outputs are
- People
- Processes
- Facilities
People affected by: environment and economy
Facilities affected by: current available technology
Inputs affected by: industry sector, competitors and suppliers
Outputs affected by: consumer and consumer trends
What is an entrepreneur? What is the difference in focus of an entrepreneur and a traditional corporate venture?
Entrepreneur – someone who perceives an opportunity and creates an organisation to pursue it
Entrepreneurship – opportunity focussed
- Identify opportunity, then access resources
Contrast with..
Traditional corporate ventures – resource focussed
- Explore opportunities to employ existing resources
Explain the Cambridge cluster
Cambridge cluster
Currently
- 4,300 knowledge intensive firms
- 58,000 peple employed by knowledge intensive firms
- £11 bn in total turnover
- 3rd most successful uni innovation ecosystem (after Stanford and MIT)
- 30% of people work in the knowledge intensive sectors
- 65.6 patents granted per 100 k residents
What are the different roles of entrepreneurship?
The role of entrepreneurship
- Generation of novelty
- Development of novel products and services
- Creation of employment
- Creation of new industries
- Challenging existing players – renewal
- Satisfying un-met needs
Show entrepreneurship as a problem solving process
Entrepreneurship: a problem solving process
- Identify suitable opportunity
- Gain access to resources
- Mobilise resources
- Attract customers (and retain them)
- Establish resource generation
- Manage complexity within the firm
- Establish a network
Draw a diagram to help explain the firm’s relevant environment for investment and growth
The firm’s relevant environment is the set of opportunities for investment and growth that its entrepreneurs and managers perceive
Name different entrepeurial opportunities
Changes in demand – industrial inkjet printer (legislation)
Changes in supply – bumper crop of some cotton, caused cotton price to drop
Matching demand and supply – 2007 Nintendo Wii shipping in is directly from overseas factories to meet Christmas demand ® because of shortage of supplies.
Changes in the environment – PV panels for domestic retrofit – TESLA solar roof
Innovation
- Products: mobile phone
- Processes: float glass process
- Channels of distribution: iTunes
- Forms of marketing: RedBull
- Forms of organisation: open innovation.
What are the challenges with opportunity exploitation?
Opportunity Exploitation – Challenges
- Identifying and selecting a real opportunity
- Selecting and committing to a viable project
- Identifying resources
- Selecting a good sector
- Finding the right location
- Hitting the window of opportunity
- Minimising the risks of “Lock-in”
- I.e. being constrained by the choices you make about a particular technology, channel to market, etc.
Name the resource mobilisation challenges
Resource mobilisation challenges
- Obtaining input resources
- Funding
- Technology
- People
- Setting up production
- Make or buy
- Establishing routines and procedures
- Overcoming the “liability of newness”
- Sources of resources
- Customers
Name some challenges associated with resource generation
Resource Generation – challenges
- Achieving steady resource generation
- Establishing a viable market position
- Finding customers and getting orders – and repeat orders
- Achieving revenue recovery
- Getting the right people in place
- Developing competence and capability
- Retaining or replacing key people
- Integrating new members into team
- Calling a halt to development work
What are the various growth challenges
Growth – Challenges
- Changing demands on mgmt. and staff
- Increased complexity, synchronisation needs, bottlenecks and backlogs
- “Penrose constraint” – limits on managers’ time and competence
- Accessing resources to sustain growth
- Maintaining competitiveness in evolving market
- Finding new customers, maintaining existing customers
- Generating new product stream
- New competitors; saturation; erosion of margins
- Growth may peter out and plateau, or reverse
What is a sustainable business?
Sustainable Business
- Occurs in only a small minority of firms
- Resource recovery exceeds demands of growth
- Build reserves to overcome adverse environment/ unexpected challenges
- Pursue organic growth or acquisition
- Growing to be a dominant firm is an improbable event
- Around 3% become industry leaders
Draw Moore’s Chasm
- Start up products appeal to innovators who want to try everything new
- Then come visionaries, early adopters willing to take a chance on a new product if it solves a problem.
- After visionaries comes the pragmatists. No matter how well a product serves their needs, buy after recommendations.
- Late majority or conservatives buy after a product has become the standard.
- Finally come laggards who never buy
The gap shows that those first two segments are wildly different form the other ones, and what works with them won’t work with the rest.
There are innovators and early adopters people willing to try new stuff, even if its buggy or feature-poor.
- These people have different motivations and budgets as the rest of population
- These are people who line up at the Apple store knowing the first generation will have problems.
The early majority are conservative and want to see reviews and wait to see other people using the product. When they make a purchase teams of people are involved in the decision.
Draw Ansoff’s matrix to show how firms grow
Existing or new products vs. E or N markets
Market penetration [E,E] : Nike features famous athletes in TV ads to take market share in athletic shoes from Adidas and rivals
Product development [N,E] : Xbox, Smartphones
Market development [E,N] : iPads and healthcare; video gaming and education
Diversification [N,N] : Samsung, began as a trading company then into insurance, securities and retail. Today known for electronics
Give examples of how companies crossed the chasm
- Fb started with students at Ivy League unis
- eBay focussed first on collectibles
- LinkedIn’s initial target was execs in Silicon Valley
- Google’s early ads appealed to start ups that couldn’t afford the minimum buy associated with banner ads
- Amazon started with books
Each company added functionality and addressed a broader audience, but over time, not from the beginning
How do firms decide what to do
- Vision and goals
- Appraisal of current position
- Assessment of external and internal environment
- Generation and assessment of strategic options
- Implementation
- Evaluation and learning
APPEARS LINEAR & RATIONAL, BUT IS IN FACT COMPLEX, ITERATIVE & EMERGENT
Give two useful techniques for assessing strategic options
Assessment of strategic options
Many tools and techniques
Two examples
Scenario planning
Technology Road-mapping
Show an example of scenario planning
Looking at different scenarios and preparing for all contingencies
Show an example of technology roadmapping
Looking at all the following characteristics during the development of a product:
- Market
- Product
- Technology
- R&D programmes
- Resources
What are the different dimensions of Innovation?
Underlying processes
- Process of innovation mgmt.
Types
- New products
- New services
- Manufacturing processes
- Business processes
Outputs
- Commercial innovation
What are the five challenges with innovation?
Five challenges with innovation
1. Market and customer issues
Failure to understand and satisfy market need
2. Technology issues
“how innovative do I want to be?”
3. Capturing the value
Weak appropriability (IP)
Poor access to complementary/ specialised assets
4. Product strategy and planning
Incoherent product range
Too many projects at any one time
5. New Product Introduction (NPI) process
Chaotic process, often late, over cost, many mods required
Not geared to creativity/ entrepreneurial activity at front-end
Give two examples of market and customer issues
Post it :
Post-it note was developed by a scientist attempting to make a strong adhesive. Instead he accidently created a “low-tack”, reusable, pressure-sensitive adhesive.
Scientist promoted it as “solution without a problem” and it never gained acceptance
A colleague came up with the idea of using it as an adhesive to anchor bookmarks ® was not successful until they issued free samples directly to consumers who used them as post its.
Sinclair C5
Give some examples of innovators and followers that won and lost
Technology issues
Product strategy and planning
Show a graphical representation of the new product introduction process
Draw and explain the different aspects in the Pentathlon Framework
Managing innovation: Pentathlon Framework
Innovation strategy
Achieving strategy goals responsibility of top management
- Assessing market trends and how these drive the need for innovation in the company
- Role of technology → opportunities it can provide → expertise needed
- Communicating the role of innovation within the company
Ideas – raw material for innovation
- Idea generation – supported at the individual and team level
- Ideas should draw upon both technical possibilities and market opportunities
- Time to experiment with risky ideas → cost of failure at this stage is low
Selection & Prioritization – must be efficient process to ensure best ideas are pushed forward
- Tools are used to consider the relevant merits of different projects
Implementation – Focus on developing new products/services fast
- Focus on discipline and quality, not on creativity and change
- As projects move closer to market, the cost of changes become higher.
What is the classic definition of marketing?
The classic definition of marketing
Marketing is a process concerned with influencing ‘all the potential consumers sharing a particular need or want who might be willing to engage in exchange transactions to satisfy that want or need.’
What really is marketing and the balanced organisation?
Marketing is the whole business looked at from the consumer’s point of view
Therefore it is:
Looking at the organisation from the outside in
Closely related to the market-based view of strategy
A complement to the supply chain view of the business – demand chain management
Draw and explain demand chain mgmt.
Looking at the organisation from the outside in
Closely related to the market-based view of strategy
A complement to the supply chain view of the business – demand chain management
Explain the steps in market orientation
Understanding your customers
- Major investment in gaining knowledge of ‘the market’ and ‘the customer’ – MARKET RESEARCH
- ‘The market’ includes all the STEEPI factors PLUS the ‘competition’ – the ‘O’ and ‘T’ of SWOT.
- Social, Technological, Environmental, Political and Infrastructural
- Customers are looked at as sets of NEEDS, some of which they have already fulfilled and some which they have not
Explain the needs based view of the consumer
Explain the key characteristics of a market driven organisation
Culture: externally orientated
Capabilities: market orientation, strategic thinking
Configuration
- Focus on superior customer value
- Coherence of structure and systems
- Adaptability
Superior ability to:
- Understand markets
- Attract and keep customers
What are the two groups a marketer’s activities usually fall into?
In practice a marketer’s activities usually fall into two broad groups:
- Maintaining/optimising the performance of existing brands/products
- Identifying new opportunities = Unmet Needs (Rational & Emotional) that could make us profit
Many organisations reflect this in their organisational structure:
Brand/category mgmt. and new product development
What is the changing marketing philosophy?
The changing marketing philosophy
In the 1980s marketers began to extend the core marketing concept of exchange transactions into relationship creation and maintenance
Exchange transactions became subsumed under the bigger relationship banner
(A move from a mechanistic view to an organic one)
What is the difference between the transactional view and relationship view
Transactional view
- Purpose of marketing is to make a sale
- Sale is the result of success
- Businesses defined by products and factories
- Price determined by market forces – it is an input
- Communications aimed at aggregates of customers
- Marketer valued for products and prices
OBJECTIVE: MAKE THE NEXT SALE; FIND NEXT CUSTOMER
Relationship view
- Purpose is to create a customer
- Sale is the beginning of relationship; profit is measure of success
- Business defined by customer relationships
- Price determined by negotiation – it is an outcome
- Communications targeted and tailored to individuals
- Marketer valued for problem solving ability
OBJECTIVE: SATISFY THE CUSTOMER BY DELIVERING SUPERIOR VALUE
Explain how the marketing toolbox is changing
Marketing tools
- The paradigm shift from the transactional to the relationship based view has been reflected in the changing marketing toolbox
- The transactional view is relatively short termist and assumes that changing that changing one variable in the marketing mix is often all that is necessary to change consumer perceptions
- The relationship base view takes a longer term, more holistic view of the business and focuses on factors that influence the development and maintenance of customer loyalty
What is in the transactional toolbox?
The Transactional toolbox
The 7 Ps marketing mix:
Product
Price
Place
Promotion
(People)
(Physical layout)
(Processes)
In the transactional world these can be infinitely manipulated to change consumer perceptions of your product or service
What is ‘servitisation’?
Involves firms developing the capabilities they need to provide services and solutions that supplement their traditional product offerings
Draw the customer relationship pyramid
Draw the customer relationship pyramid
KEEPING
- Partner
- Advocate
- Supporter
CATCHING
- Client
- Prospect
FINDING
- Target
- Target Prospect
what is market segmentation?
Market segmentation
- Markets are rarely totally homogeneous
- Marketers frequently divide heterogeneous markets into sub-groups of more or less homogeneous consumers
- This process is called Market Segmentation and allows Marketers to develop separate marketing strategies for each of their sub markets = segments
What is the basis of segmentation?
The basis of segmentation
Segmentation can be carried out on a number of different criteria:
Demographics: all 18-24 year olds
Usage: heavy users vs light
Need state: those seeking breath freshness v those seeking tooth whiteness
Lifestyle: traditional v innovators
Explain the extraordinary concept of a brand
The extraordinary concept of a brand
A product is something that is made in a factory; a brand is something that is bought by a customer. A product can be copied by a competitor; a brand is unique. A product can be quickly outdated; a brand is timeless
Explain the main differences between a brand and a product
Products and brands
A PRODUCT:
Is TANGIBLE – it has physical presence
Its associated characteristics are those of a tangible physical object (e.g. PRICE) and are therefore, fixed and the same for all people
A BRAND:
Is INTANGIBLE – it exists in consumers’ minds and cannot be physically touched
Its associated characteristics are subjective and, therefore, can and do vary from one person to the next (e.g. VALUE)
What is the promotional mix made up of?
The promotional mix
Traditionally made up of four major elements:
- Advertising
- Sales promotion
- Publicity/ public relations
- Personal selling
Now two additional elements
- Direct marketing
- Interactive/internet marketing
Difference between sales and marketing
Sales
- Works to increase current volume and meet current sales quotas
- Interacts with the individual customer to focus on factors relating to current events
- Is focussed on short-term concerns relating to today’s products, today’s customers and today’s strategies
- Is a tactical function, using its skill and methods to gain immediate results as called for by a plan
- Consists of work in the field, calling on customers
Marketing
- Works to increase profitability through appropriate volumes, products and customer mixes.
- Is focussed on developing strategies for the optimum mix of product and markets
- Is concerned with long-term issues that shape the business 5-10 years down the road – the dreaming of what could be
- Is a strategic focus, using planning and direction for the big picture
- Consists of office work, research and developing plans and methods for implementation
Explain the different marketing strategies and how they affect sales objectives and strategy
Build
- Objective
- Build sales volume
- Increase distribution
- Provide high service levels
- Strategy
- High call rate on existing accounts
- High focus during call
- Call on new accounts
Hold
- Objective
- Maintain sales volume
- Maintain distribution
- Maintain service levels
- Strategy
- Continue present call rates on current accounts
- Medium focus during calls
- Call on new outlets when they appear
Harvest
- Objective
- Reduce selling costs
- Target profitable accounts
- Reduce service costs and inventories
- Strategy
- Call only on profitable accounts
- Consider telemarketing or dropping the rest
- No prospecting
Divest
- Clear inventory quickly
- Quality discounts to targeted accounts
Explain important factors for selling in 2018
Selling in 2018
Data and knowledge management
- An example is in-app customer data collection
Customer Relationship management
- Data protection concerns have recently become a big issue
Problem solving and system selling – relationships
- Long-term relationships are built, rather than quick sales
Satisfying needs and adding value
Explain the different orientations for firms
What customers want?
Production orientation
- Focus on producing goods and services
Sales orientation
- Focus on ensuring that products are sold
Marketing orientation
- Focus on identifying and satisfying customer needs and wants
List the stages in selling process
The selling process
Identify prospects
Pre-approach (planning)
Approach (appropriateness)
Pre-close (anticipating/identifying issues)
Presentation (appropriate format, demonstration)
Objection handling
(Negotiation)
Close (mutually agree, clarity)
Follow up (maintain relationships)
Sales should focus on the desired outcome, rather than the product
List the stage in the buying process
Need recognition/ problem awareness
Information search
Evaluation of alternatives
Purchase
Post-purchase evaluation
List the different sales functions
Primary
Identification of customer needs
Presentation and demonstration
Negotiation
Handling objections
Closing the sale
Secondary
Prospecting
Database and knowledge mgmt.
Self mgmt.
Handling complaints
Providing service
Relationship mgmt.
What is prospecting? Give examples.
Prospecting – where to look
Existing customers
Trade directories
Enquiries
Press and internet
Cold canvassing/cold calling
Describe the steps in sales preparations and negotiations
Selling
Preparation
Product knowledge and benefits
Knowledge of competitors’ products and their benefits
Sales presentation planning
Setting sales objectives
Understanding buyer behaviour
Negotiations
Assessment of balance of power
Determination of negotiating objectives
Concession and proposal analysis
Explain B2B vs B2C
B2C – customer is purchasing for their own, or family’s use
Fast moving consumer goods
Semi durable consumer goods
Durable consumer goods
B2B – customer is purchasing in organisational context
Supplies and consumables
Capital equipment
Business services
Who is important in the buying decision
Who is important in the buying decision
Initiator
Influencer
Decider
Buyer
User
IMPORTANT TO CONSIDER
How do they buy?
- What are their choice criteria?
- Where do they buy?
- What do they buy?
Explain the steps in organisational decision making
- Recognition of a problem
- Determination of characteristics, specification and quantity of needed item
- Search for and qualification of potential sources
- Acquisition and analysis of proposals
- Evaluation of proposals and selection of supplier
- Selection of an order routine
- Performance feedback and evaluation
What are the influences on organisational buying
Buy class
- Straight re-buy
- Modified re-buy
- New task
Product type
- Product constituents
- Production of facilities; MROs
Importance of purchase
Which are the factors that affect the selection of sales channels
Market – maximum coverage, compatibility
Channel costs – short channels vs long channels
Product – cost; technology; service requirements
Profit potential – cost benefit
Channel structure – nature of demand; other players
Product life cycle – stage of maturity
Non marketing factors: available resources; location
What are the different charateristics of sales channels
Characteristics of Sales Channels
Direct
The manufacturer does not use a middleman and delivers direct to the end customer
Selective
The manufacturer sells through a limited number of middlemen who are chosen because of special abilities or facilities to enable the product to be better marketed.
Intensive
Maximum exposure at the point of sale is needed and the manufacturer sells through as many outlets as possible
Exclusive
The manufacturer sells to a restricted number of dealers.
Explain CRM
Customer Relationship Management (CRM)
- Aid interaction between customer and company
- Enabling coordinated communication
- Provides “single customer view” of each client
- Consolidating data from many databases
- Links sales and other business activities
- Can allow analysis of customer activity and profitability
- Effective implementation requires:
- Customer orientation
- Full integration
- Scope for adaption to business needs
