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CITY COLLEGE OF SAN JOSE DEL MONTE

SCHOOL OF BUSINESS ADMINISTRATION
AND ACCOUNTANCY
DEPARTMENT OF ENTREPRENEURSHIP

MODULE FOR

EL1:
ENTREPRENEURIAL
MARKETING STRATEGIES
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Entrepreneurial Marketing Strategy

Course Overview

This course pack covers key marketing concept and methods relevant for start-up
and early-stage entrepreneurs. Specifically, this course will look at the role of marketing in
entrepreneurial ventures and the role of entrepreneurship in marketing efforts of all firms.
It is designed to give students a broad and deep understanding in marketing new ventures
and small firms which aim to grow through entrepreneurship and appreciate how
entrepreneurs create consumer insights, turn this into the creation of opportunities and plan
marketing strategies to achieve the desired results of the business.

Entrepreneurial business often creates products and services based on radically

new technology that have the power to change the marketplace. This course pack
provides a vital guide to successfully developing customer demand and a market for
innovative new products.

In order for learners to gain competency in this course, this course pack has been
structured into four (4) modules as follows:

Module 1: Entrepreneurship and Marketing

Module 2: Market Development

Module 3: Customer Development Process

Module 4: Developing a Marketing and Sales Plan

At the completion of this course pack, learners should be able to:

• Apply the basic marketing concepts in entrepreneurial settings;

• Use trends in marketing that can be leveraged by entrepreneurs;
• Discuss entrepreneurial approaches to formulating product design, strategic
pricing, market engagement, distribution strategies and implementation programs;
and
• Analyze relevant theories and frameworks relating to the marketing of a new
product offering.

Students in this course are encouraged to go through all the topics without skipping any
modules to take full advantage of the lessons efficiently. They should work on all the
exercises and problems as they build their mastery of the subjects.

So, to make your journey more meaningful, study this course pack with your co-
learners at your own pace.

Good luck and God bless!

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Table of Contents

Module 1: Entrepreneurship and Marketing

Module Overview.................................................................................................... 1
Lesson 1: Developing Business Model ........................................................2
Lesson 2: Defining Marketing and Sales .................................................... 8
Lesson 3: Role of Marketing ...................................................................... 12
Module Assessment............................................................................................... 17
Module Summary ................................................................................................... 19
References ............................................................................................................. 20
Appendix… ........................................................................................................... 21

Module 2: Market Development

Module Overview................................................................................................. 22
Lesson 1: Adoption and Diffusion ........................................................... 23
Lesson 2: Understanding Lead Customers ............................................... 30
Lesson 3: Market Competition ................................................................. 37
Module Assessment.............................................................................................. 43
Module Summary ................................................................................................. 45
References ............................................................................................................ 46
Appendix… ........................................................................................................... 47

Module 3: Customer Development Process

Module Overview ................................................................................................... 49

Lesson 1: New product development vs. Customer Development .............. 50
Lesson 2: Steps of the Customer Development Process ............................. 54
Lesson 3: Different customer roles ............................................................. 62
Module Assessment............................................................................................... 67
Module Summary ................................................................................................... 68
References ............................................................................................................ 69
Appendix… ............................................................................................................70

Module 4: Developing a Marketing and Sales Program

Module Overview ................................................................................................... 72

Lesson 1: A one-page marketing and sales plan ......................................... 73
Lesson 2: Marketing Instruments ............................................................... 78
Lesson 3: Managing Customer Expectations .............................................85
Module Assessment............................................................................................... 90
Module Summary ................................................................................................... 91
References ............................................................................................................. 92
Appendix ................................................................................................................93
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Module Overview
Module 1

Entrepreneurship and Marketing

“Marketing’s job is never done. It’s about a perpetual
motion. We must continue to innovate every day.”

- Beth Comstock ( General Electric Vice Chair)

In this Module:

• Developing Business Model

• Defining Marketing and Sales
• Role of Marketing

Many believe that the only condition necessary for a sale is an innovative product
or service. But the problem is, of course, that most new products are far from excellent, to
say the least. For radically new products, the challenge is even greater. Never having seen
before, these products require customers to change their cognitions and behaviors. This
explains why classical or traditional marketing does not apply, and why a so-called
‘effectual approach’ is required. This module contains lessons that will discuss the effectual
approach and demonstrates how to use it in a creative way for marketing innovative new
products.

At the completion of this module, you should be able to:

• explain the business model concept;

• discuss the firm and customer side of a business model;
• define marketing and sales;
• describe the traditional and effectual approaches to marketing;
• know the difference in the evaluation criteria that experienced versus
inexperienced entrepreneurs use for assessing business opportunities; and;
• explain the bowling alley

Are you ready? Then start the lessons now!

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Lesson Developing Business Model

1
Objectives:

➢ Explain the business model concept; and

➢ Discuss the firm and customer side of a business
model

Introduction:

Welcome to lesson 1 of this module! Are you familiar of what business

model is? If not, this lesson will help you to understand fully the components,
importance and how a start-up’s business model of the firm will make money.
Enjoy and keep reading!

Let’s play bubble

quotes! Here’s how
you will do the game.

1. Think of a business
that you plan to have in
the future.
2. If you already
decided what your
business is, then think
how you will
run/manage your
business to make it
successful.
3. Put your ideas inside
the bubbles.
4. Make at least 5 or
more bubbles.

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Follow-up questions based on your answers on the activity

portion.

• Why you chose that kind of business?

• How will you satisfy the needs and wants of your customers in order to attain
customer loyalty?

• Where else aside from social media can you market your product/service?
Mention them and explain briefly.

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Entrepreneurs are people who decide to

develop and market a new product or service. Many
entrepreneurs aim to improve existing products,
rather than develop something completely new.
Traditional marketing, is a systematic and goal-
oriented approach can help the emerging
entrepreneur specify the value offer, develop a
pricing strategy and create the right message and
adequate promotional support. In contrast, people
with radically new ideas based on new technology
are better defined as high-tech entrepreneurs.

3 Types of New Products Based on the Level of ‘Newness’ of a

Technology

1. New version of existing products. It contains modestly new products:

the products that have been around for some time but, with a different marketing
approach.
2. Incremental Innovations. These products are moderately new. They are
serious extensions of existing products. These new products are similar to what
we know, but there is something added, or changed, which increases value to
customers.
3. Radical Innovations. These draw on new technology to produce products
people have not seen before.

Although, a good product or service idea is important, a new firm’s viability

and survival depends on its business model. A start-up’s business model explains
how the firm will make money.

The Business Model Concept

A business model is a clear, concise way of picturing how a business

operates. The management team should be able to describe the business model in
a few sentences. All companies strive to provide value to their customers. The
stronger this value proposition, particularly when compared to that of
competitors, the more likely it is large numbers of customers will purchase from
the company. The business model is a means of translating the value proposition
into the potential for rapid revenue growth and profitability.
Components
The business model describes the methods the company will use to
generate revenue. This could be selling products or services, charging
subscription fees, selling service contracts on products -- any means to create
revenue opportunities. The model also shows the factors about the operation of
the business that will enable it to be profitable. The company might have higher
margins than competitors because of its lower cost sources of supply. A business
that benefits from word-of-mouth recommendations from current customers to

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prospective customers can be more profitable because this type of marketing is

considerably less expensive than other means, such as advertising.
Importance
For a startup company, the business model is one of the first things
developed, often before product development is completed or the management
team is assembled. The model demonstrates the feasibility of the venture. The
management team must be convinced the model gives the company a reasonable
chance of success in order to be willing to take the risks of starting the venture.
A company may adapt a business model successfully used by other companies
in other industries. With Internet companies, word-of-mouth marketing is termed
“viral marketing” because communication moves so swiftly on the Web. But
the concept has been just as successful for low-tech businesses, such as
restaurants and bars.

Figure 1.1 shows the business model concept. On the left-hand side, we see
the value creation and the delivery system of the start-up. On the right-hand side,
we see the customer’s consumption system. It involves prospective customers
recognizing the value put forward by the start-up and their willingness to pay for
this value. If these two parts are ‘in balance’, they will stimulate continuous
production and consumption. A third process highlighted is the value exchange at
the bottom of the figure. It includes the negotiation between the entrepreneur and
prospective customers and actual exchange. The role of marketing and sales is to
align these two core processes and facilitate the third process of exchange in both
the short and long run.

Figure 1.1 The business model concept

Manufacturer ………………………. Customer

Selling Validation of value Needs and
by customer wants
Value creation
and deliver Van ......................................
process

Customer loyalty

Sustainable sales
and profits

R&D …………………….. Consumption

Product Money exchange process
Concept
…………………………………. Purchasing
Value exchange process

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A useful test for any business model involves a combination of a narrative

and numbers test:

• Narrative Test – This test asks the following questions:

✓ Does the story make sense?
✓ Does the proposed product or service indeed
represent unique value to a group of prospective
customers, and will this group be interested?
✓ Why is the start-up in a unique position to develop
this value and how well is it able to protect its
position?
✓ Why will intermediaries also cooperate?
• Numbers Test – This task asks:
✓ Do the profit and loss add up?
✓ What kind of resources are necessary, and this affect
cost?
✓ Is the anticipated stream of revenue and cash flow a
sufficiently healthy basis for sustainability?

In each episode of the BBC television program Dragons’ Den, you can see
how venture capitalists evaluate and scrutinize the pitch of entrepreneurs (narrative
test) and ask for the general numbers of market size, cost and sales to check whether
these numbers add up for the proposed start-up.

The internet, with its instant communications and interactivity, has

introduced completely new business models. For instance, many firms in the game
industry started by first posting games for free and then making users pay for
updates.

The internet has boosted the opportunities for entrepreneurs. It offers a

broad audience, allowing high-tech start-ups to broadcast their message 24/7 and at
very low cost. Furthermore, online selling offers entrepreneurs a worldwide
channel of distribution.

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Direction: Answer the essay questions below.

(Note: Please refer to appendix of this module for the
rubrics.)

1. Peter Drucker, the ‘father of modern

management’, identified innovation as one of the firm’s core
business functions. As future entrepreneur, how will you
apply innovation?

2. Discuss the business model concept.

Well done! You have just finished Lesson 1 of this module.

Now if you are ready, please proceed to Lesson 2 of this module which will
discuss about marketing and sale.

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Lesson Defining Marketing and Sales

2
Objectives:

➢ define marketing and sales; and

➢ describe the traditional and effectual approaches
to marketing

Introduction:

Everyone is fortunate to have marketing everywhere. It is in every four

corners of the house, in the offices, in malls, in school and the like. It is part of
everyone’s life every time, any time and all the time. One can see and touch all
products and experience the services created by marketers.

To know more about marketing and sales, consider the following activity:

Source:

Diagram Analysis

Analyze the
Source: https://www.lucidchart.com/blog/what-is-the-7-step-sales-process
pictures on the
right side of this
box in order to
answer the
analysis questions.

Source:https://www.alamy.com/stock-photo-cartoon-of-business-people-on-
two-separate-ledges-when-sales-and-marketing-79324289.html

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• What did you understand about the first picture

illustrated on the activity portion? How about the
second picture?

• Based on the 1st picture, explain how marketing works?

• In the 2nd picture, why there is a need for the marketing and sales to
communicate? What will happen if the two do not communicate?

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Defining Marketing and Sales

2 Interpretations of Marketing

1. Marketing as a function – it refers to the

marketing person (or department) and their
activities such as market segmentation, advertising
and pricing.
2 levels of marketing activities:
➢ Strategic activities
➢ Tactical activities
2. Marketing Philosophy – refers to the need for firm to have market-oriented culture
which promotes all employees to systematically use market information and make
market-informed decisions in each of its business processes.

➢ Market information can help employees understand the mechanisms

underlying customer behavior and understand the drivers of success in
the marketplace against the backdrop of competitors and their
behaviors.
➢ Customer and competitor information should be collected,
disseminated and used systematically.
➢ A firm’s marketing specialists are expected to facilitate the creation of
a market-oriented culture and behaviors in an organization.

Traditional Marketing – focuses on existing markets whose future can be predicted.

- Begins with the market and looks for needs to address, and then
uses a planned and linear processes to fill these needs.
- Traditional marketing is a rather broad category that incorporates
many forms of advertising and marketing. It's the most
recognizable types of marketing, encompassing the advertisements
that we see and hear every day. Most traditional marketing
strategies fall under one of four categories: print, broadcast, direct
mail, and telephone.

Traditional Approaches to Marketing

1. Production Concept – focuses on the internal potentials of the company and not
based on the desires and needs of the market.
2. Sales Concept – refers to the idea that people will buy more goods and services
through personal selling and advertising done aggressively to push them in the
market.
3. Marketing Concept – a philosophy which states that organization must try hard to
find out and satisfy the needs and wants of consumers while at the same time
accomplishing the organizational goals.
4. Relationship Concept – centers on maintaining and improving value-added long-
term relationships with current customers, distributors, dealers and suppliers.
5. Societal Marketing Concept – views that organizations must satisfy the needs of
consumers in a manner that gives for society’s benefit.
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Effectual Marketing – embraces uncertainty and focuses on new products and markets
that are hard to predict at best
- Begins with the entrepreneur’s new technology and product and
tries, through experimentation, to find a customer group whose
needs fit the new innovation’s characteristics best

Sales – is the operational task involving the prioritizing of and meeting potential
customers as well as closing new deals.
- Should “hunt” for new customers to expand business and turnover
and “farm” existing customers to ensure the firm’s bread and
butter.

Choose your favorite brand of sports

shoes and explain how you will market
your shoe brand using the segmented
explanatory organizer below. (Note:
Please refer to appendix of this module for the
rubrics.)

Application

I will market my shoe using I will market my shoe using

traditional marketing by... effectual marketing by...

My favorite shoe
brand is....

I will market my shoe using I will market my shoe using

traditional marketing by... effectual marketing by...

Congratulation! So you have successfully completed the activities and tasks for
lesson 2. It is expected that you have gained insights and meaningful experience in this
lesson. In the next lesson, you will learn about the role of marketing.
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Lesson
The Role of Marketing
3
Objectives:
➢ Know the difference in the evaluation criteria that
experienced versus inexperienced entrepreneurs use for
assessing business opportunities; and
➢ Explain the bowling alley model

Introduction:

Welcome to lesson 3, the last topic of this module. This lesson will introduce you
to the role of marketing, the experienced and inexperienced entrepreneurs, and the
importance of bowling alley model as a way of conceptualizing company development
over time and as a metaphor for finding your first customers. Just help yourself and work
in the given activities. Enjoy and keep reading!

Understanding
the bowling
alley model.

Analyze the
diagram on the
right side of
this box in
order to answer
the analysis
questions.

Source:https://www.google.com/url?sa=i&url=https%3A%2F%2Fslideplayer.com%2Fsli
de%2F14640134%2F&psig=AOvVaw3HZZ7kRxAiNryBi7Kp_2L&ust=15975727194610
00&source=images&cd=vfe&ved=2ahUKEwiv0uuk_JzrAhW9gGMGHVneBKgQr4kDeg
UIARCAAQ
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• Based on the diagram, what did you understand about the

bowling alley model?

• As an entrepreneur, how can you use this information?

To know more about the lesson, study the following:

Entrepreneurship as opportunity seeking

Entrepreneurship concerns the discovery, evaluation and

exploitation of a market opportunity for a new idea or
technology.

➢ Market opportunity – refers to the demand for a specific

product application by a customer segment or the market as a
whole.

➢ Product application – concern a specific manifestation of

the technology and solution to a manifest or latent customer
problem or irritation.
▪ It is a link between an entrepreneur’s new idea or
technology and the market, specifically the customer’s
needs.

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An entrepreneur’s main challenge is to find the first viable product application, for
which customer demand will compensate for the manufacturing and marketing costs of the
new product.

Inexperienced entrepreneurs, is particular, did not look beyond the first

application that came to mind. In contrast, experienced or serial entrepreneurs identified
several options before they made their decisions. They engage in a ´distant´ rather than
´local search´; they search more broadly and creatively.

Evaluation criteria of the experienced entrepreneur

Contrasting prototypes of novices and experienced entrepreneurs and their

evaluation criteria (based on Gruber et al. 2008)

Novice entrepreneurs focus Experienced entrepreneurs

on focus on
How novel the idea is Whether a customer problem
is solved
The extent to which the idea is The ability to generate positive
based on new technology cash flow
The superiority of product or The speed of revenge
service generation
The potential to change the The manageable risk
industry
Their intuition or gut feel Others in their network with
whom to develop the venture

The particular role of marketing

Research by Gruber et al. showed that inexperienced entrepreneurs with

marketing knowledge found it extremely hard to avoid becoming committed to a
particular market opportunity early in the process, and thus, found it difficult to come up
with several ideas for product applications. However, experienced entrepreneurs with
marketing knowledge did identify many more opportunities than their counterparts without
such marketing knowledge.

Experience entrepreneurs – use marketing in the alternative, effectual mode. They

actively search for an array of possible markets and potential customer needs that fit the
new technology.

Inexperienced entrepreneurs – tend to rely on traditional marketing principles, which

promote local searching by obeying existing market boundaries and product categories.

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Interaction between prior entrepreneurial experience and marketing- experience

(adapted from Gruber et al. 2008).

Number of 4
Market` Experienced
Opportunities of serial
identified 3 entrepreneur

1 Inexperienced
entrepreneurs

Low Medium High

Developing your bowling alley model

Moore suggests using the concept of a bowling alley to illustrate the

entrepreneur’s challenge to select the first and best product application. He argues that to
gain market momentum, entrepreneurs should target a niche (the first pin in the model)
that can help open up a larger market and preferably will lead to a strike).

Source:https://www.google.com/url?sa=i&url=https%3A%2F%2Fslideplayer.com%2Fslide%2F14640134%2F&psig=AOvV
aw3HZZ7kRxAiNryBi7Kp_2L&ust=1597572719461000&source=images&cd=vfe&ved=2ahUKEwiv0uuk_JzrAhW9gGMGH
VneBKgQr4kDegUIARCAAQ

Moore’s key message is that an entrepreneur should develop a vision for his/her
company development. The bowling alley stresses the existence of multiple product
applications and the need to select the first pin carefully.
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Application

Based on the discussion above, make a self-reflection on

the Role of Marketing in the Society. (Note: Please refer
to appendix of this module for the rubrics.)

Well done! You have successfully completed the activities and tasks for this
module. It is expected that you have gained insights and meaningful experience in all
the lessons and other related topics. Now, you are already prepared to move to module
2 of this course package. Enjoy and keep working

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MODULE ASSESSMENT

Direction: Read the article and answer the questions below it. (Note: Please refer to
appendix of this module for the rubrics.)

How Brands Can Adjust To ‘New Era’ Of China’s Luxury Cooldown

Source: Jing Daily, December 17, 2013; https://jingdaily.com/how-brands-can-
adjust-to-new-era-of-chinas-luxury-cooldown/#.VpTKa7Z95dh

On the heels of Bain & Company’s October global luxury goods report stating
that China’s luxury growth has slowed to 2.5 percent in 2013, the consultancy has
released a study outlining the slowdown’s major causes and impacts, as well as advice for
what brands can do about it.

The study found, as Jing Daily has previously noted, that the government’s
ongoing corruption crackdown is only one factor in China’s luxury slowdown: changing
consumer tastes and shifting purchase channels also play a major part. The report
confirms Jing Daily’s previous assertion that the crackdown has also not had a uniform
effect on the industry, taking its toll on more heavily gifted items such as luxury watches,
which saw an 11 percent decline in sales over the past year.

The major bright spots in the market was womenswear, which grew by an
estimated 10 percent this year, and shoes, which showed “strong momentum” with an
estimated 8 percent growth. Cosmetics, which make up one-fourth of luxury goods sold on
the mainland, also logged 10 percent growth; however, this number isn’t as much of a
bright spot considering the fact that the number is down from 15 percent last year.

Changing consumer tastes are also a major factor in the slowdown, finds the
report. It states that in tier 1 cities, “as Chinese shoppers become more sophisticated, they
realize that the only way to show their uniqueness and personality is through fashion with
personalized mix and match, not with accessories that everybody can wear.” These
changing tastes are also leading to a differentiation between tier 1 and lower-tier cities, as
second- and third-tier locations have more “traditional” shoppers, according to Bain.

Meanwhile, shopping abroad and through parallel daigou channels—services

where others purchase luxury goods abroad and sell through professional agencies or
Taobao—have had a major effect on the slowdown this year as tariffs remain high and
more Chinese tourists are traveling internationally. While one third of all luxury goods
sold Chinese customers are purchased outside of the mainland and Hong Kong, the study
finds that nearly 60 percent of China’s luxury consumers have used a daigou
channel to buy goods, and half of those who haven’t would consider doing so in the
future.

There have been several effects of this changing luxury landscape. First, store
expansion in mainland China “is no longer enough to drive growth,” says the report. It
notes that of 20 luxury brands studied, the number of store openings this year declined

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to 100, compared to about 150 last year. Brands have been shifting their focus to store
renovation, relocation, and operational improvement.

In addition, luxury consumers are “extremely well informed” about their

purchases now. The study found that 73 percent use the internet, including company
websites, news, microblogs, mobile apps, and more to obtain information before they
buy.

Bain has several pieces of advice for brands in navigating the cooling market.
“Brands have to master a broader set of management skills to succeed in China
now,” said Bruno Lannes, a Bain partner in Greater China and lead author of the Chinese
edition of the study. “There are three new imperatives coming from the increased
sophistication of Chinese shoppers: changing focus to managing fashion lines,
merchandising and inventory; tailoring customer strategies to multiple segments; and,
training store staff to provide the best customer experience for these diverse and
increasingly more sophisticated Chinese shoppers.”

Questions:

1. How will you describe the buying characteristics of Chinese shoppers? Discuss your
answer.

2. Are Filipino shoppers comparable to Chinese shoppers? Explain your answer.

3. Is the use of the internet really advantageous? Explain briefly.

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Module Summary

You have completed the first module of Entrepreneurial Marketing Strategy.

Key points covered in the module include:

• Entrepreneurs are people with new ideas who develop their own businesses.
• There are three types of new products based on the level of ‘newness’ of the
technology: 1) new version of existing products, 2) incremental innovations,
and 3) radical innovations.
• A start-up’s business model explains how the firm will make money.
• There are two interpretations of Marketing: 1) Marketing as a function and
2) Marketing Philosophy.
• Sales – is the operational task involving the prioritizing of and meeting
potential customers as well as closing new deals.
• Traditional Marketing focuses on existing markets whose future can be
predicted.
• The five traditional approaches to Marketing are: 1) Production Concept,
2) Sales Concept, 3) Marketing Concept, 4) Relationship Concept, and 5)
Societal Marketing Concept.
• Effectual Marketing embraces uncertainty and focuses on new products and
markets that are hard to predict at best.
• Marketing and sales are important business functions to identify and develop
prospective customers.
• By identifying a wider range of options before selecting the first application,
entrepreneurs can enhance their success.
• An entrepreneur’s main challenge is to find the first viable product
application, for which customer demand will compensate for the
manufacturing and marketing costs of the new product.
• Experience entrepreneurs actively search for an array of possible markets
and potential customer needs that fit the new technology.
• Inexperienced entrepreneurs tend to rely on traditional marketing
principles, which promote local searching by obeying existing market
boundaries and product categories.
• The bowling alley concept offers a model of how to develop your business
sequentially.

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References

Lesson 1:

Camilar-Serrano, A. (2016) Principles of Marketing. Unlimited Books

Library Services & Publishing Inc.. Cabildo St., Intramuros, Manila

https://smallbusiness.chron.com/concept-business-model-3866.html; retrieved
on August 10, 2020

Nijssen, E. (2017) Entrepreneurial Marketing an effectual approach

(2nd Edition). Routlidge. Third Avenue, New York.

www.bbc.co.uk/programmes/b006vq92 ; retrieved on August 11, 2020

Lesson 2:

Camilar-Serrano, A. (2016) Principles of Marketing. Unlimited Books

Library Services & Publishing Inc.. Cabildo St., Intramuros, Manila

https://www.marketing-schools.org/types-of-marketing/traditional-
marketing.html ; retrieved on August 11, 2020

Nijssen, E. (2017) Entrepreneurial Marketing an effectual approach

(2nd Edition). Routlidge. Third Avenue, New York.

Lesson 3:

Gruber, M.,MacMillan, I.C. and Thompson, J.D. (2008), Look before you
leap; market opportunity identification in emerging technology firms,
Management Science, 54(9), 1652-65.

Jing Daily, December 17, 2013; https://jingdaily.com/how-brands-can-

adjust-to-new-era-of-chinas-luxury-cooldown/#.VpTKa7Z95dh; retrieved
on July 25, 2020

Moore, G. (2006), Crossing the Chasm: Marketing and Selling High- Tech
Products to Mainstream Customers, Collins Business Essentials, New
York, NY.

Nijssen, E. (2017) Entrepreneurial Marketing an effectual approach

(2nd Edition). Routlidge. Third Avenue, New York.

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Appendix
Rubrics

Lesson 1: Essay
Category 5 4 3
Organization Writing is coherent and Some points remain Writing lacks logical
logically organized. Ideas are misplaced and stray organization. It shows
clear and accurate. from the topic. some coherence but ideas
lack unity.
Content Content indicates original Content indicates Shows some thinking and
thinking and develops ideas thinking and reasoning but most ideas
with sufficient and firm reasoning applied are underdeveloped and
evidence. with original thought unoriginal.
on a few ideas.

Lesson 2: Segmented Explanatory Organizer

Category 10 5 1
Market Aspect The students present The students present The students present
excellently the target market well the target market poorly the target market
and the promotional methods and the promotional and the promotional
used and its effectiveness. methods used and its methods used and its
effectiveness. effectiveness.

Content Content indicates original Content indicates Shows some thinking

thinking and develops ideas thinking and and reasoning but most
with sufficient and firm reasoning applied ideas are underdeveloped
evidence. with original thought and unoriginal.
on a few ideas.

Lesson 3: Reflection Essay

Category 20 15 10
Reflective The reflection explains the The reflection The reflection does not
Thinking student’s own thinking and attempts to address the student’s
learning processes, as well as demonstrate thinking and/or learning.
implications for future thinking about
learning. learning but is vague
and/or unclear about
the personal learning
process.
Organization Writing is coherent and Some points remain Writing lacks logical
logically organized. Ideas are misplaced and stray organization. It shows
clear and accurate. from the topic. some coherence but ideas
lack unity.

Module Assessment
Category 10 5 1
Organization Writing is coherent and Some points remain Writing lacks logical
logically organized. Ideas are misplaced and stray organization. It shows
clear and accurate. from the topic. some coherence but ideas
lack unity.
Content Content indicates original Content indicates Shows some thinking and
thinking and develops ideas thinking and reasoning but most ideas
with sufficient and firm reasoning applied are underdeveloped and
evidence. with original thought unoriginal.
on a few ideas.
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Module Overview
Module 2

Market Development
“The aim of marketing is to know and
understand the customer so well the product fits
him and sells itself.”

- Peter F. Drucker

In this Module

• Adoption and Diffusion

• Understanding Lead customers
• Competitive and Market considerations

Innovators are the small percentage of people or prospects that are risk-oriented,
interested in new technology and less sensitive to initial product underperformance. Lead
customers can offer important feedback and help co-create the entrepreneur’s new product
application. Their feedback can seriously enhance the new product’s success, with the
lead user also used as an excellent reference. Chasms in market development should be
anticipated. Because early majority customers are pragmatists, they may not consider
innovators a good reference and thus postpone their adoption. Dealing successfully with
chasms requires modification of the start-up’s marketing and sales effort. On the other
hand, resistance in the market against innovations is the norm rather than an exception. It
should be anticipated by the entrepreneur and it requires special attention. In particular,
ensuring that the new product clearly outperforms the customers’ existing options is the
best remedy.

At the completion of this module, you should be able to:

• define adoption and diffusion;

• understand the technology adoption life cycle, customer adoption and
diffusion of innovations;
• explain that for lead customers, adoption extends beyond the start-up’s
new product application to the technology and start-up organization;
• discuss why customers may postpone adoption of an innovation;
• explain what lead customers are;
• discuss why customers may postpone adoption of an innovation;
• explain different levels of competition; and
• define the market using a technology

Are you ready? Then start the lessons now!

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Lesson Adoption and Diffusion

1
Objectives:

➢ Define adoption and diffusion; and

➢ Understand the technology adoption life cycle, customer
adoption and diffusion of innovations

Introduction:

Welcome to lesson 1 of module 2! This lesson introduces you as to what diffusion

is, the technology adoption life cycle, and who are those customer segments of
technology adoption. It is important for you, as future entrepreneur, to know more about
adoption and diffusion on innovations before we can proceed in discussing how to build
customers for the start-up. But before going through the discussion, answer first the
activity below.

GESTSA UMREONCS OPTDA

______ ________ ____

_
NCCEATPACE ATIEGRNNITO

__________ ___________
Scrambled key terms
EWN IDEA WNE ODURTPC ARMTEK
Form the different key
terms from the given set ___ ____ ___ _______ ______
of scrambled words.
Write your answers on WEN HNOYGLOETC CILTANOIPAP
the space below each ___ __________ ___________
word.
RETMKA
______

Fill in the blanks with the correct key terms.

Adoption

• refers to the by which a might a new product or service.

• the , and use of new technology in society.

Diffusion

• is the process by which a or is accepted by the .

• the spreading of a and its in a . 23
lOMoARcPSD|14893662

• Is technology adoption significant in the market? Why?

• As an entrepreneur, why is it important to know about diffusion?

Read On!

The technology adoption life cycle

Based on the observation that consumers and

organizations have different propensities to adopt new
products (services and ideas), Rogers developed the
technology adoption life cycle model and diffusion theory.
This model postulates that if a market is confronted with
the opportunity to switch to a new technology, prospective
customers will have a different inclination to adopt based
on their levels of risk aversion and openness to change.

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Source:https://www.google.com/url?sa=i&url=https%3A%2F%2Fslideplayer.com%2Fslide%2F16336399%2F&psig=AOvVaw1CnfOr3
9bgu9Bz4adjaUL-&ust=1597576726663000&source=images&cd=vfe&ved=2ahUKEwj95c-bi53rAhW49zgGHfuYC- oQr4kDegUIARCoAQ

The bell-shaped curve of the technology adoption life cycle model divides the
whole market into five categories of potential customers. We find a small percentage of
risk-immune innovators (see the left-hand side of figure 4.1). Open to change by the new
technology and its opportunities, they want to be the first to try out the new technology
and its product applications. At the other extreme, we find a small percentage of risk-
averse laggards (right-hand side of the figure). Hesitant to change, they avoid the
adoption of an innovation as long as possible. In between are three additional groups –
the early adopters, early majority, and the late majority. These groups constitute the
majority of potential customers in the market. These people have an average risk
propensity and moderate attitude, and thus, an average willingness to change. Based on
their moment of adoption, they can be differentiated into early and late majority, with the
early adopters at the forefront of the majority.

It should be noted that each group in the bell curve represents one, two or even
three standard deviations from the mean. Consequently, the group structure is
conceptually imposed and does not refer to clusters of people that ‘naturally’ exist. The
groups are rather generalizations or stereotypes that marketers use to segment the market
and facilitate the launch of new products and ideas, in the sense that one should try and
identify innovators as a way to get the market diffusion process started. Whereas early and
late majority customers are one standard deviation away, the early adopters and laggards
are at two standard deviations. The innovator group is positioned at three standard
deviations of the mean. Empirical research supports the general notion of the technology
life cycle and its usefulness in planning the adoption and diffusion of innovations.

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The 5 Customer Segments of Technology Adoption

https://www.smartinsights.com/marketing-planning/marketing-models/diffusion-
innovation-model/

Innovators (2.5%) – They are a small group of

people exploring new ideas and technologies. It
includes "gadget fetishists!" In an online
marketing context there are a lot of specialist
blogs and media sites to engage them, Engadget
and Gizmodo for examples.
Source:https://www.google.com/url?sa=i&source
=imgres&cd=&ved=2ahUKEwio7KCKjZ3rAhX2zTg
GHbXJBSgQjhx6BAgBEAI&url=https%3A%2F%2F
www.virtuos.com%2Fio%2F&psig=AOvVaw1-SC4
Jj8QXjx5jDNIfvTdO&ust=1597577068024968

Early Adopters (13.5%)

Considered to be Opinion Leaders who may share
positive testimonials about new products and
services, seeking improvements and efficiency.
Engagement requires little persuasion as they're
receptive to change. Provide guides
on how to use the product/service.
Source:https://www.google.com/url?sa=i&source=im
gres&cd=&cad=rja&uact=8&ved=2ahUKEwjUqIigkJ
3rAhVg4jgGHWbYCvgQjhx6BAgBEAI&url=http%3A
%2F%2Fwww.auto-gration.eu%2Fearly-adopters-
programme&psig=AOvVaw1447-hg-
Omm6RbhAB5in37&ust=1597578077060089

Early Majority (34%) - These are

Followers who will read reviews by
earlier adopters about new products
before purchasing. They can be engaged
with reviews and via YouTube, where
they will look for your products.

Late Majority (34%) - To generalize,

these are sceptics who are not keen on
change and will only adopt a new product
or service if there is a strong feeling of
being left behind or missing out. They can
be engagedwith providing marketing
material, evidence, reviews from Opinion
Leaders and case studies to show how it
works.

Source:https://www.google.com/url?sa=i&source=imgres&cd=&cad
=rja&uact=8&ved=2ahUKEwiL46GIlJ3rAhUizDgGHaYECoAQjhx6B
AgBEAI&url=https%3A%2F%2Fwww.youtube.com%2Fwatch%3Fv
%3DvRyfPUQ21jk&psig=AOvVaw1eugwBBdjNp5SXp2ye5MCI&ust
=1597579098423406

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Laggards (16%) – The descriptor says it

all! Typically they prefer traditional
communications and will adopt new
products when there are no alternatives.
Laggards will come on board when 'others'
have written about your products/services,
they have research evidence, statistics or
felt pressure from others.
Source: https://www.google.com/url?sa=i&source=imgres&cd=&ved=2ah
UKEwiY1MvIl53rAhVyyDgGHQ_LCNUQjhx6BAgBEAI&url=https%3A%2F
%2Fdepositphotos.com%2Fvectorimages%2Flaggard.html&psig=AO
vVaw0iMLQnPXKzlnfgdeIzy2o3&ust=1597580037703957

Penetration and Diffusion

Penetration – the degree of a market’s adoption of a new product at a given point in

time
Diffusion – the spreading of a new technology and its application in a market
Chasms – sudden slowdowns in growth of sales of a new product
Causes of chasms
• Heterogeneity of demand
• Poor product performance or firm reputation which make subsequent
customers reluctant.

Rapid and moderate diffusion are shown, along with postponed and accelerated
take-off. The task of any entrepreneur is to avoid chasms, and thus to ensure consistent
diffusion in the marketplace.
lOMoARcPSD|14893662

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Rapid diffusion suggests that the differences (e.g. needs and norms/values)
between innovators and subsequent groups are small, therefore, the market is rather
homogenous. Moderate diffusion suggests moderate differences across the groups.
Delayed take-off concerns a diffusion pattern characterized by a lingering curve that
picks up in growth only after a certain period. If large differences exist between, for
instance, the innovators and the rest of the market, the innovators will not be a good
reference for the subsequent customer groups. Then, sales may only take off after the
product has been changed for the needs of these other customer groups or, after that,
when these groups have grown familiar with the innovation, recognizing its customer
value.

Although it is true that innovation attitude is a general value and very much a
personal trait, this does not mean that the bell-shaped curve and its groups are the same for
all innovations, and thus, for each product application. Just look around you. Although
young people are more likely to be innovators than elderly people, people may be
innovators for one product but laggards for another and vice versa. Thus, it is important
for every entrepreneur to identify the innovators for his or her new product. Furthermore,
the similarity and differences between innovators and subsequent customer groups should
be established to be able to anticipate chasms and find ways to prevent or alleviate them.

Application
Direction: Answer the questions below.
(Note: Please refer to appendix of this module for the rubrics.)

• Examine yourself. Among the different groups of

customers, where do you think you belong? Why do you say
so?

• Explain the basic idea of the technology life cycle model.

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• What is the implication of the market diffusion process/pattern?

Congratulation. You just have finished Lesson 1.

In this lesson, you learned about adoption and diffusion. Now, you are already
prepared to move to lesson 2 about the lead customers and why customers resist from
innovation.

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lOMoARcPSD|14893662

Lesson Understanding Lead

2 Customers

Objectives:

➢ Explain what lead customers are; and

➢ Discuss why customers may postpone adoption
of an innovation.

Introduction:

As previously discussed, for an entrepreneur, cooperating with one or more

venturesome lead customers represents an excellent opportunity for finding the right
product configuration and to make an entry with the market’s innovator group. Lead
customers can offer important feedback and help co-create the entrepreneur’s new
product application. Their feedback can seriously enhance the new product’s success,
with the lead user also used as an excellent reference. On the other hand, resistance in the
market against innovations is the norm rather than an exception. It should be anticipated
by the entrepreneur and it requires special attention.

Analyze the
pictures at the
right side of
Source:https://www.google.com/url?sa=i&source=imgres&cd=&ved=2ahUKEwjYrZX8m
this box and Z3rAhWx4jgGHZOWAxMQjhx6BAgBEAI&url=https%3A%2F%2Fwww.stelladesign.eu
answer the %2Fen%2Fother%2Fhow-to-attract-customers-in-a-
shop%2F&psig=AOvVaw1bN_pcFNERh0wR7tNRFO8E&ust=1597580684491972
following
questions:

Source:https://www.google.com/url?sa=i&source=imgres&cd=&ved=2ahUK
EwjqpuKSmZ3rAhWKzTgGHRNHA9MQjhx6BAgBEAI&url=https%3A%2F%
2Fwww.wonpeaceracing.com%2F&psig=AOvVaw2PAOyC7ISNl3AqFxH0bZ
8m&ust=1597580465051926

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lOMoARcPSD|14893662

• What did you see in the pictures?

1st picture 2nd picture

• Explain your interpretations on the first picture.

• Next, your interpretations on the second picture.

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Direction: Using the herringbone cause and effect, write

down each possible cause of an event based on the pictures
on the activity portion of this lesson. After determining the
causes, states the effect.

Picture 1

Cause 1 Cause 3 Effect

Cause 2 Cause 4

Picture 2

Cause 1 Cause 3 Effect

Cause 2 Cause 4

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Understanding lead customers

Lead customers are ahead of the market trend and

experience problems before other customers do. Moreover,
they generally are willing to explore ways to develop a
solution to a particular problem in cooperation with an
entrepreneur or new venture. The advantage of early
customer involvement is clear; the firm generates potential
customers’ interest before it invests too much time and
effort in the product, and enjoys feedback to initially test
and improve the marketability of the ideas and concept.

Particularly if lead customers are representative of other innovators in the

marketplace the approach will be effective. The lead customers then will be an important
reference for subsequent customers, and will stimulate their curiosity and interest.

To find lead customers, entrepreneurs should look around and explore their
network. Attending seminars and trade fairs where people present and discuss new
technologies is helpful. These events draw technologically interested parties, including
lead customer prospects, therefore enhancing the entrepreneur’s chance of moving ahead
and generating first and new business.

Anticipating and preventing chasms

Because of the psychological differences between groups, an inherent credibility

gap exists that arises when one moves through the curve. These result in a serious
slowdown in sales growth and thus development of the start-up. They are referred to as
chasms.

The difficulty in predicting slowdowns in growth after steep initial growth is what
makes chasms so dangerous. It also explains why they may prove hard to cross for any
entrepreneur.

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lOMoARcPSD|14893662

Early adopter chasm. Many entrepreneurs are reluctant to commit to a particular market
niche while their product is still under development. However, to begin making inroads
and develop a relevant customer reference for new customers such marketing choices are
needed. The more quickly the product’s final configuration is identified, the more effective
the reference will prove in attracting other innovators and the faster a transition from
innovators to early adopters may occur.

Early majority chasms. The second chasm is much –overlooked gap between the early
adopters and the early majority. It is caused by the fundamental difference between these
two groups. Like innovators, early adopters make their own decisions. They have a vision.
While norms in the marketplace are still developing, they aim to be ahead of the majority
of the market and score a technological competitive advantage for their organization. The
early majority, on the other hand, are pragmatists who only buy if the application can be
readily integrated in their current processes. They generally use up substantial amounts of
their budgets on consultants and other opinion leaders looking for advice.
For the early majority to be able to compare options, a product should have some
competitions. This suggests that alternatives should exist or be actively identified. An
entrepreneur can facilitate this process by identifying substitutes and highlighting pros
and cons for each product.

Reasons why customers postpone or resist adoption

This topic discusses the reasons for prospective customers, particularly

innovators, to postpone, resist or even reject an innovation.

In his article on ‘Eager Sellers, Stony Buyers’, Gourville explains that while
providers typically over-estimate the benefits of their new product, buyers overestimate the
problems involved in adopting them. He calls this double-edged bias’ the curse of
innovation’ (2006:100). Providers are overconfident that their innovation works and
therefore they also like to see a need for it. They are convinced that buyers are
dissatisfied with their current alternative and see their innovation as the benchmark.
Customers, however, see their existing product and brand as reference points and
generally tend to feel satisfied.

More profound
motivations for rejection may exist.
Kleijnen et al. tried to identify causes
of such resistance. Based on
interview with a set of innovative
customers, they came to the
conclusion that resistance may be
viewed as a hierarchical continuum,
ranging from resistance, moving
to postponement,
then to rejection and to opposition,
depending on both the amount and
type of change and risk present.

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lOMoARcPSD|14893662

If an innovation is likely to change existing usage patterns and has an economic risk, then
prospective customers are likely to resist by postponing adoption. However, when these two
factors are combined with a functional risk, a social risk and a poor image, they will move
towards rejecting that innovation. Finally, when a conflict with existing traditions and norms is
noted and perceived risk of physical harm added, consumers tend to move towards active
opposition or even rebellion. This is the strongest form of resistance.

Comparing postponement to rejection, the emphasis moves from more basic, practical
concerns in the case of postponement, to more societal concerns, such as tradition and norms,
in the case of rejection. Paying particular attention to these issues can help identify possible
objections to an innovation at an early stage and to develop strategies to alleviate concerns that
prospective customers may have.

However, in the case of customer concerns leading to active opposition and rebellion, the
entrepreneur will have a hard time changing customer beliefs.

Application You are about to launch a new product

in the market. What actions or steps will you take to attract
potential customers and to avoid customer resistance?
Answer the questions using flow charts.
(Note: Please refer to appendix of this module
for the rubrics.)

Step 1
Actions or steps
to attract potential customers.

Step 2

Decision

Step 3

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lOMoARcPSD|14893662

Step 1

Actions/steps to avoid
customer resistance.
Step 2

Decision

Step 3

Congratulation. You just have finished Lesson 2.

In the previous lesson, you learned about adoption and diffusion. And this lesson
discussed the lead customers and why customers resist to adopt innovation. In the last
lesson of this module, you will learn about the different levels of competitions.

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Lesson
Market Competitions
3
Objectives:

➢ Explain different levels of competition; and

➢ Discuss competitors’ reactions and network
products

Introduction:

Welcome to lesson 3, the last lesson of this module. Generating intelligence

regarding competitors, their products and technologies allows you to differentiate your
product in a meaningful way, and thus build a better competitive position. It will also
help you to anticipate competitor moves and reactions to your market entry. This is
important as start-up’s limited financial resources are better spent on firm development
and linking to customers than on fighting the competition.

Incorrectly, many entrepreneurs think that their products are unique and thus
there is no competition. They are convinced of their product’s superiority by its new
features. However, even though competing products may not look or function identically,
customers may consider them alternatives. Therefore, any entrepreneur should identify
and analyze alternatives and competitors carefully. If you can determine why and when
some customers prefer one alternative over the other, you any begin to see patterns of
competitive forces and will be able to make better marketing decisions.

In your own idea,

what is competition?
Write your answers
inside the bubbles.
lOMoARcPSD|14893662

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lOMoARcPSD|14893662

• Is it realistic to operate in a market without

competitor/s? Explain your answer.

• Which of the following would you regard as substitutes for a laptop computer?
Why?

a. Apple iPod
b. Desktop computers
c. Mobile phones
d. Handled tablet computers
e. Website development software
f. Docking stations

To know more about the lesson, study the following:

Different levels of competition

Although entrepreneur’s product may have unique

features, it is bound to have some competitors. To identify
these, one can simply look at products and services
customers currently rely on. Whether customers think that
your new product is better than the existing ones on the
market depends n their specific needs and how well each
application is able to satisfy these needs. Often, there are
multiple products in the marketplace at the same time.
Based on market trends, and changes in market share
between competitors, underlying competitive dynamics can
be identified and understood. 38
lOMoARcPSD|14893662

Marketers distinguish between different levels of competition.

Need competition – refers to the fact that

sales of substitutes influence each other.
Substitutes look and feel different but can
satisfy the same customer need.

Example: teleconferencing versus air travel.

Both can facilitate exchange of business
information or business meetings.
Source:https://www.google.com/url?sa=i&source=imgres&cd=&
ved=2ahUKEwjWnKX3mp3rAhW2zzgGHWm4BmAQjhx6BAgB
EAI&url=https%3A%2F%2Fwww.thepost.co.ls%2Fbusiness%2
Fyouneedcompetition%2F&psig=AOvVaw1JpX5grjekFHlagqbtj_
-G&ust=1597580944443484

Product competition – product compete

on the same product within one class of products.
Products from one competitor’s class usually have
different features, price and benefits but are meeting
the same need.

Source:https://www.google.com/url?sa=i&source=imgres&cd=&ved
=2ahUKEwjIkP3fm53rAhVZzzgGHUZDA24Qjhx6BAgBEAI&url=http
s%3A%2F%2Fwww.boardroommetrics.com%2Fblog%2Ftypes-of- pricing-
strategies-2-competition-based-pricing-20130625.htm&psig=
AOvVaw2bOxWFhlTc97nlefKHpEtD&ust=1597581160020674
- Might be also understood as willingness to create
product with the best design. An orthodox model of
competition assumes that the main area of
competing is to offer the lowest possible price,
however nowadays unique design plays also big
role in model of competition.
Example: Bottled water

Brand competition – rivalry between the

companies offering the similar line of products or
services in the same target market and to the same
target audience.
Source:https://www.google.com/url?sa=i&source=imgres
&cd=&ved=2ahUKEwjM_o_inZ3rAhWUxzgGHU8yACcQj
hx6BAgBEAI&url=https%3A%2F%2Fwww.campaignlive.
co.uk%2Farticle%2Fbrand-experience-report-2017-age-
integration%2F1437880&psig=AOvVaw12dKI9D0riol9p
b8B7Ar3K&ust=1597581703941997

The more similar a solution, product or brand, the more strongly they will
compete. This can be explained by the simple fact that they attract the same customers.

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lOMoARcPSD|14893662

Anticipating competitor reactions and avoiding head-on competition

It is important to identify which rivals you are

most likely to take business from. The rivals who
are affected most are considered ‘close
competitors’, while those less affected are best
thought of as ‘distant competitors’. Close
competitors generally use the same strategy
(address the same customer segments with the
same type of value proposition) and they share
the same goals and approach
Source:https://www.google.com/url?sa=i&source
=imgres&cd=&ved=2ahUKEwitndLdnp3rAhVMzj
gGHejyDkIQjhx6BAgBEAI&url=http%3A%2F%2F
davidolszewski.com%2Fis-it-good-enough-to-have
-a-better-product-than-the-compe tition&psig=AOvV
aw3vY1O8ZcXeVepxZz9yZSec&ust=1597581964510305

Although these competitors may tolerate your market entry, they will probably
react, for instance, with price discounts and promotions. The severity of the response will
depend on whether they are attacked in their core business or not. Aiming for a firm’s
core business implies a direct attack and jeopardizes it existence. To avoid this, a start-up
should-up should carefully study the competition it is up against, competitive relations and
historical responses. Each individual competitor and response style should be researched
and evaluated before moving in. Ignoring the simple and most obvious responses, such as
temporary steep price reductions or spreading negative rumors about the new product, is
dangerous. Never underestimate the effectiveness of such campaigns. Even though the
rumors may be false, customers could think ‘where there’s smoke, there’s fire’.
Furthermore, customers may trust their familiar business partner and its mature
technology rather than the ‘outsider’ with its new, unproven technology. Developing
scenarios regarding possible responses by the competition and how to respond will help to
prepare. It also will increase the start-up’s chance of survival.

An effective way to avoid competitive reaction is to first aim for a niche. A niche
is a segment of the market that requires special skills and attention to sell to it
successfully. As military theory suggests, conquering a niche requires fewer resources
than conquering an entire market. Examples of niche markets are the electrical car
market, targeted by Tesla Motors for instance, and the action camera market developed
and targeted by GoPro.

The aim for the entrepreneurial firm should be to become a market leader in a
niche. A good niche is surrounded by barriers which make it difficult for a mainstream
competitor to enter it efficiently and effectively without major efforts.

A niche strategy is particularly appropriate when the new market is supposed to

grow quickly and when there are several related market segments to appeal to with the
same application. The first offers the entrepreneur the chance to extend rapidly. The
second offers good options to exploit other related product applications. After the niche
has been secured, it may function as a beachhead for further expansion. Building a

40
lOMoARcPSD|14893662

reputation in a niche before expanding to other parts of the market offers a start-up a
learning opportunity, the chance to gain maximum effect of its resources, but also the
opportunity to leverage its early success effectively.

Network products and their particularities

Network products are products whose customer value increases as more users adopt the
product, or by the presence of complementary products (products that are sold separately
but that are used together). The customer value of a network product is determined by the
product but also by the degree of acceptance in the market.
2 intertwined dimensions:
• Product’s intrinsic value – the product with its particular features can do
• Product’s external value – the number of users and complementary products
necessary to unleash the product’s value and enhance it

Network effects emanate from three sources:

1. Direct effects. It occurs when the value of a product to any user is a direct function
of the network’s size or installed base.
Examples: fax machine and videoconferencing. These products can only be
utilized if other users are available.

2. Indirect effects. Refers to the positive influence of complementary products to the

value of a product. It occurs when the introduction of complementary goods increases in
quantity and decreases in price as consumption of the primary product increases.

3. The standardization issue. Standardization feeds the reinforcing cycle between

primary and ancillary products, based on the fact that standards make for compatibility. A
standard with a large installed base will attract more complementary products and help
persuade customers that they will not become locked into a poorly supported design.
Example: iPhone and its operating system versus the Android format. The
question is whether the Android can attract a similar stream of apps and become a
major standard.

Application

Direction: Answer the essay questions below. (Note: Please refer to appendix of this
module for the rubrics.)

1. Compare and contrast the different levels of competition.

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lOMoARcPSD|14893662

2. Is competition a motivation? Defend your answer.

3. What do you mean by this military theory, ‘conquering a niche requires fewer
resources than conquering an entire market’?

4. Which of the following would you regard as substitutes for a laptop computer and
which may be complements? Why?

g. Apple iPod
h. Desktop computers
i. Mobile phones
j. Handled tablet computers
k. Website development software
l. Docking stations

Congratulation! You have successfully completed the activities and tasks for
this module. It is expected that you have gained insights and meaningful experience in
all the lessons and other related topics. Now, you are already prepared to move to
module 3 of this course package. Enjoy and keep working! 42
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Module Assessment

Direction: Encircle the letter of your choice.

1. Innovation is defined as:

a. The commercialization of a new product or process.
b. The invention of a new product or process.
c. A new product or process idea.
d. The implementation of a new production method.

2. In which markets are network effects likely?

a. Markets subject to increasing returns
b. ‘Tippy’ markets
c. Hi-tech product markets
d. All of the above

3. This group shares some of the early adopters’ ability to relate to new technology, but is
even more pragmatic than the early adopters.
a. Innovators
b. Early majority
c. Late majority
d. Laggards

4. Diffusion means
a. the degree of a market’s adoption of a new product at a given point in time
b. sudden slowdowns in growth of sales of a new product
c. the spreading of a new technology and its application in a market
d. All of the above

5. It refers to the fact that sales of substitutes influence each other.

a. Competition
b. Need competition
c. Product competition
d. Brand competition

Direction: Answer the essay questions below. (Note: Please refer to appendix of this
module for the rubrics.)

1. Differentiate the 5 customer segments of technology adoption.

.
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2. Where to find lead customers?

3. Make a self-reflection about competition in your community.

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Module Summary

Congratulations! You have successfully completed Module 2. This module has

helped you deepening your understanding about market development. To wrap up,
module 2 highlights:

• The basic idea of the technology life cycle model is that finally all customers in
the marketplace will adopt a new technology and its application. Some
customers may not be attracted to a product or prices may never come down
enough to allow every customer to purchase and own the product. It explains the
speed of adoption and thus diffusion of an innovation in a market, but also
why its sales may never take off.
• Lead customer can offer important feedback and help co-create the
entrepreneur’s new product application. Their feedback can seriously enhance
the new product’s success, with the lead user also used as an excellent
reference.
• Resistance in the market against innovations is the norm rather than an
exception. It should be anticipated by the entrepreneur and it requires special
attention. In particular, ensuring that the new product clearly outperforms the
customers’ existing options is the best remedy.
• As a start-up’s resources are often limited, it is important to prevent retaliation
from competitors. A niche approach can help avoid or control competition.
• Network products require a penetration strategy; the aim should be to become
a dominant standard in the marketplace.

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References
Lesson 1:
Moore, G. (2006), Crossing the Chasm: Marketing and Selling High-Tech
Products to Mainstream Customers, Collins Business Essentials, New
York, NY.

Nijssen, E. (2017) Entrepreneurial Marketing an effectual approach (2nd

Edition). Routlidge. Third Avenue, New York.

Rogers, E.M. (2003), Diffusion of Innovation, Free Press, New York, NY.

https://www.smartinsights.com/marketing-planning/marketing-
models/diffusion-innovation-model/; retrieved on August 11, 2020

https://en.wikipedia.org/wiki/Diffusion_(business); retrieved on August 11,

2020

https://www.walkme.com/glossary/technology-adoption/ ; retrieved on
August 11, 2020

Lesson 2:
Gourville,J.T. (2006), Eager sellers, stony buyers: understanding the
psychology of new-product adoption, Harvard Business Review, 84(6), 99-
106

Kleijnen, M., Lee, N. and Wetzels, M. (2009), An exploration of consumer

resistance to innovation and its antecedents, Journal of Economic
Psychology, 30(3), 433-57

Moore, G. (2006), Crossing the Chasm: Marketing and Selling High-Tech

Products to Mainstream Customers, Collins Business Essentials, New
York, NY.

Nijssen, E. (2017) Entrepreneurial Marketing an effectual approach (2nd

Edition). Routlidge. Third Avenue, New York.

Lesson 3:
Christensen, C.M. (1997), The Innovator’s Dilemma, HBS Press, Boston,
MA.

Nijssen, E. (2017) Entrepreneurial Marketing an effectual approach (2nd

Edition). Routlidge. Third Avenue, New York.

https://ondigitalmarketing.com/learn/odm/foundations/5-customer-
segments-technology-adoption/ ; retrieved on August 6, 2020

https://www.marketing91.com ; retrieved on August 6, 2020

https://ceopedia.org/index.php/Product_competitors ; retrieved on
August 6, 2020 46
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Appendix
Rubrics

Lesson 1: Essay

Category 5 4 3
Organization Writing is coherent and Some points Writing lacks logical
logically organized. Ideas are remain misplaced organization. It shows
clear and accurate. and stray from the some coherence but ideas
topic. lack unity.
Content Content indicates original Content indicates Shows some thinking and
thinking and develops ideas thinking and reasoning but most ideas
with sufficient and firm reasoning applied are underdeveloped and
evidence. with original thought unoriginal.
on a few ideas.

Lesson 2: Flow Chart

Category 1 5 1
0
Integration All of the discussed concepts An adequate amount Does not correctly apply
and are correctly applied. of the discussed any of the discussed
Application concepts is correctly concept..
applied.
Content Content indicates original Content indicates Shows some thinking
thinking and develops ideas thinking and and reasoning but most
with sufficient and firm reasoning applied ideas are
evidence. with original thought underdeveloped and
on a few ideas. unoriginal.

Lesson 3: Essay

Category 5 4 3
Organization Writing is coherent and Some points Writing lacks logical
logically organized. Ideas are remain misplaced organization. It shows
clear and accurate. and stray from the some coherence but ideas
topic. lack unity.
Content Content indicates original Content indicates Shows some thinking and
thinking and develops ideas thinking and reasoning but most ideas
with sufficient and firm reasoning applied are underdeveloped and
evidence. with original thought unoriginal.
on a few ideas.

Module Assessment: Essay

Category 10 5 1
Organization Writing is coherent and Some points remain Writing lacks logical
logically organized. Ideas are misplaced and stray organization. It shows
clear and accurate. from the topic. some coherence but ideas
lack unity.
Content Content indicates original Content indicates Shows some thinking and
thinking and develops ideas thinking and reasoning but most ideas
with sufficient and firm reasoning applied are underdeveloped and
evidence. with original thought unoriginal.
on a few ideas.
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Module Assessment: Reflection Essay

Category 20 15 10
Reflective The reflection explains the The reflection The reflection does not
Thinking student’s own thinking and attempts to address the student’s
learning processes, as well as demonstrate thinking and/or learning.
implications for future thinking about
learning. learning but is vague
and/or unclear about
the personal learning
process.
Organization Writing is coherent and Some points remain Writing lacks logical
logically organized. Ideas are misplaced and stray organization. It shows
clear and accurate. from the topic. some coherence but ideas
lack unity.

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Module Overview

Customer Development Process

In this Module

• New Product Development vs. Customer Development

• Steps of the Customer Development Process
• Different Customer Roles

Customer Development Process is the formal process of identifying potential

customers and figuring how to meet their needs. Many startups spend too much time on
their products or service, which is important too, but not more so than the needs of their
target audience. Customer Development is a process that can be used to discover, test and
validate business assumptions. These assumptions include whether a product solves a
problem for a specific group of users, if the market is large enough to support such a
product and whether or not the business can scale to meet demands.

At the completion of this module, you should be able to:

• discuss the different steps of the customer development process and its
relationship with product development
• explain the role of marketing and sales in the customer development team
• illustrate different roles of customers may have in the customer
development process
• link customer development with business model development

Are you ready? Then start the lessons now!

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New Product Development vs.

Customer Development

Objectives:
• Discuss new product development vs customer development; and
• Differentiate new product development and customer development.

Introduction:

Marketing can be defined as an exchange which consumer expect more market

share, customer share and more pay. As a result of the fact that the market is dynamic,
expectation of more customer share from customers in this exchange requires marketing to
be managed with new techniques and strategies. New product development can result in
new profit or loss. These are questioning that managers need to answers before come up
with product development. What markets are they looking at? What types of products or
services should they offer? And Is the product new to the business or its customers?

Activity: How will you apply innovation using;

1. Radical Innovations:

2. Incremental Innovations:

Analysis
1. Why do you think entrepreneurs need to innovate?

2. Why do you think it is important for business to come up with new product
development?

3. Is it worth it for business to create a new product?

.
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Abstraction

New Product Development is the process of creating a new product and bringing
it to market. It is core to entrepreneurship. It involves several steps, including new
product idea generation and selection, concept development, prototyping, market testing
and launch. While at every stage of the process both technical and marketing issues co-
exist, most entrepreneurs (but also large firms) limit the role of marketing and sales by
leaving it until the end. They first develop the new product and then hand it to marketing
and sales departments. This approach is a road to disaster. The winners at the game of
new product follow a different approach; they invent and live by a process of discovery
and experimenting with customers in order to learn.

Therefore, Steve Blank (identified the Customer Development Process) suggested

that start-ups should complement their new product development process with a formal
customer development one. Customer Development Process, concerns locating a start-
up’s first customers, validating its assumptions and growing its business. Figure 6.1
shows the two parallel processes. We show them as complementary phenomena with
serious and preferably systematic, information exchange. While the product development
process begins with a lot of ideas, one of which results in an application for launch, the
customer development process begins with one or a few customers to respond to the start-
up’s product concept or prototype and ends, the entrepreneur hopes, with many customers
purchasing the final product. Consistent with this observation we show the first process as
a funnel and the latter as a reversed funnel.

While complementing product development with customer development may

seem a simple and obvious extension of the process, it is not. It requires a fundamentally
different way of looking at new product development. By listening to potential future
customers, by going out into the field and investigating potential customers’ irritations,
needs and markets before being inexorably committed to a specific path and precise
product specifications, the chance of success of the new product development process can
be seriously enhanced. Of course, exceptions exist in the form of true technology push
innovations (e.g. a new breakthrough drug), but for most new product this applies.
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A Customer Development Team should be appointed to manage this customer

development process. It should include, among others, the entrepreneur himself or herself
and the person leading the engineering effort. Preferably it will also include someone
who is responsible for marketing sales and thus, an individual with a product marketing
or product management background. This person should be comfortable moving back and
forth between customer and product development. The work of the team should help
make the customer and customer needs more central and prevent the start-up from going
‘all the way’ only to find out later that there is no demand for the start-up’s new
application. After the start-up has developed a prototype and thus validated its product
with its first customers, the customer development team may be expanded with several
people, including those responsible for moving, selling, and logistics (i.e. getting ready
orders out). Steve Blank saw customer development as not just necessary, but a driving
force behind a company’s direction. Customer Development must have the authority to
radically change the company’s direction, product or mission and the creative, flexible
mindset of the entrepreneur.

The dual-process approach benefits from engineers who can think like marketers,
and marketers and salespeople who understand technology. That way, both processes do
not stand alone but can be integrated effectively.

According to Lynn et.al, success stories for new products shared several
characteristics that match the process described previously. Successful firms typically
had probed that market with immature versions of the new product as vehicle for learning
about the technology and customer needs. It was used to find out whether and how it
could be up-scaled. This probing gave insight into the market and the market segments
most receptive to the various product features, as well as about the influence of
exogenous factors such as changes in government regulations. Rather than using regular
marketing techniques, successful firms ran several market experiments to introduce
prototypes in a variety of market segment. This research was used to probe, learn and
probe again. It was their way of validating assumptions that the product developers or
entrepreneurs had while coming up with the new product concept.

Application

Answer the question below. Write your answer in your journal.

As an Entrepreneur, how will you explain the importance of New Product

Development in planning customer development? Justify your answers. (Note: Please
refer to appendix of this module for the rubrics.)

.
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Well done! You have just finished Lesson 1 of this module. Should there be some
parts of the lesson which you need clarification, please ask your instructor during your
face-to-face interactions.

Now if you are ready, please proceed to Lesson 2 of this module which will
discuss about steps of the customer development process.

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Steps of the Customer Development

Process

Objectives:

• Discuss the steps of the Customer Development Process

• To describe the importance of the Customer Development Process.

Introduction:

The Customer Development model can help provide your business with a tried
and tested model for your customers. Customer Development works by helping you
discover, validate and grow your business before you launch your product. It is a model
that should be used alongside your Product Development model. When your team
implements these models, you will find that you have a sure way to track, test and grow
your customers and make sure that your product is going into a market that has room for
it.

Activity: “DECISION MAKING WHEELS”

CUSTOMER DEVELOPMENT PROCESS

What is the problem?

What are the choices you have?

What do you think the consequences of

these choices will be for yourself and others
who are involved?
How do you feel about the situation?

What is your decision?

Do you think you made the right decision?

Why?

Customer Discovery & Validation at Groove

Groove creates online help desk software for enterprises and small businesses. For
customers, Groove’s software looks like an ordinary email service but offers features that
allow it to be integrated with social media platforms like Facebook and Twitter. Groove
decided to move away from the freemium model and now offers all of its features for $15
per user per month.
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In its early days, Groove was earning customers but it was unable to hold on to
them. The CEO realized that the churn rate was hanging out around 3% and that was not
something he could live with because it did not fit the company’s goals. The problem for
Groove was not the churn rate itself but the fact that no one was sure why the churn rate
was as high as it was.

Analysis
1. Have you ever made a choice that resulted in a consequence that you did not
want?

2. How do we decide whether we should do something or not?

3. How do you make a choice or a decision?

Abstraction
Customer development is a four-step framework, originally identified by Steve
Blank, to discover and validate that you have identified a need(s) that customers have, built the
right product to satisfy that customer’s need(s), tested the correct methods for acquiring and
converting customers, and deployed the right resources in the organization to meet the
demand for the product. The framework provides a way to use a scientific approach to
validate assumptions about your product and business.

Figure 1 shows the four different stages of the customer development process.
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• Customer Discovery focuses on testing hypotheses and understanding customer

problems and needs – in front of customers – by the founders
• Customer Validation is where you develop a sales model that can be replicated
and scaled
• Customer Creation is creating and driving end user demand to scale sales
• Company Building transitions the organization from one designed for learning
and discovery to a well-oiled machine engineered for execution.

The first step of customer development, customer discovery, is

the part of the framework that plays the biggest part in Lean Startup, and
has also been shortened to “discovery” by some in the agile
community. Customer discovery helps you determine whether you
understand the need you are trying to satisfy and whether you are
satisfying the right need.
Customer discovery can be described as:
1. Identify the need.

You may not always immediately know the actual need you are trying to satisfy. In
some cases, you start with a solution (product idea), at which point you need to work
backward to figure out the need you are really trying to satisfy.
2. Hypothesize potential solutions.
Once you understand the true need, hypothesize a potential solution. If you were
initially handed a solution to deliver, you can include that as a candidate, but you may find
that the need you’re satisfying requires a completely different solution.
3. Identify assumptions.
Identify assumptions that are central to your hypothesized solution, including
assumptions about

- Business environment
- Dependencies
- Minimum requirements for a solution
- Change management required

A helpful way to identify assumptions is to ask, “What must be true for this solution to
be effective?”

4. Validate assumptions.
Talk to customers and gather data to validate your assumptions and test your
solution. There are many different ways you can go about validating assumptions.
5. Start delivering.
Once you feel you have validated a sufficient number of assumptions, start
delivering a minimal, yet viable, solution and get frequent feedback from your customers on
whether the solution meets their needs.
6. Constantly reevaluate your solution. 56
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Constantly reevaluate your solution to make sure it is still worthwhile based on new
information that comes to light. Regularly ask whether you should commit to, transform, or
kill the solution.

Customer Validation is to moved things forward by developing a

prototype together with one or more lead customers.

It is composed for these items:

1. Validated Sales and Marketing roadmap:
This means that you understand the market segment correctly you are
working with and with this, you optimized your conversion funnel from
the knowledge of the product and the references you may have from
customers. In practical terms, at this stage, you can determine that the
money you invest in marketing will have its return and also its profit.
2. Validated Business Model
This stage is a more general idea. At this point, validation tells you that
your business model is sustainable and scalable over time. In other words, the
value you offer and establish generates profits over time that could exceed the
operating costs of your business; in other words, the prices in technology, human
resources, technical equipment, etc.

Customer creation is the third out of four steps of the

Customer Development model. Businesses can move on to this
step after it has found its initial customers and made its initial

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sales. The main goal of customer creation is to provide an experience that drives
market demand straight into the sales channel of the company.

This is also the part of the model where businesses can start spending more on
marketing. This is because it is only when you have validated your customers that you
should begin to spend money marketing to them. This prevents you from spending large
sums of money trying to attract the wrong customer to your business. It also helps
prevent you from wasting time and money trying to position the business in the wrong
market.

In the customer creation phase, you have permission to scale up your marketing
efforts. However, customer creation is not about marketing communications per say.
While most of the essential marketing activities are included in this phase, you should
avoid thinking about them solely as marketing activities. This is because building up your
marketing is not about increasing funding to your marketing department. Customer
creation is all about reaching out to your wider customer base.
Customer creation also requires you to enlist your market’s major influences. You
have reached out to early evangelists and adopters in the previous steps. These customers
are valuable because they validate your value propositions. They also demonstrate that
you do have a real customer base. However, once you have your product and knowledge
of your customer, you need to find bigger industry influencers (artist, columnist, etc.)
The customer creation phase is not about tactics. It is not about which messages as
sent out through which channels. It is about your overall strategy to reach your customers
in a way that is meaningful. To make sure that this happens, the kinds of marketing
opportunities that you chose should be directly in line with the market that the business is
entering.

In the first three steps of the Customer Development model, you

focused on learning more about your customers and validating your
assumptions. You then learned how to capture some early customers
in order to prepare yourself for creating your market and your
product demand. All of this was absolutely essential for moving into

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the final phase of the Customer Development model: Company building.

Company building is the final step of Blank’s process for a reason. When the
majority of businesses begin the company building phase before they have understood
their markets and their customers, chaos ensues. This chaos then results in a death spiral
for too many startups.

Company building occurs only at the end of the Customer Development model.
This is when the business can transition from a startup that is focused on learning and
discovery into a fully-fledged business. This business will include formal departments
and a scaled business development model. It is only at the end of the Customer
Development model when a company can begin to appoint departments that potentially
include a Vice President of Sales or a Vice President of Marketing.

When these departments have been opened, the executives that lead then can
move away from a learning and discovery methodology and towards a mission-oriented
method. This mission-oriented method helps the company exploit the information that it
validated during the first three steps of the Customer Development model.

To begin to build a company from an organization that is learning about

customers and markets into a company that is attracting mainstream customers, you will
need to do three things:

• You will need to begin to build your mainstream customer base that extends beyond the
initial early adopters.

• You will need to ensure that this building also occurs within the company. You need to
build the management, organization and company culture to support your new
growth.

• You will need to create departments that are nimble enough to respond quickly to the
company’s growth. The goal is to have formal departments that can pivot and turn as
quickly as you did during the learning and discovery phases that preceded company
building.
At the end of the day, company building is only successful if it is consistently
flexible. Once it begins drawing in its mainstream customer base, it cannot become
complacent. It must remain as flexible and alert as it was before it began to grow.

All four stages of the process involve various iterations. Steve Blank sees the
discovery stage as one of developing and testing hypotheses about the start-up’s product
application. It involves mapping the market, identifying the best-fitting customer segment
and talking to representatives of this segment to obtain feedback. It offers a first reality
check. It concerns what we have labelled effectual segmentation, targeting and
positioning.

What any entrepreneur can take away from the Customer Development model is
that building a business is a process. From beginning to end, you need a process and goals
that match each other. Success does not happen in vacuum. It happens to those who
methodically seek it, prove it and then continue to seek it once more. To end, you need a
process and goals that match each other. Success does not happen in vacuum. It

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happens to those who methodically seek it, prove it and then continue to seek it once more.

Application

Case Study Analysis (Note: Please refer to appendix of this module for the
rubrics.)

CUSTOMER DEVELOPMENT MODEL AT DROPBOX

Dropbox is a file hosting service based in Silicon Valley. It offers both

commercial and personal cloud storage of all sizes. Founded in 2007, Dropbox entered a
very crowded market around the time that the cloud was beginning to explode. Unlike its
competitors, Dropbox managed to capture huge swaths of the market and the service grew
from 100,000 users to several million users in just 18 months. While this sounds like the
typical tech explosion story, the difference between Dropbox and other companies is that
Dropbox did this without doing any advertising.

At first, the Dropbox story sounds like a typical Silicon Valley fairytale. Founded
by a couple of engineering students from MIT, it was accepted into the prestigious Y
Combinator seed accelerator and saw rapid growth.

It is true that Dropbox was growing. However, there were serious problems. The
team at Dropbox had engineering experience but almost no marketing experience to
speak of. The team was taking the advice of investors and mentors and using traditional
marketing methods. Yet, these traditional marketing methods were not what was causing
the company to grow. Essentially, Dropbox was throwing money away on marketing
channels that were not driving customers while still seeing a growth that was unexplained.
Growth of any kind was good but it is hard to perpetuate that growth when it is unclear
where the growth was coming from.

To answer this case study analysis please refer the guide below.

i. Introduction
- Identify the key problems and issues in the case study.
- Formulate and include a thesis statement, summarizing the
outcome of your analysis in 1–2 sentences.
ii. Background
- Set the scene: background information, relevant facts, and the most
important issues.
- Demonstrate that you have researched the problems in this case
study.
iii. Evaluation of the Case
- Outline the various pieces of the case study that you are focusing on.
- Evaluate these pieces by discussing what is working and what is not
working.
- State why these parts of the case study are or are not working well.
iv. Proposed Solution/Changes

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- Provide specific and realistic solution(s) or changes needed.

- Explain why this solution was chosen.
- Support this solution with solid evidence.
v. Recommendations
- Determine and discuss specific strategies for accomplishing the
proposed solution.
- If applicable, recommend further action to resolve some of the
issues.
- What should be done and who should do it?

Well done! You have just finished Lesson 2 of this module. Should there be some
parts of the lesson which you need clarification, please ask/message your instructor thru
FB messenger or text message.

Now if you are ready, please proceed to Lesson 3 of this module which will
discuss about different customer roles.

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Different Customer
Roles

Objectives:
• Explain the different customer roles; and
• To describe the importance of customer roles in product development process.

Introduction:

Customers are arguably the most important external partner for small
entrepreneurial firms developing major innovations. Therefore, it is important to
understand the role of customers can play in the new product development process of the
firms. Recently, Coviello and Joseph studied customer involvement in young, small high-
tech firms and identified several roles customers can play.

Activity: Determine the scenario.

1. A customer has come to speak to a member

of staff to make a complaint. They are threatening to
get you to shut down. Your objective is to resolve
the issue with minimum reputation and financial
damage to the company. Question: What do you
do?
2. Someone slipped and hurt his or her self in
your place of business.
Question: What is the wrong thing to do in this
situation? The right thing?
3. A begrudged former employee is bad-
mouthing your company online with all kinds of
negative fake reviews and untrue stories. Question:
How do you get him or her to stop without
elevating the issue further?
Source:https://www.google.com/url?sa=i&url=http
s%3A%2F%2Fwww.vectorstock.com%2Froyalty-
free-vector%2Ftheater-mask-icon-vector-
27020416&psig=AOvVaw21nOe3rbSGxot4ld2_1
Znm&ust=1598405316371000&source=images&
cd=vfe&ved=0CAIQjRxqFwoTCODl3sPwtusCFQ
AAAAAdAAAAABADshop%2F&psig=AOvVaw1b
N_pcFNERh0wR7tNRFO8E&ust=159758068449
1972

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Analysis
As you can imagine, dealing with customers is not always easy. But
understanding how important customer service and training employees on correct
customer service procedures can greatly help your reputation in the community. Based on
the activity above:
1. How important good customer service in a company?

Abstraction

The role varies from the start-up approaching customers to give feedback on the
initial idea and thus for reviewing its market opportunity, to co-developing the prototype
and testing it, as well as helping to market the new product application by acting as a first
customer reference or promoter to parties in its own network. Shown in Table 3.1 the
different customer roles in a start-up’s development (based on Coviello and Joseph
2012).
Customer roles per Customer Development Process Stage
New Product Custom er Custome r Custom er Compan y
Development stage discover y validatio n creation building
Opportunity review
Source of initial 
feedback Start-up gets
feedback from
customer on
product idea or
concept; discuss
product application and
features and how
these may help
resolve
Source of latent needs current
irritations/outperfo rm 
current
solutions
Start-up identifies
unarticulated or latent
needs when observing
or
questioning
customer.
Customer-based

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funding Development
buyer
Start-up approaches 
and sells the concept
as a development deal to
specific lead
customer(s) for
Research &
Early buyer Development funding.



Start-up approaches
customer for an early
sale, thus
providing a
revenue base for
Research &
Development.

Development &
Testing Technical
adviser Start-up asks 
customer for
technical input or
specifications and 
Co-developer technical guidance

Customer engages in
hands-on
development
Commercializati on
Reference
Start-up asks lead  
customers to act as first
reference and provide
information on the
product to other
potential
customers.
 
Promoter
Customers refers
innovation to other
potential customer and/or
leverages network for
sales
development.
Feedback
Sounding board Firm asks customer   

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for feedback on the

concept, product or
market.
  
User and critic Customer offers
extensive opinions,
feedback or data on
the concept,
product or market.

These different roles are identified on the left-hand side. They are closely
related to the different stages of the new product development process. On the right- hand
side are the links with the matching stages of the customer development process shown.
The relationship is rather self-evident. However, successful start-ups constantly solicit for
customer feedback during all stages of their product development, and in this sense
constantly engage also in customer development and validation. Moreover, after product
launch, they keep looking for feedback, which serves to constantly improve the product.
This implies that the whole process of product and customer development is considered
an ongoing, circular process rather than a linear project with a clear end point.

Application

Answer the question below. Write your answer in your journal. (Note: Please refer
to appendix of this module for the rubrics.)

Describe how would you involve customers in product development? And how
important customers in product development?

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CONGRATULATIONS! You have successfully completed the activities and tasks

for this module. It is expected that you have gained insights and meaningful experience in all
the lessons and other related topics. Now, you are already prepared to move to module 2 of
this course package after you finished answering the module assessment. Enjoy and keep
working!

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Module Assessment

Answer the following questions and refer the rubric for your guide.

1. What is the role of the customer in Marketing?

2. Why is customer development important?

3. How does customer development work in the company?

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Module Summary

You have completed the third module of Entrepreneurial Marketing Strategies.

Key points covered in the module include:

• Most innovations are far from perfect and require careful marketing to
enhance their unique value. Without customers, there is no business. So,
discovering and building customers is as important as creating the new
product.
• To ensure customers for the start-up’s new product application, the customer
development process is best organized separately.
• A customer development team should be appointed and take charge.
• In customer development, involvement by the customer is key. Different
customer roles can be distinguished.
• Customer development should help collect information for product
improvement and for determining the right business model.

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REFERENCES

Lesson 1:

Cooper, R.G. (1983), A process model for industrial new product development, IEEE
Transactions on Engineering Management, EM30(1), 2-11.

Coviello, N.E and Joseph, R.M. (2012), Creating major innovations with customers:
insights from small and young technology firms, Journal of Marketing, 76(6), 87-
104

Lesson 2:

Blank, S.G. (2007), The Four Steps to the Epiphany: Successful Stretegies for Products
that Win, 4th revised edn, Lulu Enterprise, Raleigh, NC.

Drucker, P.F. (1985), The discipline of innovation, Harvard Business Review, 63(3), 67-
72.

Lesson 3:

Griffin, A., Hoffman, N., Price, R.L and Voljak, B.A. (2007), How Serial Innovators
Navigate the Fuzzy Front End of New Product Development, ISBM Report 3-
2007, The Institute for the Study of Business Markets, University Park, PA.

Hoffman, D.L., Kopalle, P.K. and Novak, Th.P. (2010), The ‘right’ consumers for better
concepts: identifying consumers high in emergent nature to develop new product
concepts, Journal of Marketing Research, 47(5), 854-65.

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Appendix

RUBRICS

Category 20 15 10
Reflective The reflection explains the The reflection attempts The reflection does not address
Thinking student’s own thinking and learning to demonstrate thinking the student’s thinking and/or
processes, as well as implications about learning but is learning.
for future learning. vague and/or unclear
about
the personal learning
process.
Organization Writing is coherent and logically Some points remain Writing lacks logical
organized. Ideas are clear and misplaced and stray organization. It shows
accurate. from the topic. some coherence but ideas lack
unity.
Lesson 1: Reflection Essay

Lesson 2: Case Study Analysis

COMPETENT (20)

UNACCEPTABL
PROFICIENT (25)

IMPROVEMEN

TOTAL SCORE
ACCEPTABLE
CRITERIA

NEEDS
T (10)
(15)

E (5)
Thoroughly Includes Includes an Includes a few Does not
MAIN ELEMENTS

answers all most of the adequate of the main include any

of the main amount of the elements of the main
questions elements main elements required for a elements,
required for required for a thorough does not
a thorough thorough response to the answer the
response to response to the questions. questions.
the questions.
questions.
INTEGRATIO
APPLICATIO

All of the Most of the An adequate Few of the Does not

course course amount of the course concepts correctly
concepts are concepts are course are correctly apply any
&
N

correctly correctly concepts are applied. of the

applied. applied. correctly course
applied. concept.

Demonstrate Demonstrate Demonstrate Demonstrate Does not

CRITICAL THINKING

highly comprehensi an adequate minimal demonstrat

comprehensi ve exploration of exploration of e
ve exploration issues and issues and ideas exploration
exploration of issues and ideas before before of issues
of issues and ideas before accepting or accepting or and ideas
ideas before accepting or forming an forming an before
accepting or forming an opinion or opinion or accepting
forming an opinion or conclusion. conclusion. or forming
opinion or conclusion. an opinion
conclusion. or
conclusion.

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No errors Minor errors A few errors Some errors Major

related to related to related to related to errors
WRITING organization organization organization, organization, related to
, grammar , grammar grammar and grammar and organizatio
and style and style style and style and n, grammar
and contains and contains contains at contains at least and style
at least 3 at least 2 least 1 3 complete and
complete complete complete citations. contains at
citations. citations. citation. no
citations.

Lesson 3: Essay
Category 5 4 3
Organization Writing is coherent and Some points remain Writing lacks logical
logically organized. Ideas are misplaced and stray organization. It shows
clear and accurate. from the topic. some coherence but ideas
lack unity.
Content Content indicates original Content indicates Shows some thinking and
thinking and develops ideas thinking and reasoning but most ideas
with sufficient and firm reasoning applied are underdeveloped and
evidence. with original thought unoriginal.
on a few ideas.

MODULE 3 ASSESSTMENT
Category 5 4 3
Organization Writing is coherent and Some points remain Writing lacks logical
logically organized. Ideas are misplaced and stray organization. It shows
clear and accurate. from the topic. some coherence but ideas
lack unity.
Content Content indicates original Content indicates Shows some thinking and
thinking and develops ideas thinking and reasoning but most ideas
with sufficient and firm reasoning applied are underdeveloped and
evidence. with original thought unoriginal.
on a few ideas.

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Module Overview

Developing a Marketing and Sales Program

In this Module

• A one-page marketing and sales plan

• Marketing Instruments
• Managing Customer Expectations

For a successful company marketing strategy, it is vital to understand everything

that is going on a global and international market. Organizational strategy defines the
market orientation of a firm, which defines how a company is focused in relation to
factors such as customers, competitors, and departmental dynamics to deliver success
(Lockrey, 2015). Effective strategic planning requires that organizations improve their
understanding of the strengths shaping the situation and the mechanisms by which such an
understanding occurs and, subsequently, form marketing strategy.

The idea of leveraging a marketing strategy across multiple markets seems to be

nothing but beneficial. It saves effort and resources and ensures a high degree of
consistency between all in-market branding and activities. However, in order to achieve
this company should possess certain marketing capabilities. The role of marketing
capabilities in achieving company’s market and financial success is enormous (Kanibir et
al., 2014, Ripolles, 2011, Nalcacia and Yagci, 2014, Merrilees et al., 2010).

At the completion of this module, you should be able to:

• Discuss the idea of a simple one-page marketing and sales plan to guide the
effectual effort.
• Identify the three core elements of the plan: build customer relationships.
• Discuss in detail the four Ps: promotion, product, place and price.
• Emphasize the importance of creativity and social media to compensate for a
limited marketing budget.

Are you ready? Then start the lessons now!

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A one-page marketing and sales plan

Objectives:
• Discuss the importance of marketing and sales plan; and
• Discuss the idea of a simple one-page marketing and sales plan to guide the
effectual effort

Introduction:

A marketing plan is a report that outlines your marketing strategy for the coming year,
quarter or month. Typically, a marketing plan includes:

• An overview of your business’s marketing and advertising goals.

• A description of your business’s current marketing position.
• A timeline of when tasks within your strategy will be completed.
• Key performance indicators (KPIs) you will be tracking.
• A description of your business’s target market and customer needs.

A sales plan, like its name suggests, is a document that outlines your business'
goals in relation to the selling of products or services. Typically, a sales plan will be
organized around central goals for the business to reach its financial targets. As a base
line, the goals you include in the sales plan should be specific, measurable and relevant to
the needs of your customers. The sales plan will often form part of the larger marketing
plan for your company so you'll need to be sure to identify a target market, consider the
buying attitudes and behaviors of the customers and consider the ins and outs of the
advertising strategies you'll use.

Both sales and marketing plans involve goal setting. Goal setting for a small
business is an important task because it can help to hold you, the business owner,
accountable for the tasks that will ultimately increase your profit margins and gain new
customers. While working towards marketing and sales strategies is rarely an easy task,
setting goals can help keep you on a timeline that is both challenging and ultimately
rewarding when you see the money start to come in.

Activity: Think of your own business and create a logo for it.

- Describe your business logo

- Explain why you come up with the idea
- Explain each element in your logo.

Source:https://www.google.com/url?sa=i&url=https%3
A%2F%2Fwww.chinabrands.com%2Fdropshipping%
2Farticle-how-to-design-your-company-logo-
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Analysis
1. Why do you think the logo of the business is part in the marketing and sales
plan?

2. How important marketing and sales plan in the business?

Abstraction

A marketing and sales plan identify the goals, market strategy, and marketing and
sales tactics that will be used to approach the market segment best fitting the start- up
technology and application, it should help to (1) create product awareness and market
presence; (2) approach and persuade prospects; and (3) clearly specify the product and its
customer value. The brief plan will give structure to your start-up’s marketing and sales
activities and draws attention to goals and allocations of resources in a systematic but
flexible way.

The one-page plan should focus on creating the right customer experience for the
start-up’s new product application. It requires paying attention to three core elements: (1)
building customer value, (2) market presence and (3) customer relationships.
Content of the Plan

Build customer value Build market presence Build customer

relationship
General content
Product features Awareness of technology Customer relationship
Service ➢ Opinion leaders management
Consistency of ➢ Lead users ➢ Prospect list
message/experience across ➢ Initial customer
touchpoints Awareness product/brand contact

➢ Relationship
Customer value ➢ Opinion leaders development
➢ Lead users ➢ Repeat and up-
selling
Access to distribution
➢ Price Educating the market
➢ Brand experience
➢ Total cost of
ownership

Create competition, point of

reference
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lOMoARcPSD|14893662

Structure

Definition (identify/validate) Definition Definition

(identify/validate) (identify/validate)
➢ Customer value ➢ Market ➢ Target segment
➢ Unique selling points ➢ Market size ➢ Target segment
(points of parity and ➢ Brand size
difference)
Goals (this period) Goals (this period) Goals (this period)
➢ Customer satisfaction ➢ Awareness and ➢ New prospects
- Product associations of ➢ Customers
- Brand technology/brand approached;
experience ➢ Distribution demonstrations
➢ Positive customer coverage/quality ➢ Customers
word of mouth ➢ Times in the news developed
➢ Service ➢ Market inroads ➢ Repeat sales
speed/recovery ➢ Market education ➢ Sales
➢ Customer
portfolio
Budget (this period) Budget (this period) Budget (this period)
Means (activities) and timing Means (activities) and Means (activities) and
(this period) timing (this period) timing (this period)
➢ Product ➢ Promotion ➢ Sales funnel
➢ Price ➢ Place ➢ Customer
relationship
building
Project information Project information Project information
➢ Activity/task ➢ Activity/task ➢ Activity/task
➢ Responsible person ➢ Responsible ➢ Responsible
➢ Deadline person person
➢ Deadline ➢ Deadline

Monitoring

Evaluation of progress Evaluation of progress Evaluation of progress

➢ Per activity ➢ Per activity ➢ Per activity
➢ Per objective ➢ Per objective ➢ Per objective

1. Building customer value. This refers to the

fact that the start-up’s product application
represents a solution for customers and thus has
customer value. This value should be identified
and optimized. This can be done carefully
considering the different product attributes and
their impact on the perceived customer value.

Source:https://www.google.com/url?sa=i&url=https%3A%2F%2Fbeyondphilosophy.com%2F7
-reasons-focus-customer-value%2F&psig=AOvVaw1FMfZC-
SQjRxqFwoTCLCK6rfytusCFQAAAAAdAAAAABAD2Fen%2Fother%2Fhow-to-attract- customers-
ishop%2F&psig=AOvVaw1bN_pcFNERh0wR7tNRFO8E&ust=1597580684491972
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lOMoARcPSD|14893662

2. Building market presence. The market

needs to know about your technology and
product to be able to act on it. This requires
creating awareness for both, the market and
the company.

Source:https://www.google.com/url?sa=i&source=im
gres&cd=&ved=2ahUKEwjYrZX8mZ3rAhWx4jgGHZ
OWAxMQjhx6BAgBEAI&url=https%3A%2F%2Fww
w.stelladesign.eu%2Fen%2Fother%2Fhow-to-
attract-customers-in-a-
shop%2F&psig=AOvVaw1bN_pcFNERh0wR7tNRF
O8E&ust=1597580684491972

3. Building customer relationship.

To sustain the firm, it will need a good
customer portfolio. This portfolio involves
developing a prospect list of innovative
customers and approaching these
customers. By maintaining the relationship,
additional sales may be obtained.

Source:https://www.google.com/url?sa=i&source=imgres&
cd=&ved=2ahUKEwjYrZX8mZ3rAhWx4jgGHZOWAxMQjh
x6BAgBEAI&url=https%3A%2F%2Fwww.stelladesign.eu%
2Fen%2Fother%2Fhow-to-attract-customers-in-a-
shop%2F&psig=AOvVaw1bN_pcFNERh0wR7tNRFO8E&u
st=1597580684491972

The three elements mentioned are important for moving the start-up forward
marketing-wise. The aim is to explain why the time is right for introduction and/or to
discuss how to prepare customers for the new product.

Application

As a future entrepreneur, to grow your business, you need a marketing plan. The right
marketing plan identifies everything from 1) who your target customers are to
2) how you will reach them, to 3) how you will retain your customers so they
repeatedly buy from you.

Using the guide below, create a one-page marketing plan for your future
business. (Note: Please refer to appendix of this module for the rubrics.)

ONE-PAGE MARKETING PLAN

Title Page (List the product/service and
the specified marketing time period to be
covered.)
Product/Service (In one sentence,
describe your product or service
including the utility it provides for its
users.)
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lOMoARcPSD|14893662

Target Market (Which people are most

likely to buy your product/service and/or
which audience are you most likely to be
able to impact with your marketing?)
Key Differentiation (How is your
product or service different from those of
your competitors?)
Benefits to Customer (How does your
product provide better or different
benefits to potential customers than
competing products? Is there a benefit or
perceived benefit that plays a key role in
customers’ buying decisions?)
Marketing Strategy (How you’re going
to promote your business idea. Pick one
or two primary marketing tactics you’ll
be using, and briefly describe how you
plan to execute them.)
Special Offers/Pricing (What pricing or
special offers will you include in this
marketing campaign?)
Marketing Message (What key
messages do you want to deliver in your
marketing?)
Creative (What headlines or specific
words may you use in your marketing?)
Media (f you’re going to rely heavily on
social media, for instance, which
channels will you choose? Will you
advertise or just try to go viral for free?
Will you engage in email marketing or
inbound marketing, and how? Talk about
where and when your messages will run.
If you’re engaging in publicity, mention
the types out outlets you’ll target and
why. Distill everything into a few
sentences.)
Profit and Loss Projection (Project the
profit and loss of your product/service
during the marketing time period.)
Summary

Well done! You have just finished Lesson 1 of this module. Should there be some
parts of the lesson which you need clarification, please ask your instructor during your
face-to-face interactions.
Now if you are ready, please proceed to Lesson 2 of this module which will
discuss about marketing instruments.
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lOMoARcPSD|14893662

Marketing Instruments

Objectives:

• Introduce the 4P’s: Product, Price, Place and Promotion: and

• Discuss the concept of Marketing Mix.

Introduction:

The marketing instruments are the set of tactical marketing tools that the firm
uses to actually implement its marketing strategy. The strategy tells us how the firm want
to create customer value, build profitable customer relations, and capture value back in
return.
The instrument, product includes not only the physical product or service and its
specifications, but also packaging, brand name and warranty that jointly are intended to
satisfy customer needs. Price includes expectations for what customers can expect to pay,
such as the list price, discounts and terms of credit. At the customer end, it refers to the
cost the customer will incur. Place refers to distribution and captures the various channels
through which products will be made available to customers. The more easily the product
can be ordered and obtained, the more convenience the customer will enjoy. Finally,
promotion involves the various means of communication through which awareness and
knowledge of the product are conveyed to customers and positive customer attitude is
pursued; it includes traditional promotions and sales efforts, but also new, interactive
media.

Activity: “Draw it!”. Draw your product and fill in the 4P’s
based on your desired product.

PRICE MARKETING MIX PROMOTION

Draw your Product

PRODUCT PLACE
lOMoARcPSD|14893662

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lOMoARcPSD|14893662

Analysis
1. Why your target market needs a particular feature?

2. Why sell through wholesalers rather than direct channels?

3. What if improve the public relations rather than rely on online advertising?

Abstraction

PRODUCT: designing a product application and product line

Product Design

Product design is an important

source of sustainable advantage. As Alan
Lafley, CEO of P&G, “Design can
unlock the technological performance we
build into a product and help the
consumer see it, touch it. Good design is
serious business.”
Design refers to the actual form
and shape of a product. Besides features
delivering functional and emotional
benefits, it also includes aspects of
product appearance that influence
customers’ evaluation and choice.
Product design is when a
new product is created to sell to
customers. The stages of the product
Source:https://www.google.com/url?sa=i&url=https%3A
%2F%2Fwww.defsa.org.za%2Farticles%2Fwhat- design process are to create an idea,
industrial- determine product feasibility, test
design&psig=AOvVaw1ktExgO9iad4vHwhSyLZWw&ust=
1598406694125000&source=images&cd=vfe&ved=0CAI the product, and then launch
QjRxqFwoTCNi7rMX1tusCFQAAAAAdAAAAABAD the product for customers to buy.

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lOMoARcPSD|14893662

Products as bundles of attributes

A product is a bundle of attributes

(features, functions, benefits, and uses) that a
person receives in an exchange. In essence,
the term “product” refers to anything offered
by a firm to provide customer satisfaction,
tangible or intangible. Thus, a product may be
an idea (recycling), a physical good (a pair of
jeans), a service (banking), or any
combination of the three. Source:https://www.google.com/url?sa=i&url=https%3
A%2F%2Fwww.defsa.org.za%2Farticles%2Fwhat-
industrial-
design&psig=AOvVaw1ktExgO9iad4vHwhSyLZWw&ust
=1598406694125000&source=images&cd=vfe&ved=0
CAIQjRxqFwoTCNi7rMX1tusCFQAAAAAdAAAAABAD
Salient Attributes are features that customers think are important because they
offer benefits. It is important to learn about these salient attributes and their threshold
values, or minimal requirement levels. Another relevant product concept is the distinction
between core, extended and augmented product. The core product is the generic, tangible
product that the customer experiences. The extended product is the core product but with
additional physical and design features. The augmented product refers to the whole,
potential product. It includes all current and future features, elements and services that
make the product more valuable and thus are potentially compelling to customers. For
example, if a personal computer is the core product, then the extended product includes
software applications and peripheral devices such as a mouse, keyboard and printer. The
augmented product includes all software updates, lease options and etc.

Product line issues

A product line is a group of related products all marketed under a single brand
name that is sold by the same company. Companies sell multiple product lines under their
various brand names, seeking to distinguish them from each other for better usability for
consumers. A product line can be described using three dimensions: length, breadth and
depth.

➢ Length. Refers to the number of similar products carried to cater to the firm’s
customers (e.g. coffee, espresso, cappuccino, latte). The more variety, the longer the
line.
➢ Depth. Refers to the level of variation in a product line (e.g. size, flavors or other
distinctive factors)
➢ Breadth. Refers to the total number of product lines of a firm (e.g. product lines of
juice and pastries can also be found at a café).

The product line design is a central issue in marketing. By creating the ideal
product of each customer segment, a firm cater to specific variations in customer needs,
and best satisfy different customer groups. It allows the firm to charge premium prices for
these products while satisfying the customers. The basis of product line are the attributes
from which a product is made.

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PRICE: how to set your price

Support for a sustainable business model

Price should reflect the value of your product. If the relationship is

right, and if the priced competitively compared with competing
products, customers should be willing to engage in exchange.
However, switching costs should be accounted for, including old
accessories that do not fit the new product and need replacement, installation costs and the
time required to train staff to learn how to use the new product.

Economic roots

Economic theory asserts that in a free

economy, the market price reflects interaction
between supply and demand for a product. That
is, the price is set so as to balance the quantity
supplied and the quantity demanded. Sometimes,
the price may be distorted by factors such as tax
and other government regulations.
The way demand and supply interact and
the price that emerges is affected by the market
structure. Market structure refers to the number
of firms producing identical products. In which
there are perfect competition in the market.
Characterized by an unlimited number ofSource:
producers and consumers that sell and buy ahttps://www.google.com/url?sa=i&url=https%3A%2F
%2Fwww.vectorstock.com%2Froyalty-free-
homogeneous product. In the extreme content,vector%2Fdemand-and-supply-balance-on-the-scale-
we find monopoly, where only one provider of avector-
21033236&psig=AOvVaw2Nf3EPOAHxKOGCCIHv0p
product or service in the market and many9g&ust=1598407418024000&source=images&cd=vfe
&ved=0CAIQjRxqFwoTCNDYqJr4tusCFQAAAAAdAA
customers. AAABAD

Second, one should understand price elasticity. Price elasticity refers to changes in
customer demand in response to small changes in price levels. It is important factor to
include when considering prices and price strategies.

Pricing methods

There are three basic price-setting methods: cost-based pricing, competitor- based
pricing and customer-based pricing.

1. Cost-based pricing – focuses on calculating costs and then adding a profit margin,
or return on investment mark-up. It is a basic, simple pricing method. It requires
estimating future sales volume, which is particularly difficult for new products.
2. Competitor-based pricing – uses competitor prices as a point of reference. Either
the market leader or closest alternative is used to set a price.

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lOMoARcPSD|14893662

3. Customer-based pricing – relies mainly, but not exclusively, on customer’s

perceptions of the benefits of a product. It sets price based primarily on the value to
the customer, perceived or estimated.

Pricing strategies

The pricing strategy for a new product should be developed to achieve the desired
impact on the market while discouraging competition; it should be closely intertwined
with pricing itself. There are two basic strategies to achieve; skimming pricing and
penetration pricing.

1. Skimming Pricing. The price is often based

on some competitive advantage such as holding
a patent with its limited time span, or having a
first-mover advantage that will decline over
time. It is recommended for conditions when
the nature of demand in uncertain, when the
competition requires some time to develop and
market a similar product and when the product
is so innovative that first customers are willing
to pay the price.
2. Penetration Pricing. The strategy of
entering the market with a low price to attract
customers and capture a large market share as
soon as possible. Discourages the competitors
from entering the market. Low price implies
low margins, which should defer competitor
interest.
Source:
https://www.google.com/url?sa=i&url=https%3A%2F
%2Fgust.com%2Flaunch%2Fblog%2Fstartup-pricing-
strategy-
concepts&psig=AOvVaw3aIo9hSE1SaUIamvnUKyrd&
ust=1598407660824000&source=images&cd=vfe&ve
PROMOTION: creating awareness with a
d=0CAIQjRxqFwoTCPCTjo_5tusCFQAAAAAdAAAAA limited budget
BAD

The challenge of establishing brand presence

A strong brand presence is a significant

competitive advantage in markets where customers
have many choices. A brand refers to the
personality that identifies a product, service or
company generally includes a brand name and a
sign or symbol or combination thereof. A brand
acts as a point of recognition and affinity, two
things start-ups typically lack. So, it rather applies
to the customer creation and company building
Source:
stages. https://www.google.com/url?sa=i&url=https%3A%2
F%2Fwww.hypeinsight.com%2Fis-my-content-
strategy-creating-brand-
awareness%2F&psig=AOvVaw2o98RdV6abgwQdeO
LYkSiD&ust=1598408010666000&source=images&
cd=vfe&ved=0CAIQjRxqFwoTCOigybj6tusCFQAAA

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Useful promotion and social media strategies for start-ups

Start-ups often have limited resources and small promotion budgets. Here are some
ways to create awareness with having limited resources:

1. Take advantage of publicity. For start-up,

any cheap opportunity to promote its new
product is welcome. Entrepreneurs can obtain
publicity by contacting a newspaper, magazine
or online report to share their story.
2. Use the power of internet. The Internet has
opened up completely new, exciting ways to
generate free publicity.
3. Use trade fairs. Participating in or visiting
trade fairs is a good way expand your network
and increase the chances of finding prospects

4. Use pre-announcement. Pre-

Source: announcement is a tactic particularly to
https://www.google.com/url?sa=i&url=https%3A%2F promote new products using new
%2Fwww.allthingsweb.co.uk%2Falternative-social-
media-platforms-your-business-should-consider-in- technology. It makes prospective customers
2016%2F&psig=AOvVaw2gMQddlxwScmVczFNc611u aware of the new development and can
&ust=1598407770557000&source=images&cd=vfe&v
ed=0CAIQjRxqFwoTCKDa- potentially persuade them to delay their
cP5tusCFQAAAAAdAAAAABAD purchasing a product until the new
application is ready.

PLACE: obtaining market access

Gaining access to customers

Place refers to distribution, and therefore all the available options to deliver the new
product to your target audience. It involves three decisions:
1. Where customers should be able to buy the product (channel decisions);
2. How to ship it to the customers (physical distribution); and
3. How to manage the relationship with distributors (trade marketing).

Motivation of distributors to carry the start-up’s brand

Just like customers, distributors buy for a reason. They have their own reason to
add your product line and to want to represents your start-up. Motivation for
distributors include:
1. Customers asks for the product.
2. More favorable margin.
3. An opportunity to reduce the current product range.
4. Enhanced positioning.

By understanding the motivations of distributors, start-up can better prepare its

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sales pitch and negotiate a deal.

Application

The Coca-Cola Company, one of the world's largest multinational corporations in

the non-alcoholic beverage space, is known for its innovative marketing initiatives. In
2014, it launched its "Share a Coke" campaign, in which it replaced its iconic brand name
with one of the 250 most popular American names on the labels of 20-ounce bottles.

Consumers were encouraged to find bottles with names that held personal
meaning to them, share them with friends and family, then tweet about their experiences
using the hashtag #ShareaCoke.

Watch on YouTube (https://www.youtube.com/watch?v=5-ahnFYzMp8) the

famous campaign of Coca-Cola Company, “SHARE A COKE” and answer the
following questions. Write your answers in your journal. (Note: Please refer to
appendix of this module for the rubrics.)

1. Identify the elements of the marketing mix that Coca-Cola focused on as part of
their “Share a Coke” marketing campaign.
2. Explore some of the strengths and weaknesses of this marketing campaign.
3. Examine other elements of the marketing mix that could have been highlighted
adapted and for promoted as part of this campaign to achieve a growth in sales
4. Identify and compare other marketing campaign of a similar nature to Coca-
Cola’s “Share a Coke”. What wanted, what failed and why?

Well done! You have just finished Lesson 2 of this module. Should there be some
parts of the lesson which you need clarification, please ask your instructor during your
face-to-face interactions.
Now if you are ready, please proceed to Lesson 3 of this module which will
discuss about managing customer expectations.

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Managing Customer Expectations

Objectives:

▪ Discuss the importance of managing customer expectations.

▪ Identify the different customer expectations.

Introduction:

Customer expectations management can be very challenging indeed. Your clients

and customers will all have their own expectations of your business or organization and
these can be enormously varied.
Today’s customers are more knowledgeable and more critical than ever before. To
meet their expectations businesses and organizations need to understand their changing
needs and demands and they need to have effective strategies in place that will ensure
high levels of customer satisfaction into the future. Ideally, businesses should be
anticipating and exceeding customer expectations before they are even expressed.
Customers will have both explicit and implicit expectations regarding the product
or service which they have purchased. They will have performance expectations which
include a dynamic element due to anticipated changes to the product or service over time.
Importantly, they will also have interpersonal and service-level expectations which relate
directly to the customer relationship and interaction with a business or organization.

Activity: Consider yourself in this scenario. How will you able

to come up with a solution.
Scenario 1: “Your customer is frustrated about a defect in your
product.”
Scenario 2: “Your customer is dissatisfied with the result of
a service they recently received.”
Scenario 3: “Your customer is confused about what product or
service to purchase.”

Analysis
Customer expectations are difficult to meet. The higher they are, the less likely
you are to exceed them. So, how do you meet and exceed customer expectations?

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To learn more about managing customer expectations. Here more discussion

about it.

Abstraction

Customer expectation encompasses everything that a customer expects from a

product, service or organization. Customer expectations are created in the minds of
customers based upon their individual experiences and what they have learned, combined
with their pre-existing experience and knowledge.
Factors Influencing Customer Expectations

Customer expectations are influenced by a multitude of factors but

there are a few key elements which are recognized as important
influences on customer expectations.

1. Previous Customer Experience

One of the most significant factors influencing customer expectations is their

prior experience with your organization. If they are highly satisfied existing
customers then this sets a high level of expectation which must be maintained. But if
their previous experience has been suboptimal then they may lack confidence in your
business and their expectations may be quite low.

2. Customer Communications

Every piece of outbound communication from your business may have

influenced your customer expectations. Blog posts, tweets, web pages, emails, print
advertising, radio and TV advertising all contribute to the expectations that your
customers will have. It is essential that your communications are all honest,
consistent, clear and unambiguous.

3. Reviews and Word of Mouth

The internet is a magnificent research tool so you can expect your customer’s
to have carried out research before making their purchase. They will have read
reviews of your product or service and they will have potentially read reviews of your
business. They may also have read what people are saying in forums and on social
media. What they derive from these sources will influence their expectations so you
need to be aware of what’s being said.

4. Previous Experience with Other Companies

People’s experiences with other companies and organizations greatly

influence their expectations. Regardless of whether other companies are in the same
niche as yours, these days customers expect the same high levels of great customer
service from all businesses and organizations.

6 Customer Expectation Management Tips

Understanding how customer expectations are formed and how they change over
time provides a great foundation for effective customer expectation management. It
should be clear that developing an understanding of your customer expectations is vital
for business success. It should also be clear how expectations vary. For example, 86
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customer expectations in hotels differ greatly from customer expectations from an

insurance provider.

Here are some top tips that will help you to not
only meet their needs but significantly exceed their
customer expectations.

1. Communicate Clearly and Honestly

2. Cultivate Loyalty
3. Monitor Your Market and Beyond
4. Be Expert
5. Always Follow Up
6. Discover and Exceed
Source:
https://www.google.com/url?sa=i&url=https%3A%2F
%2Fwww.business2community.com%2Fcustomer-
experience%2Ftop-customer-expectations-2014-
0732452&psig=AOvVaw1GDYgUs8Fy1luWUiIe9OkA
&ust=1598408725082000&source=images&cd=vfe&v
ed=0CAIQjRxqFwoTCNCMl6f9tusCFQAAAAAdAAAA
ABAD

Application

Case Study Analysis. (Note: Please refer to appendix of this module for the
rubrics.)

PEAK WORKLOAD

A utility company issued more than a hundred thousand bills each month. Most of
the bills had first-of-the-month due dates, and were computer-generated in a single
lengthy run about twenty-five days before each due date. The rest of the bills had due
dates at five other points throughout the month—the fifth, tenth, fifteenth, twentieth, or
twenty-fifth—and were produced in five comparatively short runs, also about twenty-
five days before each due date. Because most customers sent in their payment close to the
due date, the billing process placed a considerable workload on both computer and human
resources in getting the first-of-the-month bills out and in processing first-of- the-month
payments. The billing staff wanted to even out the workload so that it was spread
throughout the month, and they wanted to accomplish the spread by reallocating accounts
evenly across the six billing cycles.

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The request came from a

department that had credibility and
clout in the organization, so it was
easy to unquestioningly accept the
request as stated. Besides, the
problem seemed clear: how to
distribute the workload more
evenly.

1. What was the original reason for establishing the billing process this way? Is
that reason still valid?

2. What other departments would be affected by a change in billing cycles?

3. What kinds of savings does the current approach provide, such as postage
discounts for the high-volume mailing of first-of-the-month bills?

4. What are the desirable aspects of the problem?

5. What need is there for temporary personnel or overtime to handle the current
peak workload?

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CONGRATULATIONS! You have successfully completed the activities and

tasks for the last module of this course. It is expected that you have gained insights and
meaningful experience in all the lessons and other related topics. I hope all the modules
related to this course help you as a future Entrepreneurs. God bless and Stay Safe!

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Module Assessment

Answer the following questions and refer the rubric for your guide. (Note: Please
refer to appendix of this module for the rubrics.)

1. Why is it important to manage customer expectations?

2. How to deal with unrealistic customer expectations?

_
3. How do you apply the product to the Marketing Mix?

4. How is the 4P’s of marketing used?

5. How important the marketing and sales plan in start-up venture?

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Module Summary

You have completed the third module of Entrepreneurial Marketing Strategies.

Key points covered in the module include:

• A simple plan can help guide marketing and sales efforts. The plan can be
updated and improved over time in response to opportunities.
• The content of the plan will depend on the stage of the customer development
process. It should be developed and managed by the customer development
team, who should be accountable.
• The plan should focus on building customer value, market presence and
customer relationship. First, assumptions about customer value, market and
target customers should be validated. Second, a consistent programme should be
developed that can be rolled out to the market at large later.
• Marketing activities include the four P’s: product, price, promotion and place.
The first two are closely related to creating customer value. The latter two are for
building market presence.
• Creativity, cooperating with partners and using the latest online marketing
opinions can help obtain maximum marketing exposure at minimum expense.

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REFERENCES

Originally prepared by WENDY C. LICAYAN, LEOLYN DENMAR A. SUMANGIT-

COMPOSTELA VALLEY STATE COLLEGE

Lesson 1:

Allen, K. (2010), Entrepreneurship for Scientists and Engineers, Prentice Hall, Upper
Saddle River, NJ.

DiBenedetto, A. (1991), Identifying the key success factors in new product launch,
Journal of Marketing 72(5), 84-97.

Fogel, S., Hoffmeister, D., Rocco, R. and Strunk, D.P (2012), Teaching sales, Harvard
Business Review, 90(7), 94-9

Lesson 2:

Mullins, O., Walker, J., Boyd, H. and Larreche, J. (2005), Marketing Management: A
Strategic Decision-Making Approach, 5th edn, McGraw-Hill, New York, NY.

Webb, J.W., Ireland, R.D., Hilt, M.A., Kistuck, G.M and Tihanyi, L. (2011), Where is the
opportunity without the customer? An integration of marketing activities,
the entrepreneurship process, and institutional theory, Journal of the Academy of
Marketing Science, 39(4), 537-54.

Lesson 3:

Rosen, E. (2002), The Anatomy of Buzz: How to Create Word of Mouth Marketing,
Doubleday, Random House, New York, NY.

Srinivasan, R., Lilien, G.L., Rangaswamy, A., Pingitore, G.M and Seldin, D. (2012), The
total product design concept and an application to the auto market, Journal of
Product Innovation Management, 29(S1), 3-20.

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Appendix

RUBRICS

Lesson 1: One-page Marketing Plan

TOTAL
Outstan Very Satisfactory (5) Needs Poor (1)
SCORE
CRITERIA ding (10) Satisfactory Improvement
(8) (3)
Title Page
Product/
Service
Target
Market
Key
Differentiat
ion
Benefits To
Customer
Marketing
Strategy
Marketing
Message
Creative
Media

Profit and
Loss
Projection
Summary
COMPETENT (20)

UNACCEPTABLE
PROFICIENT (25)

IMPROVEMENT

TOTAL SCORE
ACCEPTABLE
CRITERIA

NEEDS
(15)

(10)

(5)
ELEMENTS

Thoroughly Includes Includes an Includes a few Does not

answers all most of the adequate of the main include any
MAIN

of the main amount of the elements of the main

questions elements main elements required for a elements,
required for required for a thorough does not
a thorough thorough response to the answer the

Lesson 2: Case Study Analysis

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response to response to the questions. questions.

the questions. questions.
INTEGRATIO
APPLICATIO

All of the Most of the An adequate Few of the course Does not
course course amount of the concepts are correctly
concepts are concepts are course concepts correctly applied. apply any of
&
N

correctly correctly are correctly the course

applied. applied. applied. concept.

Demonstrate Demonstrate Demonstrate Demonstrate Does not

CRITICAL THINKING

highly comprehensi an adequate minimal demonstrat

comprehensi ve exploration of exploration of e
ve exploration issues and issues and ideas exploration
exploration of issues and ideas before before of issues
of issues and ideas before accepting or accepting or and ideas
ideas before accepting or forming an forming an before
accepting or forming an opinion or opinion or accepting
forming an opinion or conclusion. conclusion. or forming
opinion or conclusion. an opinion
conclusion. or
conclusion.

No errors Minor errors A few errors Some errors Major

related to related to related to related to errors
organization organization organization, organization, related to
WRITING

, grammar , grammar grammar and grammar and organizatio

and style and style style and style and n, grammar
and contains and contains contains at contains at least and style
at least 3 at least 2 least 1 3 complete and
complete complete complete citations. contains at
citations. citations. citation. no
citations.
COMPETENT (20)

UNACCEPTABLE
PROFICIENT (25)

TOTAL SCORE
IMPROVEMENT
ACCEPTABLE
CRITERIA

NEEDS
(15)

(5)
(10)

Thoroughly Includes Includes an Includes a few Does not

MAIN ELEMENTS

answers all most of the adequate of the main include any

of the main amount of the elements of the main
questions elements main elements required for a elements,
required for required for a thorough does not
a thorough thorough response to the answer the
response to response to the questions. questions.
the questions.
questions.
Lesson 3: Case Study

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INTEGRATION
APPLICATION
All of the Most of the An adequate Few of the course Does not
course concepts course concepts amount of the concepts are correctly
are correctly are correctly course concepts correctly applied. apply any of
&

applied. applied. are correctly the course

applied. concept.

Demonstrate Demonstrate Demonstrate Demonstrate Does not

CRITICAL THINKING

highly comprehensi an adequate minimal demonstrat

comprehensi ve exploration of exploration of e
ve exploration issues and issues and ideas exploration
exploration of issues and ideas before before of issues
of issues and ideas before accepting or accepting or and ideas
ideas before accepting or forming an forming an before
accepting or forming an opinion or opinion or accepting
forming an opinion or conclusion. conclusion. or forming
opinion or conclusion. an opinion
conclusion. or
conclusion.

No errors Minor errors A few errors Some errors Major

related to related to related to related to errors
organization organization organization, organization, related to
WRITING

, grammar , grammar grammar and grammar and organization

and style and style style and style and n, grammar
and contains and contains contains at contains at least and style
at least 3 at least 2 least 1 3 complete and
complete complete complete citations. contains at
citations. citations. citation. no
citations.

MODULE 4 ASSESSTMENT
Category 5 4 3
Organization Writing is coherent and logically Some points remain Writing lacks logical
organized. Ideas are clear and misplaced and stray from organization. It shows
accurate. the topic. some coherence but ideas lack
unity.
Content Content indicates original thinking Content indicates thinking Shows some thinking and
and develops ideas with sufficient and and reasoning applied reasoning but most ideas are
firm evidence. with original thought on a underdeveloped and unoriginal.
few ideas.

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