A Primer in Entrepreneurship

• A firm must address two important questions in order to succeed.

  • WHO are the customers?

  • HOW to attract customers?

Following the three step process, you need to segment the market, determine the target market and establish a unique position within the target market.

• MARKET SEGMENTATION
• TARGET MARKET/MARKET NICHE
• POSITIONING

The market is divided into groups of customers which are similar enough that the same product/ service will appeal to them.

• To be accomplished:
  • Homogeneous groups of buyers in regard of their wants and needs
  • Segments having smaller differences within the segment than across segments (Сегменты, имеющие меньшие различия внутри сегмента, чем между сегментами)
  • Segments beeing distinct to easily identify members (Отличающиеся друг от друга сегменты позволяют легко идентифицировать участников)
  • Segments whos size is determinable to determine potential (Сегменты, размер которых может быть определен для определения их потенциала)

Since market segments are often too large to be targeted successfully most firms target a niche within a segment.

Market Niche: see the picture

• understand the market

• meet its customers’ needs

• become an expert

• provide customers with high levels of value and service

A firm establishes a position in order to differentiate itself from its competitors.

• part of a market/ segment the firm is claiming as its own

• how the firm is situated relative to its competitors

A position is established in it's customers minds by consistently drawing attention to it's products attributes that define the essence of what the product is and what separate it from its competitors. (Позиция устанавливается в сознании клиентов, последовательно привлекая внимание к свойствам продуктов, которые определяют сущность продукта и то, что отличает его от конкурентов.)

Fictive example of the positioning of automobiles: see the picture

Firms often develop a tagline to reinforce the position they have staked out in their market. (Фирмы часто разрабатывают слоган, чтобы укрепить свои позиции на рынке.)

A phrase that is used consistently in a company’s literature, advertisements, promotions, stationery, and even invoices, and thus becomes associated with the company: see the picture

Selling benefits rather than features. (Продажа скорее преимуществ, чем функций.)

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

While features are nice, they typically do not entice someone to buy a product.

A strong brand can be a very powerful asset.

• Brand
  • a set of positive or negative attributes that people associate with a company
• Brand Management
  • monitoring the integrity of the brands, protecting the image and value of an organization's brand in consumers' minds.
• Brand Equity
  • the term denotes (обозначает) the set of attributes and liabilities that are linked to a brand and enables it to raise a firm's valuation

There are different ways of thinking about the meaning of a brand.

• a brand is an EXPECTATION of performance
• a brand is an unwritten WARANTEE (Поручительство)
• a brand is a PROMISE
• a brand is a GUARANTEE
• a brand is a REPUTATION
• a brand is a collection of MEMORIES
• a brand is a PLEDGE (Обещание)
• a brand is a mark of TRUST and REDUCED RISK

A firm may develop a brand on a philosophical and a practical level.

• philosophical
  • creating value and having and having meaning in its customers' lives 
• practical
  • building through techniques, such as advertising, public relations, sponsorships, support of social causes, and good performance

Co-branding refers to a relationship between two or more firms where the firm’s brands promote each other.

(Ко-брендинг - это отношения между двумя или более фирмами, в которых бренды фирмы продвигают друг друга.)

• There is a difference between positioning and branding.
  • The brand is all about the attributes and promises that people associate with a company.

  • The position is all about the details.

A marketing mix is the set of controllable, tactical marketing tools that is used to produce the desired response in the target market.

• Product

• Price

• Promotion

• Place

Determining the product/ service to be sold is central to the firm’s entire marketing effort.

(Die Bestimmung des zu verkaufenden Produkts/Dienstleistung ist von zentraler Bedeutung für die gesamte Marketingstrategie des Unternehmens.)

The consumer buys the actual product (see picture).

The price is the amount of money consumers pay to buy a product and is the only element of the marketing mix that produces revenue.

(see the picture: IMPORTANT)

Regardless of the method of pricing, a company cannot charge a premium price without delivering on its positioning and branding promises, and unless circumstances are right.

see the picture (IMPORTANT)

A firm needs to communicate the merits of its product to its target market in order to persuade people to buy the product.

(Ein Unternehmen muss die Vorteile seines Produkts seinem Zielmarkt vermitteln, um Menschen davon zu überzeugen, das Produkt zu kaufen.)

Advertising is used by entrepreneurs to promote their firms.

• raise costumers’ awareness of a product

• explain a product’s comparative benefits

• create associations between a product and a certain lifestyle

Public relations refers to a number of techniques.

A firm’s product needs to move from its place of origin to the consumer by taking a distribution channel.

Many firm sell directly to costumers.

• PRO
  • control
• CON
  • capital tied up in fixed assets

Firms that sell through intermediaries typically pass off their products to wholesalers who place them in retail outlets to be sold.

• PRO
  • less capital tied up in fixed assets
• CON
  • loss of control

Increasingly a company’s intellectual assets are the most important.

• INTELECTUAL PROPERTY
  • product of human imagination, creativity, and inventiveness that is intangible but has value in the marketplace.

There are two primary rules of thumb for determining whether intellectual property protection should be pursued for a particular intellectual asset.

• Is the intellectual property in question directly related to its competitive advantage?

• Does the intellectual property have value in the marketplace?

There are four common mistakes firms make in regard to protecting their intellectual property.

• NOT properly identifying all of their intelectual property
• NOT legaly protecting the intellectual property that needs protecting
• NOT fully recognizing the value of their intellectual property
• NOT using their intellectual property as part of their overall plan for success

Intellectual property laws exist to encourage creativity and innovation by granting to individuals who risk their time and money in creative endeavors exclusive rights to the fruits of their labors for a period of time.

• PATENTS
• TRADEMARKS
• COPYRIGHTS
• TRADE SECRETS

A patent is a grant from the federal government conferring the rights to exclude others from making, selling, or using an invention for the term of the patent.

A patent does not give its owner the right to make, use, or sell an invention: rather, the right granted is only to exclude others from doing so.

While this system may seem odd, it is really the only way the system could work.

Many inventions are improvements on existing inventions, and the system allows the improvements to be (patented) and sold, but only with the permission of the original inventors, who usually benefit by obtaining licensing income in exchange for their consent.

Since Patent #1 was granted in 1790, the U.S. Patent and Trade-mark Office has granted over six million patents.

The patent office is strained (напряжено). It now takes an average of 35.3 months from the date of first filing to issuance of a patent.

The subject of a patent application may be an invention, design, or business method.

A business method patent is a patent that protects an invention that is or facilitates a method of doing business.

There are three types of patents.

• UTILITY
• DESIGN
• PLANT

The subject of a patent application must be useful, novel and not obvious.

Only the inventor of a product can apply for a patent. If two or more people make an invention jointly, they must apply for the patent together.

There are notable exceptions to this rule.

• 1. If an invention is made during the course of the inventor’s employment, the employer typically is assigned the right to apply for the patent through an assignment of agreement.
• 2. The second exception is the right to apply for an invention can be sold.

The process of obtaining a patent

(see picture)

Patent infringement (нарушение) takes place when one party engages in the unauthorized use of another party’s patent.

The tough part (particularly from a small entrepreneurial firm’s point of view) is that patent infringement cases are costly to litigate (что судебные разбирательства).

A trademark is any word, name, symbol, or device used to identify the source or origin of products or services, and to distinguish those products or services from others.

Archaeologists have found evidence that as far back as 3,500 years ago, potters made distinctive marks on their articles of pottery to distinguish their work from others.

There are four types of trademarks which all are renewable every 10 years, as long as the mark remains in use.

• TRADEMARK
• SERVICE MARK
• COLLECTIVE MARK
• CERTIFICATION MARK

See picture

(fragrances: ароматы

trade dress: фирменный стиль)

• Immoral or scandalous matter

• Deceptive (Обманчивый) matter; example: a food company couldn’t register the name “Fresh Florida Oranges” if the oranges weren’t from Florida.

• Marks that are merely (всего лишь) descriptive of a product or service cannot be trademarked. For example, if you develop a new type of golf ball, you can’t get a trademark on the words “golf ball.”

• A trademark consisting primarily of a surname, such as Anderson or Smith, is typically not protectable.