P 101 Intro ENT3011 Final Test Review The way that entrepreneurs identify their primary customer is by recognizing a need or pain in the market P 102 An overview of Industry Analysis Just know the questions Is the industry growing Where are the opportunities How is the industry described What is the status of any new technology How much do industry companies spend on research and development Who are the opinion leaders in the industry What does the future look like What are typical margins in the industry Are there young successful firms in the industry Are there any threats to the industry P 103 Gathering Secondary Sources of Industry Information Check out secondary sources first in order to gather background data o Examples google yahoo msn Wikipedia For more targeted information from experts check out o Journals o Trade magazines o Industry analysts o Government publications o Annual reports of public corporations North American Industry Classification System NAICS o These codes are used to identify industries and allow for common standards and stats P 106 107 Stages of the Industry Life Cycle Birth before i e The Internet Growth and Adaptation standards Differentiation and Competition o The introduction of a disruptive technology that creates opportunities that did not exist o Rapid growth stage where companies compete for the right to determine industry o Companies find un served niches to attract customers Innovation is needed Shakeout Maturity and Decline P 109 Analyzing an Industry o This happens when smaller companies can t compete with the larger ones so they leave and the larger firms then pick up the slack causing them to grow rapidly o The industry reaches a mature state where several major companies dominate o The industry will start to decline unless there is a technological interruption The most commonly used competitive framework is Porter s Five Forces o It helps entrepreneurs characterize the industry and markets they are looking to enter o Created by Michael Porter o Some people want to include a sixth force the government or public The Five Forces o Barriers to Entry o Buyer Bargaining Power o Threat of Substitutes o Supplier Bargaining Power o Intensity of Competitive Rivalry P 110 Economies of Scale Found in more mature industries Occurs when the costs of production have declined relative to the price of the good service P 114 Pest Analysis The PEST Analysis examines the environment that the new venture will operate This helps the entrepreneur to align their goals with the way the market is reacting Areas of focus o Political o Sociocultural o Economic o Technological P 116 Characterizing the Target Market The goals of market research o Identify and profile the first customer o Estimate potential demand from that customer o Identify subsequent customer segments and needs to grow the company P 116 Targeting the First Customer The first customer may not be the biggest market but they allow the entrepreneur to enter the market with no direct competition The goal is to narrow the focus to save time and money by identifying 2 3 prototypes of business that are most feasible o Allows more productivity P 117 Targeting the First Customer Cont Using the U S census data the entrepreneur can determine how the geographic area in which they are doing business is composed o i e increasing decreasing population young older population skilled unskilled workforce P 118 Exploring the Market with Primary Data The most important data to collect is primary data Types of data collections o Observations o Online in person surveys o Phone surveys o Interviews o Informational focus groups Deciding the best one for you can be decided off time and money P 119 Structured Interviews Advantages of personal interviews o They provide more opportunity for clarification and discussion o The opportunity to observe nonverbal communication o The response rate is high o Interviews permit open ended questions that can lead to more in depth information o Provide the opportunity to network and create valuable connections Money is usually why some small business stay away from them P 122 Customer Profile Age Income level Education Buying habits when where how much Where these customers typically find these types of products and services How they would like to purchase these products and services Analyzing Product Service Risks and Benefits page 129 Chapter 7 It is important to put the customer at the center of the business Every business large or small product or service is involved in product service development at every stage of its life cycle Whenever a new product service or revision is introduced it has gone through a design and development process Intellectual Property new products and services that create assets that need to be protected The Impact of Technology page 131 Technology has shortened product life cycles Just like the industry life cycle product life cycles have periods of product development market introduction growth maturity and decline Complete product life cycle can be from 90 days to 100 years As a result BOTH product and service based companies must conduct R D much more frequently to remain competitive How Entrepreneurs Develop Products and Services page 131 90 of current companies surveyed say that innovation is integral to current strategic goals These companies also expected innovation to spur strong top line growth This purpose of innovation is to produce new sources of revenues for the company How Entrepreneurs Develop Products and Services pages 132 and 133 5 Problems Associated with New Product Development NPD o Poor execution o Time to market increases o First to market opportunities are missed o Projects are made simpler so that more can be done with less o Team morale declines Intellectual Property page 138 The group of legal rights that make up intellectual property rights o Patents o Trademarks o Copyrights o Trade Secrets Patents page 139 A patent gives the patent holder the right to defend the patent against others who would attempt to manufacture use or sell the invention during the period of the patent At the end of the patent life the invention is placed in public domain it is free to use for everyone The U S patent system was designed 200 years ago by Thomas Jefferson o Its purpose was to provide a brief legal monopoly to give the inventor an opportunity to get the invention into the market and recoup development costs before competitors entered the