ENT 3003 FINAL EXAM STUDY GUIDE Tuesday December 13 2011 5 30pm CHAPTER 6 Analyzing the Industry and Market Entrepreneurs identify their primary customers by recognizing a need or pain in the market AN OVERVIEW OF INDUSTRY ANALYSIS Data collected should answer the following key questions 1 How is the industry described particular character developed by demographics 2 Is the industry growing growing industry means more opportunities for new ventures to develop and survive determined by type of industry 3 Where are the opportunities does the industry provide opp for new bus w new innovative products processes distribution or marketing GATHERING SECONDARY SOURCES OF INDUSTRY INFORMATION It s generally wise to begin any research by looking at secondary sources of information to gather background data NACIS North American Industry Classification System USA Mexico Canada Identify industries allow for common standards FRAMEWORKS FOR UNDERSTANDING INDUSTRIES Industry Life Cycle stages are identified by different kinds of activities at each stage Figure 6 1 page 168 Stages Birth Growth Adaptation Differentiation Competition Shakeout Maturity Decline Growth Adaptation fight for position the right to determine industry standards ANALYZING AN INDUSTRY Porters 5 Forces commonly used competitive framework challenged to add a 6th force government or public Barrier to Entry Threat from Substitutes Threat from Buyers Bargaining Power Threat from Suppliers Bargaining Power Competitive Rivalry Among Existing Firms Using Framework to Draw Conclusions Economies of Scale when you achieve it means your cost to produce has declined relative to the price of their goods and services found in mature industries catch 22 situation new venture enter on a large scale risk retaliation enter on a small scale and may not be able to compete bc costs are high compared to everyone else PEST ANALYSIS Analysis to examine the environment in which the new venture will operate and ensure that the entrepreneurs strategies are aligned with the industry markets in which it will compete Examines specific aspects of the macro environment 4 factors Political gov reg legal Economic capital inflation purchasing power emp rate Sociocultural demos culture Technological R D Rate of Change CHARACTERIZING THE TARGET MARKET For a new company goals of market research are id and profile first customer estimate potential demand from that customer id customer segments needs to grow TARGETING THE FIRST CUSTOMER First customer is the one who most needs the benefits of the entrepreneur s service May not be the biggest market but a niche that enables the entrepreneur to enter w no direct competition 4 Step Market Research Process research Forecast demand Access info needs Research secondary sources first Measure target market w primary Research Secondary Sources First customer demographics psychographics size of market growth of market how is market affected by geography reach market competitors reach market successful market strategies The Internet is a good starting point for gathering secondary data census website demographics EXPLORING THE MARKET WITH PRIMARY DATA Most important data entrepreneurs can collect on potential customers is primary data observation surveys interviews focus groups Decision about what one to use is based on time money To avoid bias a sample should be random Structured Interviews best source of valuable info from anyone who can help determine who the first customer is Advantages opportunity for clarification and discussion opportunity to observe nonverbal comm high response rate permit open ended questions opp to network PAGE 120 CUSTOMER PROFILE Info that goes into the customer profile age income level education buying habits where the customers typically find these services preferred purchasing method CHAPTER 7 Analyzing Product Service Risks and Benefits Every business large or small product or service is involved in product service development at every stage of its life cycle Bc new products services create assets that need to be protected intellectual property it is essential entrepreneurs understand how to protect those assets THE IMPACT OF TECHNOLOGY Technology has shortened product life cycles Product Life Cycle product development market intro growth maturity decline Can be 90 days 100 years Customers expect entrepreneurs to provide new innovative services more rapidly at a lower cost HOW ENTREPRENEURS DEVELOP PRODUCTS SERVICES 2003 Study of Conference Board innovation strategies 90 co s considered innovation integral to current strategic goals 83 expected it to spur growth for their co s Entrepreneur ventures typically don t like to play by other co s rules need to have a product development strategy in place to successfully compete in own niches Lack of resources in new product development makes 5 problems occur 1 poor execution 2 time to market increases 3 first to market opps are missed 4 projects are made simplier so more can be done w less 5 team morale declines NEW PRODUCT FAILURE 3 strategies that should be incorporated in any product development program to enhance chances of competing effectively are 1 design the product right the first time 2 shorten the time to market 3 outsource NEW PRODUCT CHECKLIST p137 Elements the MARKET SWOT analysis DESIGN DEV MANU FINANCIAL INTELLECTUAL PROPERTY IP Product has to be unique to qualify Group of rights associated w patents trademarks copyrights trade secrets every business no matter how small has ip rights associated w it PATENTS Primary means of protecting an original invention Gives the patent holder the right to defent the patent against others who would attempt to manu use or sell during the period of the patent end invention becomes pub domain US patent system was designed 200 yrs ago by Thomas Jefferson purpose is to provide a brief legal monopoly to give the inventor an opp to get the invention into the market recoup costs before competitoes enter the market to be patentable the invention must fit into one of these 5 criteria machine a method an article of manufacture furniture composition of matter gas new use or improvement BUSINESS METHOD PATENTS Arose out of the need of Internet companies to protect the way they do business started with one click TRADEMARK INFRINGEMENT COUNTERFEITING DILUTION Trademarks patents can suffer from infringement counterfeiting or misappropriation Infringement is found if a mark is likely to cause confusion with a