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| Tuesday, 29 June 2004 |
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Entrepreneurship and marketing effectiveness by Prasanna Perera, Marketing and Management Consultant, Chartered Marketer CIM, UK Michael Porter defines competitive advantage by stating that you must be different to your competitors, not necessarily better than them. This is the very essence of entrepreneurship, which is to be creative and think "out of the box", in business and marketing related activities. What is entrepreneurship?
Entrepreneurs and entrepreneurial firms exhibit the dimensions of risk taking, innovation, creativity and proactivity. Basically they are willing to "change the traditional business model and create their own unique" one. In doing so, industry and market boundaries are altered, and entirely new industries/markets are created. Entrepreneurial marketing This brings us to the topic of entrepreneurial marketing, which is defined as the behaviour exhibited by an individual and/or organisation, which adopts a philosophy of challenging established market conventions, during the process of developing new solutions. Market conventions based on logical extensions are not really entrepreneurial. To be considered as entrepreneurial, market conventions should be based on 'breakthrough' developments. Marketing effectiveness To be considered as effective in Marketing as organisation or an individual, has to achieve the right results. This requires strategic thinking, planning and clever implementation. It is the strategic thinking, ability that differentiates an entrepreneur from a conventionalist. We now begin to see glimpses of the linkage between successful entrepreneurship and marketing effectiveness. Examples of successful entrepreneurship and resultant marketing effectiveness, are too numerous to mention. However, there are a few outstanding examples, which are worth dwelling upon. Examples of entrepreneurship and marketing effectiveness (outstanding) In the area of service marketing IKEA, Starbucks and Federal Express comes into mind. IKEA which was originally a Swedish mail order company evolved overtime with the aim of providing well designed modular furniture at low prices. Their target customer group was newly married persons, who required good quality furniture, but at an affordable price. (A tough equation to meet). The IKEA solution was indeed unique. In order to keep service costs low and create customer ownership of solutions, customers were involved in the shopping process. Basically, IKEA made sure that customers were carrying out some of the tasks, of in-store shop staff. The beauty of this entrepreneurial solution was that customers were happy, to be involved in the service encounter. It gave them a sense of ownership, relating to the solution. For e.g. assembling your own furniture and designing same. Operational standards In the case of Starbucks the company was obsessed with brewing the best possible cup of coffee, which they served in well appointed coffee bars. The entrepreneurial aspect of Starbucks is that it set operational standards, well above customer expectations. These operational standards were required to be met at all outlets, by all employees. Another aspect of the entrepreneurial culture, is that all employees are educated on the world of coffee. Therefore, they are able to enter into a meaningful discussion with customers, thereby adding value to the customers' experience at Starbucks. Federal Express realised that they must maintain service standards, in an industry characterised by extreme pressure. (Packages and documents moving to and fro around the world). The entrepreneurial solution was to invest in exploiting the latest development in IT. Further, customers were integrated with FedEx data management system, in order to improve delivery times and accuracy. Entrepreneurship and New Product Development (NPD) NPD could be considered from two perspectives i.e., Modifications to existing products and new products (new to the world of innovations). Modifications to existing products, are conventional and routine actions. These cannot be really considered as "entrepreneurial". However new to the world products are certainly a result of unconventional and innovative thinking and action. Thus, they should be termed as "entrepreneurial". 'Innovative prowess' When innovations and entrepreneurship, are considered, the name of the Sony Corp comes easily to mind. Sony is world renowned for their 'innovative prowess", based on a range of successful new product introductions such as the Walkman, Video Walkman, Discman, Handycam and many more. The innovative spirit of Sony is summed up brilliantly in the company motto. "Sony the one and only". The entrepreneurship spirit within Sony, is due to the leadership provided by the founder, Akio Morita. In the male grooming market the name Gillette is renowed for innovative products. Shaving systems starting from Sensor, Sensor Excel and now Mach 3. Each shaving system is not a simple modification to a existing one. It is a profound development based on careful market research and years of trial. The commitment of Gillette to innovations is commendable and has resulted in strong brand equity. Process re-engineering and Entrepreneurship Re-engineering became popular in the 1990s among western firms, in both the manufacturing and service sectors. The important question is whether process re-engineering can be considered as an entrepreneurial activity. The answer is to address what specific methods were adopted in re-engineering processes. If conventional processes were broken and replaced with far more productive ones, then this activity is definitely entrepreneurial. However, if another firm adopts the same improved process, then this is not considered as entrepreneurial, because all they are doing is merely reacting to a new initiative in the industry. Entrepreneurial activities are proactive, unconventional, often risky and achievement oriented. Basically the will power not to accept the status-quo. Conclusion Marketing effectiveness is based on the ability of an organisation to achieve the right results, concerning its customers and products. In order to achieve the right results, conventional wisdom may have to be challenged and newer (entrepreneurial) methods of working, may have to be introduced. Entrepreneurial behaviour is characterised by the following traits, irrespective of whether the organisation is large or small in size and scope. * Willingness to take risks. * Willingness to challenge conventional methods. * Aptitude for problem solving, in a creative manner. * Proactive in operational aspects. * High tolerance for ambiguity (uncertainty) in all business activities. "Risk-taking is the essence of innovation" "The best leaders are apt to be found among those executives, who have a strong component of unorthodoxy, in their characters. Instead of resisting innovation, they symbolise it". |
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