Full Summary
Eship4
Document made to be studied at 150-180% zoom (do this for best experience)
,Lecture 3 – Engaging with your market (first 2 lectures were not important to learn)
Knowing your market
B2B = small number of customers (market research may be impossible to conduct)
B2C = large number of customers
➢ Market research may reveal;
o Market segmentation (optimize product to segments targeted)
o Pricing: optimal pricing
o Features: optimal configuration
Competitive strategy
Competitive strategy is about being different. It means deliberately choosing a different set of
activities to deliver a unique mix of value.
In a study done, 86% of 108 business launches were line extensions and a mere 14% aimed at
creating new markets or industries.
o Line extensions accounted for 62% of the total revenue, but only 39% of total profit
o The other 14% delivered 35% of total revenues, but had 61% of the total profits
Optimal product configuration
Use the method from the book to come up with the most optimal product configuration.
Also think of how the competitors will react.
Distribution channel
Have to balance reach and effectiveness with the cost of distribution.
➢ Aim is to optimize the realized demand
,Advertising
It usually becomes within reach once you can cover advertising expensed from your cash flow.
➢ Investors (in NL) tend to be extremely reluctant to have their money be used for advertising
costs
➢ Initially, free publicity may be your only option
, Venture design
- Abc
- Abc
- Abc
Reading: Venture Design (Knott) chapter 1: Introduction
Inspiration vs perspiration
Ideas are not heroic/valuable, the entrepreneur is the source of value. VCs look for evidence that the
entrepreneur can get things done.
➢ Why need a course in entrepreneurship then?
o You don’t need it, it lacks the experience. But, in the real world it costs money to
make choices, etc., on paper it does not cost much (learning before doing).
➢ Why the decision-making approach?
o The quality of a venture is in essence the sum of its decisions. It allows you to
distinguish good ideas from lesser ideas.
Competitive advantage from decision making
Students can have a large firm bias in favor of rejecting ideas, a Type 1 and Type 2 error (thinking the
market is unattractive because it is too easy to enter or attractive because it has formidable entry
barriers).
➢ It is a big opportunity, as large firms reject new ventures for two reasons: risk aversion and
unattractive scale.
- Type 1 error = rejecting a venture that ultimately would have succeeded
- Type 2 error = pursuing a venture that ultimately will fail
Exploiting Raw Data
Most people are unwilling to analyze data, much less gather it (example of students having to make a
choice based on raw data and on a summary of the data).
Flow of the book
The book is organized around the decisions that an entrepreneur faces in designing a venture.
Eship4
Document made to be studied at 150-180% zoom (do this for best experience)
,Lecture 3 – Engaging with your market (first 2 lectures were not important to learn)
Knowing your market
B2B = small number of customers (market research may be impossible to conduct)
B2C = large number of customers
➢ Market research may reveal;
o Market segmentation (optimize product to segments targeted)
o Pricing: optimal pricing
o Features: optimal configuration
Competitive strategy
Competitive strategy is about being different. It means deliberately choosing a different set of
activities to deliver a unique mix of value.
In a study done, 86% of 108 business launches were line extensions and a mere 14% aimed at
creating new markets or industries.
o Line extensions accounted for 62% of the total revenue, but only 39% of total profit
o The other 14% delivered 35% of total revenues, but had 61% of the total profits
Optimal product configuration
Use the method from the book to come up with the most optimal product configuration.
Also think of how the competitors will react.
Distribution channel
Have to balance reach and effectiveness with the cost of distribution.
➢ Aim is to optimize the realized demand
,Advertising
It usually becomes within reach once you can cover advertising expensed from your cash flow.
➢ Investors (in NL) tend to be extremely reluctant to have their money be used for advertising
costs
➢ Initially, free publicity may be your only option
, Venture design
- Abc
- Abc
- Abc
Reading: Venture Design (Knott) chapter 1: Introduction
Inspiration vs perspiration
Ideas are not heroic/valuable, the entrepreneur is the source of value. VCs look for evidence that the
entrepreneur can get things done.
➢ Why need a course in entrepreneurship then?
o You don’t need it, it lacks the experience. But, in the real world it costs money to
make choices, etc., on paper it does not cost much (learning before doing).
➢ Why the decision-making approach?
o The quality of a venture is in essence the sum of its decisions. It allows you to
distinguish good ideas from lesser ideas.
Competitive advantage from decision making
Students can have a large firm bias in favor of rejecting ideas, a Type 1 and Type 2 error (thinking the
market is unattractive because it is too easy to enter or attractive because it has formidable entry
barriers).
➢ It is a big opportunity, as large firms reject new ventures for two reasons: risk aversion and
unattractive scale.
- Type 1 error = rejecting a venture that ultimately would have succeeded
- Type 2 error = pursuing a venture that ultimately will fail
Exploiting Raw Data
Most people are unwilling to analyze data, much less gather it (example of students having to make a
choice based on raw data and on a summary of the data).
Flow of the book
The book is organized around the decisions that an entrepreneur faces in designing a venture.
