ILRHR4640 Lecture 11- Entrepreneurial Process, Eager Sellers and Stony Buyers

ILRHR4640 Lecture 11- Entrepreneurial Process, Eager Sellers and Stony Buyers

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Unformatted text preview: Entrepreneurial Entrepreneurial Process Dr. Daniel Cohen Spring 2009 Entrepreneurship Entrepreneurship Definition: “The pursuit of opportunity without regard to resources currently controlled” Dr. Mike Morris, Syracuse U Integrative Framework Integrative Framework ID Opportunity Changing demographics Emergence of new market segments New technologies Regulatory change Social change Framework from Morris, Kuratko, and Schinduette “understanding entrepreneurship through frameworks” Develop Concept Develop Concept New products New services New processes New markets New technologies New sales or distribution channels Determine Required Resources Determine Required Resources Skilled employees Management experience Sales and marketing experience Technical expertise Financing Distribution channels Patents, licenses and legal protection Acquire Resources Acquire Resources Debt Equity FFF Outsourcing Leasing Supplier financing Factoring Barter Partnerships Implement and Manage Implement and Manage Implement concept Monitor performance Payback resource providers Reinvest Expand Achieve performance goals Harvest Venture Harvest Venture Sell venture Family succession Go public Shut down venture License rights Eager Sellers and Stony Buyers Eager Sellers and Stony Buyers Article Questions the “build a better mousetrap” philosophy Companies assume customers buy because of utility and value only This article examines the psychological factors involved 40%­90% of New Products Fail. 40%­90% of New Products Fail. Why? Consumers find comfort in familiarity New products often require behavioral change Customers irrationally overvalue existing product Companies, knowing their innovation is technically better, overvalue the benefits they provide Result: a gaping mismatch! Gains and Losses Gains and Losses Evaluation of products subjective not objective Customers evaluate relative to reference point Improvements = gains; Shortcomings = losses Losses loom larger! The Endowment Effect The Endowment Effect “Customers value what they own, but may have to give up, much more than they value what they don’t own but could obtain” (pg. 3 in article) Examples: Sellers vs Choosers Result? Irrational overvaluation Status Quo Bias: people tend to stick with what they have even though a better alternative exists Intensifies over time These tendencies are universal but awareness is What to do about this Inequity? What to do about this Inequity? Use these strategies to limit the extent of behavior change: Make behaviorally compatible products Toyota Prius Hybrid Target un­entrenched customers Burton Snow boards Find Believers Find customers who believe in your product and who are not overly concerned about the costs of switching Manage Customer Resistance Manage Customer Resistance Brace for slow adoption Accept that your long haul product may not catch on immediately Avoid depleting resources too quickly Offer benefits 10X > than existing products MRI’s are 10x + greater than x­rays, so customers accept new behaviors and claustrophobic conditions Questions Questions ? ...
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This note was uploaded on 03/18/2009 for the course ILRHR 4640 taught by Professor Cohend during the Spring '09 term at Cornell University (Engineering School).

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