AVB I 20070525 3 4

Revised Class Schedule (as of 5/25) : 

Revised Class Schedule (as of 5/25) 　　　Office Hour: 金 11:00-12:30 VBL 2F 電話285-3630 ①②　5/11(金) 14:30-17:40 Overview of Venture Business / Business Models & Strategy ③④　5/25(金) 14:30-17:40 Intel Case Study / Sales & Marketing ⑤⑥　6/1 (金) 14:30-17:40 Dell Online Sales/Marketing Case / Student Marketing Presentations ⑦⑧　6/8(金) 14:30-17:40 Innovation & Product Development /Student Univ. Idea Presentations ⑨ 6/20　(水） 14:30-16:00 Finance & Accounting/"Elevator Pitch" Presentations 　 ⑩⑪ 6/29(金) 14:30-17:40　Finance & Accounting Continued/Business Idea Workshop ⑫⑬ 6/ 30 (土) 10:00-12:00 KISC Case Study 13:00-16:00 KISC Business Plan Review ⑭⑮　7/6 (金) 14:30-17:40 Final Student Presentations Final Team Business Plan Paper By July 10 (火）　KISC format

Class 3: 

Class 3 Intel Case Study

Today’s Drucker: 

Today’s Drucker A business has 2 basic functions: marketing and innovation.

Intel Case Study: 

Intel Case Study Big idea, new technology/business area: semiconductors, IC chips Company is more than its products “Platform” (product series, same technology base) Technology Innovation Marketing Innovation Strategic Choices Sustainable Competitive Advantage

Intel 1968-1977 Case: 

Intel 1968-1977 Case “Trying to do things nobody else could” – Robert Noyce (co-inventor integrated circuit IC) Gordon Moore (creator of “Moore’s Law) Andy Grove joined, took personal “risk” First 2 DRAM products not market successes 3rd product 1103 became world leader, 90% of Intel revenues (concentrated)

Intel : 

Intel Intel Suppliers Competitors Substitutes Channel Customers Kyocera, etc Motorola AMD, TI, Cyrix RISC 日本のDRAM E N D U S E R Licensees IBM Others Direct IBM Compaq Dell Packard Bell C H A N N E L Software Providers OS Application Equipment (sole/dual) collaborators

Intel DRAM Strategy: 

Intel DRAM Strategy Strategy: push product design, be first to market Design & process technology leader Investment in plant & equipment Costs drop over production volume (scale) growth Prices drop with competitive capacity DRAM generally not protectable with patents Japanese started introducing products more rapidly Invested more heavily in production (44% vs. 22%) 1986 Intel decided to exit DRAM business 1/3 of R&D, but only 5% of Revs, was small player in market Japanese beat Intel on process technology (of commodity)

Intel and Microprocessor: 

Intel and Microprocessor 1970 CPU chipset order for Busicom calculator Technology development “paid by customer” Bought rights for “non-calculator” use Hard to see future even for Gordon Moore “…never gave it another thought” – Moore “We didn’t take it (PCs) seriously” – Grove Non-sequential forecasting Sometimes easier for outsider to see Exit: By 1984 mid-level managers shifting technology Hard to leave business that began company Especially for long time senior managers Mid-level managers closer to daily business realities

Apple/Motorola vs. IBM/Intel: 

Apple/Motorola vs. IBM/Intel First to Market Closed architecture Sole-provider Exclusivity Proprietary Big, famous name Standardized, open architecture Components Software Scale economies Intel gets benefit of IBM marketing and strategy (derived demand) INTERDEPENDENCE OF COMPANIES (p.30, 22) “Value Chain” 1994 Apple/IBM-Motorola PowerPC chip 2006 Apple/Intel

Intel Microprocessor Progression: 

Intel Microprocessor Progression

386 Changes Everything (1985): 

386 Changes Everything (1985) Intel 386 Investments $200 million for design $800 million for production facilities Decides not to license, except IBM IBM choice allows Compaq entry and Win IBM delays selling, to create more closed architecture Compaq enters Desktop market with Intel 386

486 and Wintel Collaboration: 

486 and Wintel Collaboration Hardware advance precedes software advance Microsoft Operating System (new DOS) not ready for 386 Need large installed base of hardware for software upgrade Emerging collaboration between MS & Intel WINdows + INTEL = “WINTEL” platform Software + Brain Software investments (past and future) Increasing switching costs

“Intel Inside” – Marketing Innovation: 

“Intel Inside” – Marketing Innovation Ingredient（材料）/Component（成分） Marketing　 Another example? Intel is “superior to other chips” Market maturity, education higher (2nd, 3rd PC) Buyer Intel preference moved from 60% to 80% AMD: “it shouldn’t matter which chip” but it DOES IBM, Compaq resisted, but then gave in Couldn’t fight Intel Better to have branded “Intel Inside” “premium” chip 6% rebate for use in partner marketing Fight competitors with technology, marketing, lawyers and money power (all pointed to same goal) 1997 spent $750 million More valuable than patent

Ending Question: 

Ending Question Is the internet good or bad for Intel?

Some Important Strategic Ideas: 

Some Important Strategic Ideas Where is the most “value” in a computer? Success attracts competition, company must protect against 2005 Intel has 82% of PC processor market Technology moved so rapidly that patents became obsolete protect by know-how, branding, scale, luck Small stuff that goes inside other stuff Allows focus, expertise, scale, “piggy-backing” Thrived on derived demand driven growth and rapid change

Class 4: 

Class 4 Sales & Marketing

Today’s Other Drucker: 

Today’s Other Drucker The purpose of a business is to create and keep a customer.

Sales & Marketing: 

Sales & Marketing Sales (Revenue): Money received for selling product or service Source of funds for business operations Basis for business existence Marketing: how company gets sales selection, pricing, promotion and distribution of products/services to customers COMPANY Customers Product/Service Money

Marketing and 4 C’s & 2 S’s: 

Marketing and 4 C’s & 2 S’s

Customers : 

Customers Who are your customers (or target customers)? How many potential customers are there? What are their characteristics? Age, sex, wealth, education, hobbies, work, is it one person? What are their goals, desires, needs, wants? How do they buy? What do they think about? Where do they get information? Who influences them? What is important to decide (price, features) When do they buy (seasonal products, bonus season) When do they pay? Market segment = group of similar customers Broad market = U.S. Market, Software Market Narrow market segment = left-handed golfers

Example Consumer Market Segmentation & Positioning: 

Example Consumer Market Segmentation & Positioning Older Drivers Older Families Younger Families Single Men Single Women Car American Safe Zoom Classy Automobiles

Women, buy ALL the stuff: 

Women, buy ALL the stuff Women buy or influence the purchase of nearly all consumer products and an increasingly high percentage of business related products 1 1 Tom Peters, author of In Search of Excellence

Business Market Segmentation: 

Business Market Segmentation All U.S. Businesses 1-person companies Small Businesses >1 person Medium Businesses Fortune 500 Microsoft Large Businesses 10 million total 1 500 9 million How Many ~ 10-20,000

Consumer & Business Markets: 

Consumer & Business Markets Consumer Market Business/Industrial Market Product Service Haagen-Dazs Amazon Uniqlo Starbucks eBay Sony GE Dell Intel Askul HP Bloomberg Microsoft ヤマト Nike Google? Secom Hair Salon

3rd Party Business Model : 

3rd Party Business Model

Sales/Buying Cycle: 

Sales/Buying Cycle Awareness => Interest => Trial => Purchase => Repurchase Hear About Curious Try Buy Use Again This Exists Educate Test Use it Keep Buying Repeat customers are key to business success

Industry/Market Life-Cycle: 

Industry/Market Life-Cycle Emerging Growing Maturing Declining SALES TIME Awareness  Interest  Trial  Purchase  Repurchase

Technology Adoption Life Cycle: 

Technology Adoption Life Cycle Innovators Early Adopters Early Majority Late Majority Laggards Geoffrey Moore, Crossing the Chasm Time Examples- Internet Academics Tech. Fans Financial Services Main Market

4Ps – “Marketing Mix”: 

4Ps – “Marketing Mix” Product (what do we make) Place (where do we sell it) Price (how much we sell it for) Promotion (how do we communicate about it)

Product: 

Product What is our product and/or service Physical/tangible – alarm, software, newspaper, coffee Intangible – security, insurance, information, experience Why do people buy it What does it do? How is it used? Does it need something else? One-time or consumable? Packaging (box, label, information, customer experience) Positioning How different is it (perceived) from other products? What is my brand image/strength

Favorite Products: 

Favorite Products Product Company Target Customer Packaging Channel Competitive Products Substitutes Value Price Cost

Place – Where do I sell?: 

Place – Where do I sell? Choosing the Channel, Supporting It How many potential customers are there? Can I easily identify customer? How expensive is my product? How many products can I sell one customer? How powerful, or valuable are the resellers? Are there many resellers that compete?

Favorite Products: 

Favorite Products Product Company Target Customer Packaging Channel Competitive Products Substitutes Value Price Cost

Price Issues: 

Price Issues What does it cost to produce? (floor) Cars, Soda, Computers Pharmaceuticals, Software How much value does it have to customer? (ceiling) How many can I sell at each price? How many customers are there? How much competition is there? Is it easy to compare with other prices? How much better is my product? Does price fit with my positioning?

Price & Margin: 

Price & Margin Cost Price to Channel Price to customer

Product Positioning Promotion: 

Product Positioning Promotion

Promotion (communications, “selling”): 

Promotion (communications, “selling”) Advertising Push (direct mail, email) Is each customer readily identifiable? Pull (TV, radio, poster, newspaper, some banner ad) Can’t readily identify individual customers Internet can be push or pull Chirashi? Public Relations Investor Relations Intel Case Examples Motorola: 13 Wall Street Journal Ads Intel: 6% rebate = 4% up to 66% of Print, 2% up to 50% of TV/radio

Promotion & Market Segmentation: 

Promotion & Market Segmentation Men Overweight Men Overweight Athletic Men Overweight, Athletic, Beer-Drinking Men Overweight, Athletic, Beer-Drinking Men, Who care about their figure Taro Tanaka Night TV Direct Mail Football Broadcast Fitness Magazine Train Poster Promotion Media People TV Targeted Poster

Advertisement Discussion: 

Advertisement Discussion Product/Service Target Market Medium Value Proposition “Message” Buying Cycle

Next Class ６月1日: 

Next Class ６月1日 Dell Online Case Study Region Goods/Service Marketing Project www.venturesmith.us

Dell Case Issues to Think About: 

Dell Case Issues to Think About Company History and Choices Industry & Competition Products Customer/Market Segments Pricing Channel/Operations Competitive Advantage Case questions & decisions

Region Marketing Project: 

Region Marketing Project Group project 2-3 people Pick product/service from Kagoshima or home region Pick a target market Develop company sales/marketing promotion ６月1日 presentation (powerpoint, poster, or other) Presentation: 5分 Q&A and advice: 2-5分 English Preferred

Region Goods/Service Promotion Project: 

Region Goods/Service Promotion Project Product/service: Company/brand: Customer target & size: Promotion message: Place: Channel: Competition: Price: Collaborators: + ADVERTISEMENT Sample

Promotion Project: 

Promotion Project Product/service: Company/brand: Customer target/size: Business Model: Promotion message: Place: Channel: Competition: Price: Collaborators: Kagoshima fresh tonkatsu Big Pig Ka-ton Japanese tourist hotels (200?) Buy, resell tonkatsu to Customer Japan’s juiciest tonkatsu Trade fair, magazine, site visits Direct Kumamoto Ton, Nissin Slight premium Kagoshima pig farmers 会

Slide45: 

So Fresh You Think It Can Fly TM

Fit – Is this the Right Match?: 

Fit – Is this the Right Match? Opportunity Environment (4Cs) Marketing Mix (4Ps) Selling/Buying Cycle (Goal) Promotion Message & Strategy Business Model

Suggested Readings: 

Suggested Readings Books 競争の戦略 by マイケル・E. ポーター 日本の競争戦略 by マイケル・E. ポーター , 竹内 弘高 キャズム by ジェフリー・ムーア フォーカス―市場支配の絶対条件 アルby リース パーミションマーケティング―ブランドからパーミションへ byセス ゴーディン ネットビジネス戦略入門 by パトリシア シーボルト Video ペイ・フォワード  with ケビン・スペイシー ビッグ・チャンス with ケビン・スペイシー Glengarry Glen Ross with ケビン・スペイシー WWW Entrepreneur.com