1 00:00:02,490 --> 00:00:06,300 [Lecturer] Hello, everyone, welcome to week two 2 00:00:06,300 --> 00:00:08,820 and this week we're going to be talking 3 00:00:08,820 --> 00:00:13,820 about situational analysis and opportunity. 4 00:00:14,640 --> 00:00:16,830 So this will be the first chance 5 00:00:16,830 --> 00:00:21,830 for you to get an overview of the concept of marketing 6 00:00:21,960 --> 00:00:24,420 and there will be an exercise at the end 7 00:00:24,420 --> 00:00:26,610 for those of you who haven't thought 8 00:00:26,610 --> 00:00:29,430 about what your business plan, 9 00:00:29,430 --> 00:00:33,420 your marketing plan will be on, help you walk through 10 00:00:33,420 --> 00:00:38,420 and I'm hoping, start to gather and build on ideas 11 00:00:38,430 --> 00:00:42,690 that you have to write your final marketing plan, 12 00:00:42,690 --> 00:00:45,213 which is due near the end of the semester. 13 00:00:48,870 --> 00:00:51,150 If you do not have an idea yet 14 00:00:51,150 --> 00:00:54,420 and many of you probably do not, 15 00:00:54,420 --> 00:00:57,180 then this would be a good thing for you to do 16 00:00:57,180 --> 00:00:59,460 and that is to conduct an environmental scan 17 00:00:59,460 --> 00:01:01,140 and you're gonna learn about that, 18 00:01:01,140 --> 00:01:06,140 so what I want you to do is conduct an environmental scan 19 00:01:07,590 --> 00:01:09,660 of some group that you're associated with, 20 00:01:09,660 --> 00:01:13,530 your friend, a club, people that you hang out with, 21 00:01:13,530 --> 00:01:16,440 your study partners, what are they reading, 22 00:01:16,440 --> 00:01:19,890 what do they listen to, what kind of music, 23 00:01:19,890 --> 00:01:22,770 where are they web surfing, what do they eat, 24 00:01:22,770 --> 00:01:26,460 what are some of the trends of things that they are doing 25 00:01:26,460 --> 00:01:28,890 that you find interesting? 26 00:01:28,890 --> 00:01:30,330 Make a list of this 27 00:01:30,330 --> 00:01:35,330 and think about two or three opportunities that emerge. 28 00:01:37,170 --> 00:01:41,640 So what is a product or service that you could offer 29 00:01:41,640 --> 00:01:46,350 that would be timely and relevant 30 00:01:46,350 --> 00:01:48,540 that there's a need or want for, 31 00:01:48,540 --> 00:01:53,540 and sort of talk to a few folks about this 32 00:01:55,710 --> 00:02:00,030 and see if you can come up with the best one. 33 00:02:00,030 --> 00:02:02,970 Now, know that it can change, 34 00:02:02,970 --> 00:02:06,630 that what you pick now, maybe in a week or two 35 00:02:06,630 --> 00:02:10,410 you figure out really that first idea doesn't work 36 00:02:10,410 --> 00:02:13,020 and I have a great new idea, 37 00:02:13,020 --> 00:02:15,480 the longer you wait, the harder it'll be 38 00:02:15,480 --> 00:02:18,180 but don't feel like you absolutely have to choose 39 00:02:18,180 --> 00:02:20,880 the final decision now, 40 00:02:20,880 --> 00:02:23,310 and note that I don't need to see this 41 00:02:23,310 --> 00:02:24,450 as part of your homework. 42 00:02:24,450 --> 00:02:26,700 So whether you do the environmental scan or not, 43 00:02:26,700 --> 00:02:28,410 you don't have to turn anything in, 44 00:02:28,410 --> 00:02:33,410 just do the homework based on the idea that you generate. 45 00:02:34,170 --> 00:02:36,633 And if you have any questions, 46 00:02:37,620 --> 00:02:40,233 as always, feel free to let me know. 47 00:02:45,060 --> 00:02:49,470 Now I want to get into the main theme of this class, 48 00:02:49,470 --> 00:02:50,673 which is marketing. 49 00:02:52,410 --> 00:02:57,410 I define it as activities which create and retain customers. 50 00:02:59,400 --> 00:03:02,400 And note that I'm not saying it's just selling stuff, 51 00:03:02,400 --> 00:03:04,620 it's not just selling a product, 52 00:03:04,620 --> 00:03:09,620 that so much of marketing is finding the right people 53 00:03:10,680 --> 00:03:15,180 who are really interested in what you have 54 00:03:15,180 --> 00:03:20,180 and creating value for them and communicating the value 55 00:03:20,460 --> 00:03:24,300 and ensuring the value of what you are offering 56 00:03:24,300 --> 00:03:28,350 so that they will be loyal customers 57 00:03:28,350 --> 00:03:33,350 that will keep coming back and supporting you over time. 58 00:03:34,650 --> 00:03:35,520 And it's much more 59 00:03:35,520 --> 00:03:38,940 than just getting someone to buy something one time, 60 00:03:38,940 --> 00:03:42,063 it would be sort of the opposite end of the spectrum there. 61 00:03:46,320 --> 00:03:51,320 Our textbook author, Crane, gives this definition 62 00:03:54,840 --> 00:03:59,840 and basically, I bolded these two phrases, delivering value. 63 00:04:00,810 --> 00:04:03,810 So it's all about delivering value 64 00:04:03,810 --> 00:04:06,900 and to manage relationships, 65 00:04:06,900 --> 00:04:10,380 again, to have a really good relationship 66 00:04:10,380 --> 00:04:15,380 with your customers so that you really understand 67 00:04:16,200 --> 00:04:18,450 where the value comes from 68 00:04:18,450 --> 00:04:21,273 so that you can continue to deliver it. 69 00:04:26,700 --> 00:04:31,700 And it reminds me of, I believe this is an old song, 70 00:04:32,070 --> 00:04:34,080 make new friends but keep the old, one is silver 71 00:04:34,080 --> 00:04:35,040 but the other is gold. 72 00:04:35,040 --> 00:04:37,530 So getting new customers is great 73 00:04:37,530 --> 00:04:39,390 and you will have to do that, 74 00:04:39,390 --> 00:04:42,960 but retaining the ones that you have, 75 00:04:42,960 --> 00:04:47,820 not only probably takes less effort than finding new ones, 76 00:04:47,820 --> 00:04:51,180 but it also, they're sort of the gold standard 77 00:04:51,180 --> 00:04:52,980 of your business. 78 00:04:52,980 --> 00:04:55,890 They're the ones that are really gonna see you through 79 00:04:55,890 --> 00:04:57,543 and help you to succeed. 80 00:05:02,880 --> 00:05:06,240 I think this is the only equation that I will show you 81 00:05:06,240 --> 00:05:10,260 during the whole class and it is not a very complex one, 82 00:05:10,260 --> 00:05:12,150 that's the idea of value again, 83 00:05:12,150 --> 00:05:16,680 that your job as marketing is to deliver customer value. 84 00:05:16,680 --> 00:05:18,570 So you can think of it as the ratio 85 00:05:18,570 --> 00:05:21,540 where on top is the perceived benefits 86 00:05:21,540 --> 00:05:24,184 and the bottom is the cost. 87 00:05:24,184 --> 00:05:26,250 So we'll have a brainstorming class, 88 00:05:26,250 --> 00:05:31,250 but think about some product or service that you buy, 89 00:05:31,740 --> 00:05:33,840 what are the benefits that you gain? 90 00:05:33,840 --> 00:05:35,520 Why do you buy it? 91 00:05:35,520 --> 00:05:38,607 What value do you derive from it, 92 00:05:38,607 --> 00:05:42,180 and in the denominator, what are the kinds of costs? 93 00:05:42,180 --> 00:05:45,690 Not only how much money that you pay for it, 94 00:05:45,690 --> 00:05:50,690 but things like inconvenience and time that you might spend, 95 00:05:51,930 --> 00:05:55,620 hassles, annoyance, anything like that 96 00:05:55,620 --> 00:05:57,930 that you want to minimize. 97 00:05:57,930 --> 00:06:02,930 So clearly to make the term on the left side 98 00:06:03,270 --> 00:06:07,980 as big as you can, you want to make the numerator 99 00:06:07,980 --> 00:06:09,480 as big as you can 100 00:06:09,480 --> 00:06:12,573 and make the denominator as small as you can. 101 00:06:17,790 --> 00:06:22,663 Some early words of wisdom that if you... 102 00:06:24,240 --> 00:06:26,160 One of the most important things 103 00:06:26,160 --> 00:06:28,110 that you can think about early on, 104 00:06:28,110 --> 00:06:30,840 and we're gonna spend a whole week on this, 105 00:06:30,840 --> 00:06:34,620 is when you ask who will buy your products? 106 00:06:34,620 --> 00:06:39,620 And if the answer is everyone, this is a danger sign. 107 00:06:40,590 --> 00:06:45,360 There are very, very few products that everyone buys, 108 00:06:45,360 --> 00:06:48,210 and if they are, they tend to be ones 109 00:06:48,210 --> 00:06:53,040 that are sort of high volume, low price, 110 00:06:53,040 --> 00:06:56,700 where you really only make your way into the world 111 00:06:56,700 --> 00:07:01,110 by being the low cost provider of it, 112 00:07:01,110 --> 00:07:06,110 and it's very hard for a new business to compete 113 00:07:06,570 --> 00:07:07,860 in that world. 114 00:07:07,860 --> 00:07:09,237 So it's much more important 115 00:07:09,237 --> 00:07:13,140 and a lot of this class will be finding those folks, 116 00:07:13,140 --> 00:07:17,130 getting a really rich, detailed description 117 00:07:17,130 --> 00:07:20,670 of the people who are going to gain the most value, 118 00:07:20,670 --> 00:07:24,093 who will be most interested, and to target them. 119 00:07:26,850 --> 00:07:30,240 So what we're going to do in a few weeks, 120 00:07:30,240 --> 00:07:32,970 is to come up with a target market 121 00:07:32,970 --> 00:07:37,230 that there's the saying, don't chase too many rabbits, 122 00:07:37,230 --> 00:07:39,960 that if a beagle here, I think, 123 00:07:39,960 --> 00:07:43,020 starts to chase more than one, 124 00:07:43,020 --> 00:07:46,620 that dog is probably going to get really confused 125 00:07:46,620 --> 00:07:49,320 and will not keep track of any of them, 126 00:07:49,320 --> 00:07:54,270 whereas if you find that one segment of the market 127 00:07:54,270 --> 00:07:58,140 who will become your loyal customers 128 00:07:58,140 --> 00:08:01,320 and be able to pay a lot of attention to them 129 00:08:01,320 --> 00:08:03,243 and what they want and what they need, 130 00:08:04,170 --> 00:08:08,220 it's a lot easier to effectively market to them 131 00:08:08,220 --> 00:08:11,763 than to try to market to everyone. 132 00:08:16,860 --> 00:08:18,630 Another thing that we'll be doing 133 00:08:18,630 --> 00:08:20,550 more toward the end of class, 134 00:08:20,550 --> 00:08:24,360 is the model of the classical marketing mix, 135 00:08:24,360 --> 00:08:26,490 the four P's model. 136 00:08:26,490 --> 00:08:31,490 So the four P's are product, place, price and promotion, 137 00:08:32,520 --> 00:08:35,340 so what do you sell, where do you sell it, 138 00:08:35,340 --> 00:08:39,780 how much do you charge, and how do you tell the story of it? 139 00:08:39,780 --> 00:08:42,180 And I put this graphic here, 140 00:08:42,180 --> 00:08:47,140 one of my very first research projects 141 00:08:48,930 --> 00:08:52,050 when I was a newly minted PhD 142 00:08:52,050 --> 00:08:54,750 was to look at the marketing practices 143 00:08:54,750 --> 00:08:58,350 of organic farmers in the northeast. 144 00:08:58,350 --> 00:09:00,900 And I was doing an interview of one 145 00:09:00,900 --> 00:09:03,600 and said, "So what are your four P's?" 146 00:09:03,600 --> 00:09:07,770 And this farmer said, "Ah, shell peas, snow peas, 147 00:09:07,770 --> 00:09:11,760 snack peas and world peace." 148 00:09:11,760 --> 00:09:14,520 And I had to explain that those are great 149 00:09:14,520 --> 00:09:19,323 but that I was looking for something slightly different 150 00:09:22,500 --> 00:09:25,080 but anyway, that's what it always makes me think of 151 00:09:25,080 --> 00:09:26,133 and makes me laugh. 152 00:09:27,810 --> 00:09:32,130 So here is the diagram that we've seen a few times now, 153 00:09:32,130 --> 00:09:32,963 so you can think 154 00:09:32,963 --> 00:09:36,123 about the two sort of middle horizontal ones, 155 00:09:37,410 --> 00:09:39,390 thinking about our customers, 156 00:09:39,390 --> 00:09:41,883 thinking about target and segmentation, 157 00:09:42,870 --> 00:09:47,400 today we're gonna do the top, middle and right, 158 00:09:47,400 --> 00:09:50,280 the opportunity and the external forces, 159 00:09:50,280 --> 00:09:54,540 and we just touched base upon the four P's 160 00:09:54,540 --> 00:09:57,960 with the main goal being the downward arrow 161 00:09:57,960 --> 00:09:59,400 of creating value 162 00:09:59,400 --> 00:10:02,940 and fulfilling therefore, the mission of the organization. 163 00:10:02,940 --> 00:10:06,030 But these are gonna be both the main topics 164 00:10:06,030 --> 00:10:11,030 that we will cover, and also the parts of the marketing plan 165 00:10:13,350 --> 00:10:14,373 that you will write. 166 00:10:22,380 --> 00:10:25,290 To make sure that you get off onto the right foot 167 00:10:25,290 --> 00:10:27,570 and really understand the environment 168 00:10:27,570 --> 00:10:29,700 in which you are operating, 169 00:10:29,700 --> 00:10:33,840 it's important to do a situational analysis. 170 00:10:33,840 --> 00:10:37,440 And here is a definition 171 00:10:37,440 --> 00:10:40,230 from the American Marketing Association 172 00:10:40,230 --> 00:10:41,613 that I will let you read. 173 00:10:51,450 --> 00:10:55,470 So a situational analysis is a description 174 00:10:55,470 --> 00:10:58,500 of the internal and external environment 175 00:10:58,500 --> 00:11:01,320 of the business or the organization, 176 00:11:01,320 --> 00:11:04,950 so this is an important distinction 177 00:11:04,950 --> 00:11:07,260 that the internal ones are things 178 00:11:07,260 --> 00:11:10,380 that you have some control over, 179 00:11:10,380 --> 00:11:12,990 it tends to be things like strengths, assets, 180 00:11:12,990 --> 00:11:16,650 your resources, the challenges you face, the partnerships, 181 00:11:16,650 --> 00:11:18,240 the lack of things that you have, 182 00:11:18,240 --> 00:11:21,090 but things that you really have control over, 183 00:11:21,090 --> 00:11:24,270 versus the external environment tends to be things 184 00:11:24,270 --> 00:11:27,063 that you have little or no control over. 185 00:11:28,170 --> 00:11:31,950 And being able to sort the right things into the right boxes 186 00:11:31,950 --> 00:11:34,800 in this case, is an important part 187 00:11:34,800 --> 00:11:36,420 of your homework assignment. 188 00:11:36,420 --> 00:11:40,140 So think about, again, internal being things 189 00:11:40,140 --> 00:11:42,900 that you have some control over, 190 00:11:42,900 --> 00:11:44,760 external being things that you have little 191 00:11:44,760 --> 00:11:46,503 or no control over. 192 00:11:50,190 --> 00:11:52,440 So an example, just an easy one 193 00:11:52,440 --> 00:11:57,440 is an external factor might be whether it rains today 194 00:11:59,190 --> 00:12:01,830 or not, you don't have a lot of control, 195 00:12:01,830 --> 00:12:05,280 but the internal is, did you bring an umbrella? 196 00:12:05,280 --> 00:12:06,780 Do you have one? 197 00:12:06,780 --> 00:12:09,600 Did you buy one or do you have a rain suit? 198 00:12:09,600 --> 00:12:12,150 Do you have that asset that you need 199 00:12:12,150 --> 00:12:15,153 to face that external factor. 200 00:12:19,890 --> 00:12:24,060 So my thoughts on this really was shaped 201 00:12:24,060 --> 00:12:26,940 by kind of an early mentor of mine 202 00:12:26,940 --> 00:12:30,753 who I worked with at Michigan State University, 203 00:12:32,790 --> 00:12:37,470 Professor Chris Peterson. 204 00:12:37,470 --> 00:12:40,430 And he talks about how... 205 00:12:41,288 --> 00:12:44,121 (clearing throat) 206 00:12:45,510 --> 00:12:49,500 why having the right assumptions and beliefs 207 00:12:49,500 --> 00:12:54,210 are so important to the performance of the organization. 208 00:12:54,210 --> 00:12:59,130 So if you have the right assumptions and beliefs, 209 00:12:59,130 --> 00:13:01,770 then you will develop strategies 210 00:13:01,770 --> 00:13:03,420 which are sort of big picture, 211 00:13:03,420 --> 00:13:06,150 how do we go about our businesses, 212 00:13:06,150 --> 00:13:10,260 which will leverage the opportunities, 213 00:13:10,260 --> 00:13:11,760 leverage your strength 214 00:13:11,760 --> 00:13:15,870 and help to overcome your weaknesses and threats. 215 00:13:15,870 --> 00:13:16,890 And in that way, 216 00:13:16,890 --> 00:13:20,670 those strategies will inform the operations, 217 00:13:20,670 --> 00:13:22,200 the sort of day-to-day, 218 00:13:22,200 --> 00:13:25,170 how do you put these strategies into place, 219 00:13:25,170 --> 00:13:30,170 how do you allocate your own time, your labor, 220 00:13:30,600 --> 00:13:34,200 your resources, where do you sell and what do you do 221 00:13:34,200 --> 00:13:37,380 and things like that on a more like day-to-day, 222 00:13:37,380 --> 00:13:41,700 which then will result in some sort of performance. 223 00:13:41,700 --> 00:13:46,700 And too often, and Professor Peterson's work suggests 224 00:13:49,380 --> 00:13:52,890 that when you don't get the performance that you want, 225 00:13:52,890 --> 00:13:55,890 that too often folks only go one step back 226 00:13:55,890 --> 00:13:58,140 and they tweak the operations 227 00:13:58,140 --> 00:14:00,720 and they tweak those day-to-day things, 228 00:14:00,720 --> 00:14:03,420 without understanding that those operations 229 00:14:03,420 --> 00:14:07,620 are based on a faulty strategy 230 00:14:07,620 --> 00:14:11,490 and the strategy is faulty because your assumption 231 00:14:11,490 --> 00:14:16,490 and beliefs about the world, about your own organization 232 00:14:17,400 --> 00:14:20,760 and the environment in which it operates, is faulty. 233 00:14:20,760 --> 00:14:25,080 So with bad assumptions, you're gonna have a faulty strategy 234 00:14:25,080 --> 00:14:28,290 and no amount of tweaking of operations 235 00:14:28,290 --> 00:14:31,290 that are based on faulty strategy, 236 00:14:31,290 --> 00:14:35,193 will ever give you the performance that you want. 237 00:14:42,390 --> 00:14:45,810 I'm going to walk you through several models 238 00:14:45,810 --> 00:14:50,810 of situational analysis, the first one is five Ws and an H, 239 00:14:54,330 --> 00:14:55,920 who, what, where, when, why, how, 240 00:14:55,920 --> 00:14:57,990 which is really for the internal, 241 00:14:57,990 --> 00:15:02,700 and then the five C model, and the so-called PEST model, 242 00:15:02,700 --> 00:15:07,700 which will look at both internal and external 243 00:15:08,010 --> 00:15:09,590 and I think like... 244 00:15:11,144 --> 00:15:12,570 I believe that looking at 245 00:15:12,570 --> 00:15:14,460 and thinking about both of these models, 246 00:15:14,460 --> 00:15:18,570 will give you a very broad view of the environment 247 00:15:18,570 --> 00:15:20,133 that you'll be operating in. 248 00:15:22,530 --> 00:15:24,600 So the five W's and an H 249 00:15:24,600 --> 00:15:29,600 is just those five familiar questions, six, 250 00:15:32,520 --> 00:15:34,050 who, what, where and why and how. 251 00:15:34,050 --> 00:15:38,910 So by asking and answering those, it'll tell you a good bit 252 00:15:38,910 --> 00:15:42,183 about your business organization. 253 00:15:44,760 --> 00:15:48,420 First, who, who is or are the entrepreneurs, 254 00:15:48,420 --> 00:15:51,030 what drives them, why are they in business, 255 00:15:51,030 --> 00:15:53,910 what is motivating them, and what are their strengths? 256 00:15:53,910 --> 00:15:55,890 What are their skills and assets 257 00:15:55,890 --> 00:15:58,590 and what are the weaknesses that they may have, 258 00:15:58,590 --> 00:16:01,980 and are there team members who are helping 259 00:16:01,980 --> 00:16:04,503 to shore up those weaknesses? 260 00:16:05,700 --> 00:16:09,480 Who might also apply to the customers. 261 00:16:09,480 --> 00:16:12,780 Who are the current ones, who are the target ones, 262 00:16:12,780 --> 00:16:15,003 who are they going after now? 263 00:16:15,900 --> 00:16:16,833 Who's buying it? 264 00:16:21,000 --> 00:16:24,480 The what is the product or the service, 265 00:16:24,480 --> 00:16:26,190 and what do they sell? 266 00:16:26,190 --> 00:16:28,443 What is the thing that they are providing? 267 00:16:32,310 --> 00:16:37,170 Where looks at location, where is the business located? 268 00:16:37,170 --> 00:16:40,590 What are the advantages or disadvantages? 269 00:16:40,590 --> 00:16:42,270 And one way of thinking about that 270 00:16:42,270 --> 00:16:45,120 is, so if you're on a storefront, 271 00:16:45,120 --> 00:16:47,160 if you are on church street, 272 00:16:47,160 --> 00:16:50,160 the obvious advantage is foot traffic, 273 00:16:50,160 --> 00:16:53,160 people are just gonna walk by and go in there. 274 00:16:53,160 --> 00:16:54,600 The disadvantages, 275 00:16:54,600 --> 00:16:58,530 the rent is going to be probably quite high there 276 00:16:58,530 --> 00:17:03,530 in the same way that selling in a big city, 277 00:17:07,260 --> 00:17:08,790 gives you the advantage 278 00:17:08,790 --> 00:17:12,270 of having a lot of potential customers there, 279 00:17:12,270 --> 00:17:15,930 but the downside is you're probably going to have 280 00:17:15,930 --> 00:17:18,213 more competitors as well. 281 00:17:19,410 --> 00:17:23,790 The other rare question is how do your goods 282 00:17:23,790 --> 00:17:28,790 or services get to the customers, do you sell them directly, 283 00:17:29,550 --> 00:17:31,743 do you use intermediaries? 284 00:17:36,210 --> 00:17:37,980 Some of the when questions 285 00:17:37,980 --> 00:17:40,800 include how long have they been in business, 286 00:17:40,800 --> 00:17:44,490 how has it changed over time, and what stage are they in? 287 00:17:44,490 --> 00:17:46,920 Are they in the startup phase 288 00:17:46,920 --> 00:17:48,600 or is it all the way at the end 289 00:17:48,600 --> 00:17:50,940 where thinking about succession 290 00:17:50,940 --> 00:17:55,530 of who will take this business over, I'm ready to retire 291 00:17:55,530 --> 00:17:58,323 or I'm ready to sell or I'm ready to move on, 292 00:17:59,220 --> 00:18:01,443 those are all when questions. 293 00:18:05,130 --> 00:18:07,443 Next come the why questions, 294 00:18:08,550 --> 00:18:11,880 what drives them to be in the business? 295 00:18:11,880 --> 00:18:14,370 What is motivating them? 296 00:18:14,370 --> 00:18:18,060 Is it because they have a passion for what they do, 297 00:18:18,060 --> 00:18:21,600 is it the autonomy, like they want to be their own boss, 298 00:18:21,600 --> 00:18:26,600 a lot of folks do, are they in it for the money, 299 00:18:26,640 --> 00:18:28,380 what combination of this? 300 00:18:28,380 --> 00:18:30,990 And when you look at the mission and vision, 301 00:18:30,990 --> 00:18:32,760 which we already learned about, 302 00:18:32,760 --> 00:18:34,773 that's gonna tell you a lot about why. 303 00:18:39,120 --> 00:18:42,960 Finally how, what is the performance? 304 00:18:42,960 --> 00:18:44,340 How are they doing? 305 00:18:44,340 --> 00:18:49,340 Are they fulfilling the mission and goals? 306 00:18:50,400 --> 00:18:53,160 How do they operationalize values and goals? 307 00:18:53,160 --> 00:18:56,010 How do they actually put these values, 308 00:18:56,010 --> 00:18:59,880 how do they put the mission and vision into place? 309 00:18:59,880 --> 00:19:03,270 And finally a word that we're gonna learn a lot later, 310 00:19:03,270 --> 00:19:06,420 what is its position in the marketplace? 311 00:19:06,420 --> 00:19:11,420 What space do they occupy compared to their competitors? 312 00:19:13,590 --> 00:19:17,640 And stay tuned for a lot more on position as we go through 313 00:19:17,640 --> 00:19:21,033 'cause that's a very important marketing concept. 314 00:19:24,780 --> 00:19:29,780 Another model is the five C's and here are those five C's, 315 00:19:29,790 --> 00:19:33,480 company, competitors, customers, collaborator and climate. 316 00:19:33,480 --> 00:19:37,020 So climate is really going to be thinking 317 00:19:37,020 --> 00:19:38,920 about the external environment 318 00:19:40,230 --> 00:19:41,780 and I'll walk through each one. 319 00:19:44,850 --> 00:19:49,850 So for company, what are its goals, its mission and vision, 320 00:19:50,280 --> 00:19:53,490 what does it sell, what's its position in the marketplace, 321 00:19:53,490 --> 00:19:55,263 what is its performance? 322 00:19:58,860 --> 00:20:02,040 Next week we're gonna talk at length about competitors 323 00:20:02,040 --> 00:20:04,797 and help you think about who they are and why are they, 324 00:20:04,797 --> 00:20:08,160 and why did you choose those as competitors, 325 00:20:08,160 --> 00:20:11,970 what are your competitors' goals, assets, strategies, 326 00:20:11,970 --> 00:20:15,690 strengths, position and what are their weaknesses 327 00:20:15,690 --> 00:20:18,060 and maybe where are they vulnerable 328 00:20:18,060 --> 00:20:21,330 and how does that create space and opportunity 329 00:20:21,330 --> 00:20:25,443 for you to successfully compete? 330 00:20:30,210 --> 00:20:34,020 Also next week we're gonna get into depth about customers, 331 00:20:34,020 --> 00:20:36,090 but for now we're thinking about who they are, 332 00:20:36,090 --> 00:20:38,580 what do they want and how and why and where 333 00:20:38,580 --> 00:20:39,990 and when do they buy? 334 00:20:39,990 --> 00:20:41,500 What is their behavior 335 00:20:42,990 --> 00:20:47,043 around buying your product or service? 336 00:20:53,280 --> 00:20:57,690 Another part of customers is what are the segments, 337 00:20:57,690 --> 00:21:00,660 how do you break them up into coherent groups 338 00:21:00,660 --> 00:21:02,910 to make them easier to reach? 339 00:21:02,910 --> 00:21:06,120 And three types of attributes that we think about, 340 00:21:06,120 --> 00:21:10,170 are demographic, geographic and psychographic, 341 00:21:10,170 --> 00:21:13,410 and again, we're gonna go into more depth 342 00:21:13,410 --> 00:21:16,260 in I think two weeks on these, 343 00:21:16,260 --> 00:21:19,293 but I wanna just sort of introduce them now. 344 00:21:21,300 --> 00:21:26,300 Demographic, demo is the Greek word for people, 345 00:21:28,980 --> 00:21:30,450 so it's the measurement, 346 00:21:30,450 --> 00:21:32,850 the graphic of people, who they are. 347 00:21:32,850 --> 00:21:35,010 So this tends to be things like their age, 348 00:21:35,010 --> 00:21:38,190 their gender identity, gender, race, ethnicity, 349 00:21:38,190 --> 00:21:40,020 their income, occupation, household ties, 350 00:21:40,020 --> 00:21:44,070 so things that sort of describe them as a person, 351 00:21:44,070 --> 00:21:46,170 geographic is where they are, 352 00:21:46,170 --> 00:21:49,230 where they live and, or where they work, 353 00:21:49,230 --> 00:21:53,580 and then psychographic is maybe the more subtle 354 00:21:53,580 --> 00:21:58,410 and less familiar one, but very important in marketing, 355 00:21:58,410 --> 00:22:01,680 and this is sort of the measurement of their psychology. 356 00:22:01,680 --> 00:22:02,820 How do they think? 357 00:22:02,820 --> 00:22:03,810 What do they value? 358 00:22:03,810 --> 00:22:05,160 How do they spend their time? 359 00:22:05,160 --> 00:22:07,650 What are their hobbies, what are their beliefs, 360 00:22:07,650 --> 00:22:10,050 what are their activities? 361 00:22:10,050 --> 00:22:11,283 Questions like this. 362 00:22:15,930 --> 00:22:18,930 And then also thinking about customers, 363 00:22:18,930 --> 00:22:21,060 when and why do they buy, 364 00:22:21,060 --> 00:22:25,110 is your item something they buy every day, 365 00:22:25,110 --> 00:22:29,460 is it a gift for a friend or for someone that they love, 366 00:22:29,460 --> 00:22:30,930 when and how do they buy, 367 00:22:30,930 --> 00:22:33,780 do they buy it in large amounts all at once in bulk, 368 00:22:33,780 --> 00:22:37,800 do they go every day, what's their behavior around that? 369 00:22:37,800 --> 00:22:42,800 And by thinking about their psycho, demo, geographic 370 00:22:43,590 --> 00:22:46,350 and their behaviors, that's going to tell you a lot 371 00:22:46,350 --> 00:22:47,800 about how can you reach them. 372 00:22:52,590 --> 00:22:57,590 The next C is collaborators, so suppliers and distributors. 373 00:22:57,930 --> 00:23:00,450 Where do they buy the things that they need 374 00:23:00,450 --> 00:23:03,630 for their operations, who do they sell to? 375 00:23:03,630 --> 00:23:07,770 Are they distributing it through somebody else, 376 00:23:07,770 --> 00:23:09,990 are they strategic partners, 377 00:23:09,990 --> 00:23:12,360 are they a business who cares about you, 378 00:23:12,360 --> 00:23:16,080 who treats you as a valued partner, 379 00:23:16,080 --> 00:23:20,940 or is it all about buy low, sell high? 380 00:23:20,940 --> 00:23:23,130 Are you replaceable? 381 00:23:23,130 --> 00:23:25,320 Are they gonna invest 382 00:23:25,320 --> 00:23:28,173 in maintaining the relationship with you? 383 00:23:29,100 --> 00:23:33,596 And how do they create or impede value for you? 384 00:23:33,596 --> 00:23:36,846 (plane engine roaring) 385 00:23:37,860 --> 00:23:40,710 Another type of collaborator 386 00:23:40,710 --> 00:23:43,800 is the networks in which you operate. 387 00:23:43,800 --> 00:23:47,520 So who do you learn from, who do you collaborate with, 388 00:23:47,520 --> 00:23:50,730 where do you get technical support and assistance? 389 00:23:50,730 --> 00:23:55,730 What are those individuals or organizations out there 390 00:23:56,400 --> 00:23:59,460 that you have networked with that can help create value 391 00:23:59,460 --> 00:24:02,643 for your business or organization? 392 00:24:06,300 --> 00:24:11,300 The last C, climate, also serves as a segue 393 00:24:11,700 --> 00:24:15,810 into the external environment 394 00:24:15,810 --> 00:24:18,450 and looking at the external factors 395 00:24:18,450 --> 00:24:21,180 in your situational analysis. 396 00:24:21,180 --> 00:24:24,660 So climate, again, in this context 397 00:24:24,660 --> 00:24:26,553 means the external environment, 398 00:24:27,630 --> 00:24:29,850 most of the C's we've done before, 399 00:24:29,850 --> 00:24:31,290 most of those factors 400 00:24:31,290 --> 00:24:33,780 have to do with the internal environment, 401 00:24:33,780 --> 00:24:38,780 you have some control over the attributes of your company 402 00:24:39,270 --> 00:24:41,430 and the customers you seek out 403 00:24:41,430 --> 00:24:45,303 and the collaborators that you work with and so forth. 404 00:24:46,410 --> 00:24:50,670 Now we're gonna focus on the external environment, 405 00:24:50,670 --> 00:24:54,450 and one model that can help you sort of outline that 406 00:24:54,450 --> 00:24:59,450 is the PEST model, which stands for Political, Economic, 407 00:24:59,760 --> 00:25:02,580 Social and Technological. 408 00:25:02,580 --> 00:25:07,230 So the political environment is things like rules, taxes, 409 00:25:07,230 --> 00:25:10,350 regulation, things like that, 410 00:25:10,350 --> 00:25:15,350 the economic environment is incomes, wages, taxes, 411 00:25:16,860 --> 00:25:21,860 things like that, social is things like demographics, 412 00:25:22,650 --> 00:25:24,870 psychographics, tens, fads... 413 00:25:24,870 --> 00:25:28,890 Nah, I'm sorry, trends, fads, opinions, things like that, 414 00:25:28,890 --> 00:25:31,350 and then finally, the technological 415 00:25:31,350 --> 00:25:34,710 is the state of the art of technology 416 00:25:34,710 --> 00:25:39,710 and certainly today, our economy is very dependent 417 00:25:40,530 --> 00:25:45,530 on technology for information and automation 418 00:25:46,560 --> 00:25:50,043 and regulation and many, many other things. 419 00:25:53,400 --> 00:25:55,710 So when thinking of the external environment, 420 00:25:55,710 --> 00:26:00,710 you may wish to think about which of them are accelerators 421 00:26:00,720 --> 00:26:03,600 and which of them are brakes, 422 00:26:03,600 --> 00:26:07,290 what's making your business or idea go faster, 423 00:26:07,290 --> 00:26:09,300 what's making it go slower? 424 00:26:09,300 --> 00:26:14,300 And you can see that the PEST model is embedded here, 425 00:26:15,960 --> 00:26:19,680 there's a number of ways that you can see this, 426 00:26:19,680 --> 00:26:22,680 I'm sort of doing a number of them, 427 00:26:22,680 --> 00:26:27,270 taking a very broad perspective, 428 00:26:27,270 --> 00:26:31,860 showing you a number of models that certainly have overlap, 429 00:26:31,860 --> 00:26:34,170 there may be some redundancy, 430 00:26:34,170 --> 00:26:39,170 but basically, I want to give you all of the tools 431 00:26:39,480 --> 00:26:43,470 and present them so you have many options 432 00:26:43,470 --> 00:26:46,920 to do this analysis. 433 00:26:46,920 --> 00:26:51,753 So forgive me if it gets a little bit repetitive at times. 434 00:26:55,860 --> 00:26:59,100 The first thing we'll look at is social forces. 435 00:26:59,100 --> 00:27:02,410 So one of the things that you can think about 436 00:27:03,300 --> 00:27:06,540 and it's really important in my world 437 00:27:06,540 --> 00:27:09,210 of food and agriculture, 438 00:27:09,210 --> 00:27:12,290 that we really have an aging population, 439 00:27:14,730 --> 00:27:17,670 I am actually one of the very last 440 00:27:17,670 --> 00:27:20,310 or the youngest of the baby boomers, 441 00:27:20,310 --> 00:27:24,000 so feel free to make any boomer jokes at me 442 00:27:24,000 --> 00:27:28,740 that you feel fit, they're probably true, 443 00:27:28,740 --> 00:27:33,270 but when you think about how much of the wealth 444 00:27:33,270 --> 00:27:38,270 and power in our population is skewed to the older folks 445 00:27:41,100 --> 00:27:45,120 and just thinking about age, 446 00:27:45,120 --> 00:27:49,410 that when you look at the advertisement for baseball games, 447 00:27:49,410 --> 00:27:53,220 that tends to be a sport that many older folks like, 448 00:27:53,220 --> 00:27:57,870 you see Advil and life insurance 449 00:27:57,870 --> 00:28:00,360 and when it's football games, 450 00:28:00,360 --> 00:28:02,343 that tend to be like cars and beer. 451 00:28:03,450 --> 00:28:07,457 The advertisements you would see on on YouTube 452 00:28:08,760 --> 00:28:11,550 versus a Hallmark Channel 453 00:28:11,550 --> 00:28:15,650 or when you're streaming music like Pandora, 454 00:28:21,840 --> 00:28:24,990 the advertisements that you would see when you are... 455 00:28:24,990 --> 00:28:29,990 when you say you like the Beatles or Frank Sinatra, 456 00:28:30,390 --> 00:28:34,560 is probably varied different than the advertisement 457 00:28:34,560 --> 00:28:37,920 if you like, I don't know, Jay-Z 458 00:28:37,920 --> 00:28:42,920 or somebody who's actively making music now. 459 00:28:51,120 --> 00:28:54,153 Political forces are also very important, 460 00:28:55,200 --> 00:28:58,410 sadly, it is my view that we live 461 00:28:58,410 --> 00:29:03,410 in a time of extreme political polarization, disengagement, 462 00:29:05,340 --> 00:29:10,340 a lot of apathy or if not apathy, a lot of powerlessness. 463 00:29:11,280 --> 00:29:14,040 I have never lived in a time 464 00:29:14,040 --> 00:29:19,040 where partisanship was more weaponized than it is now 465 00:29:20,550 --> 00:29:25,110 and someone who doesn't agree with you is the enemy 466 00:29:25,110 --> 00:29:29,760 and is a threat and is trying to destroy America 467 00:29:29,760 --> 00:29:31,653 and all kinds of stuff like that. 468 00:29:33,060 --> 00:29:35,400 And this lack of engagement, 469 00:29:35,400 --> 00:29:40,400 I think really has a large impact on our economy 470 00:29:42,240 --> 00:29:47,240 that if we feel like we don't have a voice, 471 00:29:47,250 --> 00:29:49,653 if we're not engaged, 472 00:29:50,550 --> 00:29:55,170 I think it's going to really affect our economy 473 00:29:55,170 --> 00:29:57,690 and it'll affect our business, 474 00:29:57,690 --> 00:30:02,690 we certainly live in an era of extreme income inequality, 475 00:30:04,350 --> 00:30:08,870 extreme debt on the part of young folks 476 00:30:10,770 --> 00:30:13,260 and that certainly influences 477 00:30:13,260 --> 00:30:14,913 sort of what is bought and sold, 478 00:30:16,500 --> 00:30:20,250 and the last thing is one of many plugs 479 00:30:20,250 --> 00:30:23,280 that I am going to give during this semester, 480 00:30:23,280 --> 00:30:26,730 and that is how important voting is. 481 00:30:26,730 --> 00:30:29,910 It may not be or it shouldn't be the only way 482 00:30:29,910 --> 00:30:31,860 that you make your voice heard, 483 00:30:31,860 --> 00:30:34,560 but it is an extremely important one 484 00:30:34,560 --> 00:30:37,200 and I will say that there is no doubt 485 00:30:37,200 --> 00:30:40,560 that when you look at community wellbeing 486 00:30:40,560 --> 00:30:42,810 and what are indicators of that, 487 00:30:42,810 --> 00:30:46,320 what are signs of a healthy community, 488 00:30:46,320 --> 00:30:50,103 voting rate is one of the very most important ones. 489 00:30:53,550 --> 00:30:57,450 As an illustration, if you look at the electoral map 490 00:30:57,450 --> 00:31:01,930 from the 2016 election, maybe you voted for Clinton, 491 00:31:03,510 --> 00:31:08,510 maybe you voted for Trump, maybe you weren't old enough 492 00:31:09,780 --> 00:31:14,780 to vote then or regardless of who you wanted to win, 493 00:31:15,930 --> 00:31:20,910 did not vote, won all but a very small handful of states. 494 00:31:20,910 --> 00:31:25,080 So the number of people who didn't vote, 495 00:31:25,080 --> 00:31:28,980 was greater than the number of people who voted 496 00:31:28,980 --> 00:31:32,400 for anybody else, so none of... 497 00:31:32,400 --> 00:31:37,400 So basically the lack of voice won the election 498 00:31:37,800 --> 00:31:40,350 and I think that that has a great deal 499 00:31:40,350 --> 00:31:44,370 to do with why we are such a fractured 500 00:31:44,370 --> 00:31:47,883 and in my opinion, troubled nation right now. 501 00:31:52,320 --> 00:31:54,990 And I think this speaks volume as well, 502 00:31:54,990 --> 00:31:59,520 that all the vast majority said, "We didn't vote 503 00:31:59,520 --> 00:32:02,850 because we won't make a difference," 504 00:32:02,850 --> 00:32:06,480 and I think that your vote does matter 505 00:32:06,480 --> 00:32:09,750 and I am going to do all I can 506 00:32:09,750 --> 00:32:13,320 to encourage you to vote in this election 507 00:32:13,320 --> 00:32:16,230 and hope that you will continue to vote 508 00:32:16,230 --> 00:32:18,870 in every election that you can. 509 00:32:18,870 --> 00:32:22,170 I will certainly not tell you who to vote for, 510 00:32:22,170 --> 00:32:24,600 but I will certainly encourage you 511 00:32:24,600 --> 00:32:27,903 and tell you how important it is that you vote. 512 00:32:33,450 --> 00:32:37,950 The next factor is economic forces 513 00:32:37,950 --> 00:32:41,640 and thinking about some of the economic forces 514 00:32:41,640 --> 00:32:45,900 that are shaping our economy right now, 515 00:32:45,900 --> 00:32:48,450 three that leaped to mind for me, 516 00:32:48,450 --> 00:32:53,340 is we have very poor infrastructure right now, 517 00:32:53,340 --> 00:32:58,320 our bridges and roads and many, many other things 518 00:32:58,320 --> 00:33:03,320 are quite out of date, there's a great deal of debt, 519 00:33:05,430 --> 00:33:09,120 most young folks that went to college 520 00:33:09,120 --> 00:33:12,123 did so on student loans, 521 00:33:13,350 --> 00:33:16,140 there's a great deal of debt floating around, 522 00:33:16,140 --> 00:33:20,400 our federal government is in extreme debt, 523 00:33:20,400 --> 00:33:24,600 and the last one is income inequality, 524 00:33:24,600 --> 00:33:29,280 just knowing that the degree of wealth 525 00:33:29,280 --> 00:33:34,280 in the hands of a few is at nearly unprecedented amounts 526 00:33:35,790 --> 00:33:40,790 and as a result of that, and at least in my view, 527 00:33:41,130 --> 00:33:46,130 it means that the power in our society 528 00:33:49,620 --> 00:33:53,880 is, in my view, overly influenced 529 00:33:53,880 --> 00:33:56,250 by those that have a lot of wealth, 530 00:33:56,250 --> 00:33:59,130 and the degree of inequality 531 00:33:59,130 --> 00:34:02,220 means that fewer and fewer people, 532 00:34:02,220 --> 00:34:07,220 feel like they have a stake, and there's lots of research 533 00:34:07,470 --> 00:34:12,470 that shows that income inequality is socially toxic, 534 00:34:16,380 --> 00:34:17,700 that it leads 535 00:34:17,700 --> 00:34:22,367 to many, many, many unwanted socioeconomic indicators. 536 00:34:24,990 --> 00:34:29,883 And just as an example, one study by Oxfam.org, 537 00:34:30,750 --> 00:34:35,647 globally found that 82% of the wealth created in 2017 538 00:34:36,540 --> 00:34:40,577 went to 1% of the people. 539 00:34:42,870 --> 00:34:47,200 And certainly the COVID-19 pandemic 540 00:34:51,780 --> 00:34:54,567 has led to a whole other set of economic (mumbles). 541 00:34:59,640 --> 00:35:03,990 The overarching economic force that I want to talk about 542 00:35:03,990 --> 00:35:08,370 and introduce you to is the idea of neoliberalism. 543 00:35:13,480 --> 00:35:18,317 And in many ways, it is the overarching social paradigm 544 00:35:19,830 --> 00:35:21,690 of our time. 545 00:35:21,690 --> 00:35:26,640 I wanna make clear, that in some ways this is a clumsy word 546 00:35:26,640 --> 00:35:31,640 in that it refers to the idea of liberalism 547 00:35:35,880 --> 00:35:40,880 in the classic sense, which would be more attuned 548 00:35:40,890 --> 00:35:45,890 to something that the Libertarian Party would believe in, 549 00:35:49,950 --> 00:35:54,950 not sort of, we think of liberal as being the left 550 00:35:56,700 --> 00:35:58,770 and it is not about that, 551 00:35:58,770 --> 00:36:03,770 although I would say that both of our main political parties 552 00:36:08,580 --> 00:36:12,393 have helped to advance this paradigm. 553 00:36:22,260 --> 00:36:27,260 So basically, neoliberalism is basically putting the markets 554 00:36:31,890 --> 00:36:33,360 in charge of anything. 555 00:36:33,360 --> 00:36:38,360 And one of the thing that is a hallmark of it, 556 00:36:38,430 --> 00:36:43,430 is taking power away from any kind of public institution. 557 00:36:47,430 --> 00:36:52,430 So basically defunding education, defunding libraries, 558 00:36:57,000 --> 00:37:02,000 any sort of counterbalance to economic forces 559 00:37:04,920 --> 00:37:09,920 and I'll let you read this paragraph here, 560 00:37:13,320 --> 00:37:16,200 and again a disclaimer, that this is written 561 00:37:16,200 --> 00:37:18,300 by someone who opposes it, 562 00:37:18,300 --> 00:37:20,943 who doesn't see it as a good thing. 563 00:37:22,620 --> 00:37:27,620 But basically, it's the idea that the market is the best 564 00:37:28,980 --> 00:37:30,750 and therefore should be really 565 00:37:30,750 --> 00:37:35,130 the only decision making mechanism that we have, 566 00:37:37,110 --> 00:37:41,550 that the only way that we should try to change the world 567 00:37:41,550 --> 00:37:46,550 is as consumers to vote with our dollars, 568 00:37:48,270 --> 00:37:51,300 as it says here, that we will reward merit 569 00:37:51,300 --> 00:37:53,640 and punishes inefficiency, 570 00:37:53,640 --> 00:37:57,660 and that the market should determine everything. 571 00:37:57,660 --> 00:38:02,100 So basically in the US since about 1980, 572 00:38:02,970 --> 00:38:07,970 this has been the economic ideology and the social ideology. 573 00:38:08,160 --> 00:38:11,340 It may be a good thing, it may not be, 574 00:38:11,340 --> 00:38:13,710 I really leave it up to you 575 00:38:13,710 --> 00:38:18,710 and I'll say a bit more about it, so here is a quotation 576 00:38:20,670 --> 00:38:24,030 of someone who would think that it's a good thing, 577 00:38:24,030 --> 00:38:28,530 that the only social responsibility of a business 578 00:38:28,530 --> 00:38:33,530 is to increase the profits and returns to its shareholder 579 00:38:36,510 --> 00:38:41,510 and this is by Nobel laureate, economist Milton Friedman, 580 00:38:43,230 --> 00:38:47,550 and that the market knows best 581 00:38:47,550 --> 00:38:52,550 and by all of us pursuing our self-interest, 582 00:38:52,740 --> 00:38:56,793 that's how we make a world as good as we can. 583 00:38:58,860 --> 00:39:02,520 So here are some of the things that we see 584 00:39:02,520 --> 00:39:07,263 under neoliberalism, we minimize tax and regulation, 585 00:39:08,190 --> 00:39:13,127 privatize services, the devaluation of labor unions, 586 00:39:16,260 --> 00:39:21,260 the defunding of most public institutions, 587 00:39:21,600 --> 00:39:25,720 the main exceptions being the military 588 00:39:28,470 --> 00:39:33,047 and the sort of prison industry, 589 00:39:35,700 --> 00:39:38,943 which both have grown greatly under this, 590 00:39:40,080 --> 00:39:44,610 it sort of posits that the pursuit of wealth 591 00:39:44,610 --> 00:39:46,980 is what we should all be doing 592 00:39:46,980 --> 00:39:51,980 and that the market allocates rewards based on merit. 593 00:39:54,720 --> 00:39:57,480 And another way of thinking about this 594 00:39:57,480 --> 00:40:01,233 is the so-called trickle down or supply side economics. 595 00:40:02,850 --> 00:40:07,293 Another thing to look for is that under neoliberalism, 596 00:40:11,340 --> 00:40:16,340 because the market is given so much influence 597 00:40:16,770 --> 00:40:21,770 and the influence of any countervailing power is decreased, 598 00:40:23,820 --> 00:40:28,820 the market tends to remake all of our institutions 599 00:40:29,070 --> 00:40:30,480 in its own image. 600 00:40:30,480 --> 00:40:34,650 And three really obvious examples to me, 601 00:40:34,650 --> 00:40:39,650 are how over the years, religion, government and education 602 00:40:39,990 --> 00:40:42,850 have more and more become to resemble 603 00:40:45,090 --> 00:40:50,090 being run like a business and expected to earn money 604 00:40:50,280 --> 00:40:55,280 and be efficient, rather than looking at as a service 605 00:40:57,030 --> 00:41:02,030 or as an institution that has its own merit 606 00:41:02,190 --> 00:41:05,013 and that we should be supporting. 607 00:41:14,520 --> 00:41:19,053 Continuing on with factors in the external environment, 608 00:41:20,070 --> 00:41:22,907 we can think about technological forces. 609 00:41:27,150 --> 00:41:32,150 So I just made a list here of all of the businesses 610 00:41:32,160 --> 00:41:37,160 and applications and activities that we do 611 00:41:37,830 --> 00:41:42,830 that depend on technology and it's difficult to think 612 00:41:46,440 --> 00:41:51,440 where we would be or none of these arguably would exist, 613 00:41:53,280 --> 00:41:58,280 but it's certainly without having a strong online presence 614 00:41:59,370 --> 00:42:03,480 and use of social media, I can't imagine 615 00:42:03,480 --> 00:42:07,200 that you're going to reach very many consumers 616 00:42:07,200 --> 00:42:11,580 since so much of us for better or worse, spend so much time, 617 00:42:11,580 --> 00:42:16,580 but you can also think about do we have broadband access 618 00:42:16,800 --> 00:42:19,950 and can you get cellphone coverage everywhere, 619 00:42:19,950 --> 00:42:22,410 and questions like that. 620 00:42:22,410 --> 00:42:26,770 To what extent is the technology available 621 00:42:28,650 --> 00:42:32,370 when your potential customers need it 622 00:42:32,370 --> 00:42:34,143 to get in touch with you? 623 00:42:39,390 --> 00:42:44,390 Another external factor is the competitive environment. 624 00:42:45,360 --> 00:42:50,360 How competitive is your product or service space? 625 00:42:51,480 --> 00:42:55,650 Do you have a lot of direct competitors or don't you? 626 00:42:55,650 --> 00:42:59,910 And to think about that, I'm going to walk through 627 00:42:59,910 --> 00:43:03,810 a continuum that you'll see on the next slide, 628 00:43:03,810 --> 00:43:08,810 which may be the single most important concept in this class 629 00:43:11,310 --> 00:43:15,420 because understanding where you are on this continuum 630 00:43:15,420 --> 00:43:17,250 is going to tell you a whole lot 631 00:43:17,250 --> 00:43:20,340 about what kind of business that you're going to be 632 00:43:20,340 --> 00:43:22,623 and how you should market. 633 00:43:26,790 --> 00:43:28,830 So here is the continuum 634 00:43:28,830 --> 00:43:33,330 and each of the columns can be thought of as being ends 635 00:43:33,330 --> 00:43:35,613 and certainly there's a lot of gray area, 636 00:43:36,690 --> 00:43:39,690 but on the left is a commodity. 637 00:43:39,690 --> 00:43:43,050 So a commodity is something 638 00:43:43,050 --> 00:43:47,400 where basically all of the items are the same, 639 00:43:47,400 --> 00:43:51,720 they're very homogeneous, so they're all the same. 640 00:43:51,720 --> 00:43:56,720 One is the same as the other and maybe a great example 641 00:43:57,210 --> 00:44:02,210 that you might be familiar with, is a gallon of whole milk. 642 00:44:02,910 --> 00:44:05,730 Whether you buy it at Price Chopper or Shoals 643 00:44:05,730 --> 00:44:07,830 or at a convenience store, 644 00:44:07,830 --> 00:44:10,500 that bottle of milk is pretty much the same, 645 00:44:10,500 --> 00:44:12,153 it's again, homogenous. 646 00:44:13,020 --> 00:44:17,070 What you get in that bottle no matter where you buy it, 647 00:44:17,070 --> 00:44:19,770 basically anywhere in the nation, 648 00:44:19,770 --> 00:44:23,940 it's very interchangeable with any other bottle of milk. 649 00:44:23,940 --> 00:44:26,910 There's low information there, there really... 650 00:44:26,910 --> 00:44:29,610 other than vitamin D whole milk, 651 00:44:29,610 --> 00:44:31,923 there really is no other information there. 652 00:44:32,820 --> 00:44:37,820 Because they're all the same, those who produce and sell it 653 00:44:40,110 --> 00:44:44,760 engage in so-called price taking behavior, 654 00:44:44,760 --> 00:44:49,760 that there is a price and basically, the price of that milk 655 00:44:50,730 --> 00:44:55,730 is not going to change much no matter where you buy it. 656 00:44:56,070 --> 00:44:59,245 Especially if you go from Price Chopper to Shoals 657 00:44:59,245 --> 00:45:04,245 to Hannaford's, basically it's going to be the same price 658 00:45:04,860 --> 00:45:07,740 and therefore, it's very competitive 659 00:45:07,740 --> 00:45:10,890 that since they're all basically alike, 660 00:45:10,890 --> 00:45:15,720 none of them stands out, there are a lot of options, 661 00:45:15,720 --> 00:45:19,980 and the way that you can make your way in the world in that, 662 00:45:19,980 --> 00:45:24,980 is that producing and selling a high volume. 663 00:45:28,110 --> 00:45:32,430 So another example is corn, like field corn, 664 00:45:32,430 --> 00:45:37,430 number two, yellow corn, it's basically all the same, 665 00:45:37,860 --> 00:45:40,083 there's not a lot of information there, 666 00:45:41,550 --> 00:45:45,930 and no matter where it's grown 667 00:45:45,930 --> 00:45:50,930 it's very interchangeable, et cetera. 668 00:45:51,540 --> 00:45:54,150 On the other side of the continuum 669 00:45:54,150 --> 00:45:57,120 is the differentiated product. 670 00:45:57,120 --> 00:46:01,740 So now, this is where whoever is producing it 671 00:46:01,740 --> 00:46:05,070 is making claims that it's not the ordinary thing. 672 00:46:05,070 --> 00:46:10,070 That mine is in some way different, possibly unique, 673 00:46:12,120 --> 00:46:16,050 and hopefully in my case, better, it's better in some way, 674 00:46:16,050 --> 00:46:18,840 it stands out from the crowd, 675 00:46:18,840 --> 00:46:20,973 therefore there's high information. 676 00:46:22,611 --> 00:46:27,611 So example in milk, might be locally produced, 677 00:46:28,590 --> 00:46:33,510 single herd, organic, grass-fed milk. 678 00:46:33,510 --> 00:46:35,460 So there's a lot of information there. 679 00:46:35,460 --> 00:46:38,610 It's not just milk, I gave a a lot of attributes 680 00:46:38,610 --> 00:46:40,830 that I'm claiming that my milk has, 681 00:46:40,830 --> 00:46:44,610 and since it's not the same as everything else, 682 00:46:44,610 --> 00:46:47,790 that hopefully some consumers will value it more 683 00:46:47,790 --> 00:46:52,410 and they might be willing to pay a slightly higher price, 684 00:46:52,410 --> 00:46:54,723 the so-called price making behavior. 685 00:46:55,770 --> 00:47:00,770 The more unique or the more differentiated my product is, 686 00:47:01,560 --> 00:47:03,930 the less competition there is. 687 00:47:03,930 --> 00:47:08,930 So the more that my product stands out from the crowd, 688 00:47:09,030 --> 00:47:12,183 the more attributes that it has. 689 00:47:13,740 --> 00:47:18,540 Free range, grass-fed, organic cows, locally-grown, 690 00:47:18,540 --> 00:47:20,433 hand-milked, blah, blah, blah, 691 00:47:21,960 --> 00:47:23,370 a lot of information means 692 00:47:23,370 --> 00:47:27,030 that there aren't a lot of others out there doing it 693 00:47:27,030 --> 00:47:30,870 and producing the exact same product I am. 694 00:47:30,870 --> 00:47:35,870 And since these do tend to be sort of artisanal or craft, 695 00:47:36,570 --> 00:47:39,870 they are produced in a lower volume. 696 00:47:39,870 --> 00:47:43,140 So when you look at things like heirloom, fair trade, 697 00:47:43,140 --> 00:47:47,430 organic or any of the other attributes that I mentioned, 698 00:47:47,430 --> 00:47:49,830 these are the attributes 699 00:47:49,830 --> 00:47:53,700 that help these products stand apart from the crowds. 700 00:47:53,700 --> 00:47:58,700 You can think about the product or the service 701 00:47:59,700 --> 00:48:02,673 that you are going to be providing, 702 00:48:05,010 --> 00:48:10,010 are you competing with everybody else just doing milk, 703 00:48:10,410 --> 00:48:13,650 just doing corn, or are you doing something 704 00:48:13,650 --> 00:48:15,630 that stands apart? 705 00:48:15,630 --> 00:48:20,630 By some service that you offer, yours is better, stronger, 706 00:48:21,690 --> 00:48:26,627 faster, quicker, more convenient, last longer, 707 00:48:27,690 --> 00:48:31,263 some attributes that make you stand apart from the crowd. 708 00:48:35,730 --> 00:48:39,210 Another framework is the red or blue ocean, 709 00:48:39,210 --> 00:48:43,740 so you can think of these as being at the extreme ends. 710 00:48:43,740 --> 00:48:47,970 So a red ocean tends to be more commodity items. 711 00:48:47,970 --> 00:48:51,390 There's lots of competitors, it's highly contested, 712 00:48:51,390 --> 00:48:54,150 it's a fairly crowded market space, 713 00:48:54,150 --> 00:48:57,210 there's blood in the water, that's why it's red, 714 00:48:57,210 --> 00:49:01,620 versus a blue ocean, there are few competitors 715 00:49:01,620 --> 00:49:03,690 at least for now, 716 00:49:03,690 --> 00:49:08,690 although if you have a really good selling product, 717 00:49:09,450 --> 00:49:14,130 certainly others are going to notice that 718 00:49:14,130 --> 00:49:19,130 and try to produce and sell a very similar product 719 00:49:22,440 --> 00:49:25,050 so you have to keep re-innovating. 720 00:49:25,050 --> 00:49:28,830 But if it's a new value, a new innovation and a new idea, 721 00:49:28,830 --> 00:49:31,560 it's a blue ocean, it's calm water, 722 00:49:31,560 --> 00:49:36,560 not a lot of competitors, not highly contested. 723 00:49:43,470 --> 00:49:47,670 You can also think of the competitive forces 724 00:49:47,670 --> 00:49:50,100 in terms of like globalization, 725 00:49:50,100 --> 00:49:54,337 that we're seeing a lot of trade disputes now, 726 00:49:59,220 --> 00:50:02,130 many, many businesses outsource, 727 00:50:02,130 --> 00:50:06,240 so they get their parts from far away, 728 00:50:06,240 --> 00:50:10,680 and we certainly saw during the early days 729 00:50:10,680 --> 00:50:15,680 of the COVID crisis, how we ran out of basic things 730 00:50:16,290 --> 00:50:20,890 like toilet paper and isopropyl alcohol 731 00:50:21,930 --> 00:50:24,990 because they're produced so far away. 732 00:50:24,990 --> 00:50:27,000 Now there's an advantage of that, 733 00:50:27,000 --> 00:50:32,000 in that it's produced in the place where it can be produced 734 00:50:32,610 --> 00:50:37,110 at the least expensive cost, which keeps prices down, 735 00:50:37,110 --> 00:50:38,070 but we saw 736 00:50:38,070 --> 00:50:43,070 that this sort of global just-in-time delivery market 737 00:50:43,470 --> 00:50:47,283 didn't do well in the face of a big disruption. 738 00:50:48,630 --> 00:50:49,830 On the other end of the scale, 739 00:50:49,830 --> 00:50:53,040 we have niche markets and we have localization 740 00:50:53,040 --> 00:50:55,530 and here in Vermont, 741 00:50:55,530 --> 00:50:58,590 there's a lot of local support for that. 742 00:50:58,590 --> 00:51:02,190 People I think more than some of the other places 743 00:51:02,190 --> 00:51:03,600 I've lived anyway, 744 00:51:03,600 --> 00:51:07,590 really think about supporting local businesses, 745 00:51:07,590 --> 00:51:12,590 the Keep Vermont Weird thing, more local restaurants, 746 00:51:13,830 --> 00:51:18,830 less chain stores, like there's no fast food place downtown, 747 00:51:20,640 --> 00:51:24,390 at least I think not, and a lot of locally-grown 748 00:51:24,390 --> 00:51:29,223 sort of unique taste of Vermont. 749 00:51:35,460 --> 00:51:39,063 You can also think in terms of regulatory forces. 750 00:51:40,500 --> 00:51:43,920 What are the environmental regs that we're facing? 751 00:51:43,920 --> 00:51:48,000 What are the labor regulations? 752 00:51:48,000 --> 00:51:53,000 Are there harsh or are there strict safety laws? 753 00:51:53,580 --> 00:51:57,900 We have things like OSHA for workers' safety, 754 00:51:57,900 --> 00:52:02,160 but the things like a lot of agricultural enterprises 755 00:52:02,160 --> 00:52:04,350 are exempt from. 756 00:52:04,350 --> 00:52:08,250 We have, is there taxation, is there wage controls, 757 00:52:08,250 --> 00:52:11,760 and when you get into things like drugs or food, 758 00:52:11,760 --> 00:52:16,260 there's a lot of safety regs, communication, 759 00:52:16,260 --> 00:52:18,720 transportation, zoning laws, 760 00:52:18,720 --> 00:52:22,020 all those affect the environment 761 00:52:22,020 --> 00:52:26,823 in which your business or organization, will be operating. 762 00:52:30,780 --> 00:52:35,780 To think back about how different factors of production work 763 00:52:40,350 --> 00:52:43,470 against each other or compete against each other, 764 00:52:43,470 --> 00:52:46,510 there's the idea that capital and labor 765 00:52:53,100 --> 00:52:58,100 are often competitive goods, 766 00:52:58,290 --> 00:53:02,610 that they are substitutes. 767 00:53:02,610 --> 00:53:07,610 So there's this push to try to get rid of an employee 768 00:53:07,890 --> 00:53:11,550 and replace it with an automated thing 769 00:53:11,550 --> 00:53:15,660 like the automated lines in a grocery store 770 00:53:15,660 --> 00:53:20,400 or the robot arm that welds something onto a car 771 00:53:20,400 --> 00:53:22,410 instead of a human. 772 00:53:22,410 --> 00:53:24,630 And one way to think about this 773 00:53:24,630 --> 00:53:29,370 is through taxation and subsidy. 774 00:53:29,370 --> 00:53:33,330 So a tax means when you buy something, 775 00:53:33,330 --> 00:53:38,330 you have to pay an additional fee to the government, 776 00:53:39,600 --> 00:53:44,600 like a sales tax, and a subsidy means that the government 777 00:53:45,750 --> 00:53:47,310 is paying a part of this 778 00:53:47,310 --> 00:53:50,613 or keeping the price artificially low. 779 00:53:51,720 --> 00:53:55,890 Now when you tax something, you will have less of it, 780 00:53:55,890 --> 00:54:00,300 and when you subsidize, you'll have more of it. 781 00:54:00,300 --> 00:54:01,590 And when you think 782 00:54:01,590 --> 00:54:06,590 about the difference between labor and capital, 783 00:54:09,870 --> 00:54:14,543 we tax labor, especially fairly low income (murmurs) labor, 784 00:54:15,780 --> 00:54:19,650 something like seven times. 785 00:54:19,650 --> 00:54:24,650 So myself, my own labor, I pay income tax in the federal, 786 00:54:27,780 --> 00:54:32,280 I pay state income tax, I pay into social security, 787 00:54:32,280 --> 00:54:36,483 I pay into healthcare, I pay into Medicare, 788 00:54:37,560 --> 00:54:41,790 and my employer matches a lot of those, 789 00:54:41,790 --> 00:54:45,150 and then my employer also has to pay 790 00:54:45,150 --> 00:54:50,110 for unemployment insurance, workman's comp insurance, 791 00:54:51,690 --> 00:54:56,690 all of these things increase the price of labor 792 00:54:56,760 --> 00:54:59,010 and make labor more expensive. 793 00:54:59,010 --> 00:55:01,140 So it's very hard, 794 00:55:01,140 --> 00:55:04,023 there's a disincentive for hiring folks. 795 00:55:05,070 --> 00:55:08,747 On the other hand, the price of capital 796 00:55:11,700 --> 00:55:14,370 is the interest rate. 797 00:55:14,370 --> 00:55:19,200 And this is not set by the supply of savings 798 00:55:19,200 --> 00:55:24,090 and the demand for investment because we are terrible savers 799 00:55:24,090 --> 00:55:29,090 and we want lots and lots of credit for our businesses 800 00:55:30,000 --> 00:55:33,270 or to buy things, to buy homes, to buy cars 801 00:55:33,270 --> 00:55:36,570 or just putting things on our credit cards. 802 00:55:36,570 --> 00:55:39,930 So if it were set by the market, 803 00:55:39,930 --> 00:55:44,250 the rate of interest would be much, much, much higher, 804 00:55:44,250 --> 00:55:49,250 but it's actually set largely by a government bureaucracy. 805 00:55:49,320 --> 00:55:54,320 So note that we tax labor, we subsidize capital 806 00:55:57,450 --> 00:56:02,400 and then as a result, the incentives in the marketplace 807 00:56:02,400 --> 00:56:07,400 are to get rid of labor and replace it with a machine. 808 00:56:09,180 --> 00:56:11,940 Yet we all need job, 809 00:56:11,940 --> 00:56:14,730 but then we think about, well, we have jobs 810 00:56:14,730 --> 00:56:18,300 and so we're in many cases maybe lowering 811 00:56:18,300 --> 00:56:23,300 our environmental standards or giving huge tax breaks 812 00:56:23,580 --> 00:56:27,720 to someone who will provide jobs. 813 00:56:27,720 --> 00:56:31,170 So to me, the things that we tax 814 00:56:31,170 --> 00:56:33,477 and the things that we subsidize, 815 00:56:37,050 --> 00:56:38,580 don't always make sense 816 00:56:38,580 --> 00:56:42,093 for the kind of outcomes that we want. 817 00:56:46,020 --> 00:56:51,020 A huge external factor that we're facing now 818 00:56:51,210 --> 00:56:56,160 is climate change as well as biodiversity loss 819 00:56:56,160 --> 00:57:00,827 and all of the ecological problems that our earth is facing. 820 00:57:01,980 --> 00:57:06,720 Phosphorus in Lake Champlain and cyanobacteria, 821 00:57:06,720 --> 00:57:09,960 lots and lots of environmental challenges 822 00:57:09,960 --> 00:57:11,880 that we are facing 823 00:57:11,880 --> 00:57:15,960 and I will talk more a bit in the discussion 824 00:57:15,960 --> 00:57:20,960 about how that may impact your business or organization. 825 00:57:27,480 --> 00:57:31,710 So again, looking at the external environment, 826 00:57:31,710 --> 00:57:36,543 helps you to see opportunities and overcome barriers. 827 00:57:41,190 --> 00:57:45,483 So for those of you who don't have a business idea yet, 828 00:57:46,350 --> 00:57:48,600 refer to the homework 829 00:57:48,600 --> 00:57:51,780 and think about environmental scanning. 830 00:57:51,780 --> 00:57:55,590 So this is something that savvy entrepreneurs 831 00:57:55,590 --> 00:58:00,390 are doing all the time, learning how to trendspot, 832 00:58:00,390 --> 00:58:02,580 looking beyond the ordinary. 833 00:58:02,580 --> 00:58:07,500 So this photo that you see here, is sort of an echo chamber 834 00:58:07,500 --> 00:58:12,500 where this person is just hearing their own thoughts. 835 00:58:12,780 --> 00:58:14,700 But to trendspot, 836 00:58:14,700 --> 00:58:19,440 you really wanna step out of your same old same old, 837 00:58:19,440 --> 00:58:21,690 and notice what are people doing, 838 00:58:21,690 --> 00:58:24,600 what sort of media are they consuming? 839 00:58:24,600 --> 00:58:28,860 Networking with folks in other walks of life, 840 00:58:28,860 --> 00:58:32,370 self-observing, challenging assumptions 841 00:58:32,370 --> 00:58:37,370 and talking with and observing customers of your products 842 00:58:38,370 --> 00:58:43,290 and with products of your competitors, 843 00:58:43,290 --> 00:58:45,390 and notice where do they get information? 844 00:58:45,390 --> 00:58:47,840 Well, what are they trying, what's the new trend, 845 00:58:51,552 --> 00:58:52,385 what is hot? 846 00:58:55,050 --> 00:58:58,830 Because only by having a good understanding 847 00:58:58,830 --> 00:59:00,510 of the external environment, 848 00:59:00,510 --> 00:59:05,280 will you have these true and deep 849 00:59:05,280 --> 00:59:08,280 and meaningful assumptions and beliefs, 850 00:59:08,280 --> 00:59:13,050 which you can then use to develop strategies and operations, 851 00:59:13,050 --> 00:59:15,933 which will then give you the performance that you want. 852 00:59:20,370 --> 00:59:22,260 So once you've gone through 853 00:59:22,260 --> 00:59:25,680 and made a big list of the external 854 00:59:25,680 --> 00:59:29,850 and internal environment, you can put it 855 00:59:29,850 --> 00:59:32,190 into what is called a SWOT analysis. 856 00:59:32,190 --> 00:59:35,340 So SWOT stands for Strengths, Weaknesses, 857 00:59:35,340 --> 00:59:36,870 Opportunities and Threats. 858 00:59:36,870 --> 00:59:40,890 So note that strengths and weaknesses are internal things 859 00:59:40,890 --> 00:59:45,570 that you might have some or a large amount of control over, 860 00:59:45,570 --> 00:59:49,320 what are your resources and capacities? 861 00:59:49,320 --> 00:59:51,900 What is your brand, how strong is your brand? 862 00:59:51,900 --> 00:59:54,273 How's your cost, do you have expertise? 863 00:59:55,320 --> 00:59:58,890 What is your location, things that you choose, 864 00:59:58,890 --> 01:00:03,750 and then weakness are the lack of these things 865 01:00:03,750 --> 01:00:07,680 or the other factors that you may have control over, 866 01:00:07,680 --> 01:00:09,423 that work against you. 867 01:00:10,320 --> 01:00:14,880 Whereas here in the yellow print are the external factors, 868 01:00:14,880 --> 01:00:18,120 the opportunities and threats that you have 869 01:00:18,120 --> 01:00:21,570 that are external, the opportunities work for you, 870 01:00:21,570 --> 01:00:23,133 the threats work against you. 871 01:00:25,950 --> 01:00:27,030 And do the... 872 01:00:27,030 --> 01:00:31,290 through an environmental scan, you can make a list 873 01:00:31,290 --> 01:00:33,660 of the technological, social, economic, 874 01:00:33,660 --> 01:00:37,080 competitive and regulatory opportunities. 875 01:00:37,080 --> 01:00:42,080 How are these external factors working in your favor? 876 01:00:42,480 --> 01:00:45,960 Those are opportunities, how are they working against you? 877 01:00:45,960 --> 01:00:47,103 Those are threats. 878 01:00:49,470 --> 01:00:51,360 And then once you're done with that, 879 01:00:51,360 --> 01:00:55,020 then you can try to put it into this two by two graph. 880 01:00:55,020 --> 01:00:58,380 So hopefully, you'll be up in the top right, 881 01:00:58,380 --> 01:01:01,350 you'll be playing offense, it's first in 10, 882 01:01:01,350 --> 01:01:03,663 it's your ball, do your thing. 883 01:01:04,500 --> 01:01:07,860 If you're in the the top left, 884 01:01:07,860 --> 01:01:11,100 there's a really strong opportunity there, 885 01:01:11,100 --> 01:01:15,420 but the weakness prevents you from beating that. 886 01:01:15,420 --> 01:01:20,420 So you wanna strengthen those places where you are weak, 887 01:01:23,670 --> 01:01:27,033 so you have a chance to meet the opportunity. 888 01:01:28,020 --> 01:01:33,020 If you're in the bottom right, you have a lot of strengths, 889 01:01:33,090 --> 01:01:36,510 but your threats are greater than the opportunities 890 01:01:36,510 --> 01:01:38,940 that you may wish to diversify 891 01:01:38,940 --> 01:01:41,280 and put those strengths that you have 892 01:01:41,280 --> 01:01:45,540 toward another opportunity to get back to the top right, 893 01:01:45,540 --> 01:01:50,147 and if you are in the bottom left, you are playing defense 894 01:01:51,780 --> 01:01:54,330 and it may reach a point 895 01:01:54,330 --> 01:01:57,213 where you simply close the business. 896 01:02:03,840 --> 01:02:07,680 The last topic is an opportunity, 897 01:02:07,680 --> 01:02:10,020 which is the beginning of any venture. 898 01:02:10,020 --> 01:02:14,913 So any organization, any business that begins, 899 01:02:15,960 --> 01:02:19,020 should find an unmet need or want 900 01:02:19,020 --> 01:02:21,840 that they are going to meet. 901 01:02:21,840 --> 01:02:26,840 So we've talked about the external factors 902 01:02:26,910 --> 01:02:29,940 and environmental scan on how to find them, 903 01:02:29,940 --> 01:02:33,213 and now we're going to talk about how to evaluate them. 904 01:02:39,300 --> 01:02:43,320 I'm gonna walk through in summary, the characteristics 905 01:02:43,320 --> 01:02:45,900 and then go through each one. 906 01:02:45,900 --> 01:02:48,453 So there's five of them and the first one, 907 01:02:49,890 --> 01:02:54,240 so the first three here, so good opportunities, 908 01:02:54,240 --> 01:02:56,250 first they create value. 909 01:02:56,250 --> 01:03:01,250 So there is a real need, a desire or a problem 910 01:03:01,830 --> 01:03:06,150 that they address and remembering our value equation, 911 01:03:06,150 --> 01:03:09,690 that they provide benefits. 912 01:03:09,690 --> 01:03:13,680 Next is the potential for profit. 913 01:03:13,680 --> 01:03:17,250 So if you are a for-profit organization, 914 01:03:17,250 --> 01:03:21,180 that the expected reward in the longterm, 915 01:03:21,180 --> 01:03:26,180 the revenue should be greater than the risk and the costs. 916 01:03:28,050 --> 01:03:32,130 And looking at the internal analysis, 917 01:03:32,130 --> 01:03:35,697 that it should be a good fit for the firm's resources, 918 01:03:37,740 --> 01:03:42,740 that the strengths that the firm or the organization has 919 01:03:43,500 --> 01:03:47,520 for addressing it should be greater than the weaknesses 920 01:03:47,520 --> 01:03:49,470 that the organization should have, 921 01:03:49,470 --> 01:03:51,210 the experience, the skills, 922 01:03:51,210 --> 01:03:54,270 the resources like labor and management 923 01:03:54,270 --> 01:03:59,270 and have the values and the passions to meet this need 924 01:03:59,280 --> 01:04:00,963 or solve this problem. 925 01:04:05,640 --> 01:04:10,140 The last four are, will the demand for this 926 01:04:10,140 --> 01:04:11,760 be durable over time? 927 01:04:11,760 --> 01:04:15,810 It's not based on some fad or some obsolete technology, 928 01:04:15,810 --> 01:04:18,540 and finally, can it obtain financing? 929 01:04:18,540 --> 01:04:22,170 And then a few extras that I want you to ponder, 930 01:04:22,170 --> 01:04:25,533 are for the community entrepreneurs, 931 01:04:26,700 --> 01:04:30,510 does it protect and enhance the natural 932 01:04:30,510 --> 01:04:33,690 and built environment, and does it equitably share risk 933 01:04:33,690 --> 01:04:36,420 and reward among all stakeholders at... 934 01:04:36,420 --> 01:04:39,990 Is it a YIMBY, a Yes, In My Back Yard? 935 01:04:39,990 --> 01:04:42,780 So if you put all of those things together 936 01:04:42,780 --> 01:04:44,250 and if you can say yes, 937 01:04:44,250 --> 01:04:46,470 then I think that would be an excellent opportunity 938 01:04:46,470 --> 01:04:51,470 for a budding community entrepreneur such as yourself. 939 01:04:58,110 --> 01:05:02,190 So again, looking at sustainability, 940 01:05:02,190 --> 01:05:05,520 looking at the three legs of the stool 941 01:05:05,520 --> 01:05:10,110 or the triple bottom line, how does it do that 942 01:05:10,110 --> 01:05:13,680 and how would you operationalize this? 943 01:05:13,680 --> 01:05:16,410 What are the key decisions you have to make 944 01:05:16,410 --> 01:05:19,080 and what the trade-offs that you might have to make? 945 01:05:19,080 --> 01:05:22,233 Who's going to win and lose from this? 946 01:05:26,490 --> 01:05:31,490 One step in any opportunity, is to be able to validate it 947 01:05:31,530 --> 01:05:36,127 with potential customers, that if we remember back 948 01:05:37,290 --> 01:05:40,800 and we ask who will buy it and they say everyone, 949 01:05:40,800 --> 01:05:44,280 that they probably haven't done a very good job 950 01:05:44,280 --> 01:05:47,010 of thinking through who their customers are. 951 01:05:47,010 --> 01:05:51,210 So by thinking about who are folks that would buy this 952 01:05:51,210 --> 01:05:53,580 and then well, would they buy it 953 01:05:53,580 --> 01:05:57,420 and how much would they pay, and to get feedback 954 01:05:57,420 --> 01:06:00,180 so they can help co-create the value 955 01:06:00,180 --> 01:06:03,330 to really help to design its attributes 956 01:06:03,330 --> 01:06:07,023 to meet their needs and wants even better. 957 01:06:10,380 --> 01:06:13,410 So I'll go through each one of those five, 958 01:06:13,410 --> 01:06:15,510 first is creating value. 959 01:06:15,510 --> 01:06:19,890 So the better product or service, it performs better 960 01:06:19,890 --> 01:06:22,560 or a better price, faster, more reliable, 961 01:06:22,560 --> 01:06:24,300 there has to be something it does 962 01:06:24,300 --> 01:06:27,000 that the existing products don't, 963 01:06:27,000 --> 01:06:30,600 one thing is to serve dissatisfied customers 964 01:06:30,600 --> 01:06:32,880 or if it's a new product or service, 965 01:06:32,880 --> 01:06:37,770 to make this a latent need or desire. 966 01:06:37,770 --> 01:06:42,360 But there has to be something about it that creates value 967 01:06:42,360 --> 01:06:44,980 for someone who will then buy it 968 01:06:46,290 --> 01:06:49,420 or if it's an organization, fits a need 969 01:06:50,820 --> 01:06:53,403 so that someone will support you. 970 01:06:56,640 --> 01:07:01,640 Next, is it a good fit based on your passions 971 01:07:01,650 --> 01:07:04,680 and your commitment and your skills 972 01:07:04,680 --> 01:07:07,860 and the skills and knowledge and abilities 973 01:07:07,860 --> 01:07:11,820 of the team that you're going to put around yourself? 974 01:07:11,820 --> 01:07:16,820 Is it a good fit for your internal resources? 975 01:07:19,950 --> 01:07:24,950 Do you have the needed knowledge, experience and technology, 976 01:07:25,020 --> 01:07:29,733 and is it a good fit for your firm's mission statement? 977 01:07:32,970 --> 01:07:35,550 To think back to our grid, 978 01:07:35,550 --> 01:07:39,480 is it an opportunity greater than the threats, 979 01:07:39,480 --> 01:07:40,770 and are the strengths 980 01:07:40,770 --> 01:07:42,930 that you have to put toward meeting it greater 981 01:07:42,930 --> 01:07:47,930 than the weaknesses, can you play offense? 982 01:07:52,650 --> 01:07:54,690 Next is durability, 983 01:07:54,690 --> 01:07:58,530 that if it's an opportunity that will fade over time, 984 01:07:58,530 --> 01:08:01,980 it may not be worthwhile going after. 985 01:08:01,980 --> 01:08:03,510 Is it based on a fad 986 01:08:03,510 --> 01:08:07,920 such as a One Hit Wonder band merchandise or diet books 987 01:08:07,920 --> 01:08:10,593 or things that tend to change very quickly, 988 01:08:11,520 --> 01:08:15,780 is it hard to copy? 989 01:08:15,780 --> 01:08:20,780 Will somebody have a hard time copying what you're offering? 990 01:08:22,290 --> 01:08:27,290 Maybe you have a path, maybe you have a unique location, 991 01:08:27,690 --> 01:08:32,070 but the most important thing is authenticity, 992 01:08:32,070 --> 01:08:35,250 that's the hardest thing to copy. 993 01:08:35,250 --> 01:08:40,250 That if you're sort of the real deal, 994 01:08:40,290 --> 01:08:45,290 and if you offer something that is truly unique 995 01:08:45,360 --> 01:08:50,040 based on your own identity and your own ability to make it, 996 01:08:50,040 --> 01:08:55,040 if you do it authentically, that is also very hard to copy. 997 01:08:58,830 --> 01:09:03,707 Next, can it get in the level of financing needed? 998 01:09:05,970 --> 01:09:10,780 Could you, if possible, finance it from your savings, 999 01:09:11,880 --> 01:09:16,880 then down to the next step is to ask the three F's, 1000 01:09:17,460 --> 01:09:20,280 friends, family and fools, 1001 01:09:20,280 --> 01:09:23,010 and once you've sort of tapped them out, 1002 01:09:23,010 --> 01:09:26,190 can you get banks or angel investors? 1003 01:09:26,190 --> 01:09:30,030 And basically, if you're going to use anything 1004 01:09:30,030 --> 01:09:32,370 other than your own savings, 1005 01:09:32,370 --> 01:09:36,243 you're gonna have to sell the idea to somebody else. 1006 01:09:40,680 --> 01:09:45,100 As an aside, the four C's of credit worthiness are... 1007 01:09:47,970 --> 01:09:52,527 and you can think of these as all being internal resources, 1008 01:09:54,840 --> 01:09:58,890 first is your own character, 1009 01:09:58,890 --> 01:10:02,160 your financial history and credit report, 1010 01:10:02,160 --> 01:10:07,160 the capacity of your firm to generate revenue and cash flow, 1011 01:10:07,200 --> 01:10:09,990 do you have a good business plan, 1012 01:10:09,990 --> 01:10:14,990 do you have a good marketing plan, do you have the capital, 1013 01:10:19,500 --> 01:10:22,260 the machinery and equipment and building 1014 01:10:22,260 --> 01:10:23,580 to put it into place, 1015 01:10:23,580 --> 01:10:27,597 and do you have collateral assets to back up this loan? 1016 01:10:32,400 --> 01:10:36,510 So we can think of where to look for opportunity 1017 01:10:36,510 --> 01:10:41,190 in the external forces in needs not being met, 1018 01:10:41,190 --> 01:10:46,170 do the environmental scan to think about what are needs 1019 01:10:46,170 --> 01:10:51,170 or wants out there or problems that are not being solved? 1020 01:10:53,880 --> 01:10:58,473 So the overarching theme, is does it create value? 1021 01:11:00,030 --> 01:11:03,390 Does it have a lower price and a lot of benefit, 1022 01:11:03,390 --> 01:11:06,960 does it respond to a real need, 1023 01:11:06,960 --> 01:11:10,380 and for community entrepreneurs, 1024 01:11:10,380 --> 01:11:13,203 does it advance the triple bottom line? 1025 01:11:16,020 --> 01:11:20,343 If you don't have an idea, do this environmental scan. 1026 01:11:24,030 --> 01:11:27,150 And here is the recap of this class, 1027 01:11:27,150 --> 01:11:30,660 I look forward to our discussion in class. 1028 01:11:30,660 --> 01:11:32,163 Thank you for your time. 1029 01:11:34,950 --> 01:11:39,950 Next up, we're gonna talk about customers and competitors. 1030 01:11:43,578 --> 01:11:46,140 (bright upbeat music) 1031 01:11:46,140 --> 01:11:46,973 Thank you.