lOMoARcPSD|7910873

Entrepreneurial Marketing lecture notes

Entrepreneurial Marketing (University of Melbourne)

StuDocu is not sponsored or endorsed by any college or university

Downloaded by Jabs format (juhacrest@[Link])
 lOMoARcPSD|7910873

Week 1

• strategy has to be driven by stakeholders, most of all consumers

A new Entraprenurial Philosophy

• entrepreneurial ventures not to be managed like existing companies

◦They are not the same, they are inherently built differently

‣ Doesn’t have existing set of consumers, or existing category, or even existing financial
model

start-ups are not smaller versions of large companies

startups

Excecution Vs Search

• Goal of a startup is • By definition always testing

and trying new things and
to learn through
testing hypotheses D new methods/curriculums

are in mode
they learning

The old way: rigid linear strategic planning

• usually focus on business plans

◦Document that maps out for foreseeable future what Is going to happen with venture
‣ Operating plan?
‣ Operation model?
‣ Marketing plan? How can it be sold?
‣ Financial plan? `

whats withthisapproach
wrong
• too linear

• Doesn’t allow for experimentation

• Assumes that you know everything that goes on, when in reality its realistic that we would have no
idea what’s actually going on

• Typically results in attempts to reassure, leading to a false sense of security

Downloaded by Jabs format (juhacrest@[Link])

 lOMoARcPSD|7910873

whats

better

• no business plan survives first contact with consumer => the plan is derived from the consumer, but
derived from a wish

• Essence is Experimentation

◦Must rely on educated guesses, and then test

• must start with consumer, must observe, hypothesise, and test (test with consumers)

Why is there a new philosophy?:

• it’s bad lmao

• World has changed, way more startups consuming even the most niche of markets

◦Hyper-competition

What are the implications?

• impact on...

◦Strategy

◦Process

◦Organisation

◦Your learning

Speed, iterative changes, consumer experimentation

Downloaded by Jabs format (juhacrest@[Link])

 lOMoARcPSD|7910873

Week 2

• rather than have a top down approach, have a bottom up

Creativity/Founders Vision

• “what important truth do very few people agree with you on?”
◦What valuable company is nobody building?

◦Want to find scalable opportunities

Ideation Techniques

• Be creative (lmao)

◦Consumer problem inventory

‣ Focus on a specific problem you encounter

• What are the most pressing issues of an industry (that can realistically be solved)

◦Solution checklist method

‣ What solutions Can a firm provide to a list of problems

◦Brainstorming

‣ Forced creative technique (constrained, pressure)

‣ Intensity is necessary

‣ Group excercise

‣ Must withhold criticism for a certain amount of time to be effective

• (Two parts, the first part = anything goes, anyone has freedom to say anything without
any criticism. Second part, break it down)

‣ Need roles: note takers, leader

◦Reverse brainstorming

‣ Criticism is allowed and encouraged

‣ Criticise, evaluate, put people on the spot

‣ The goal is to see “in how many ways can this idea fail”

• Identifying things, makes the solutions more evident

• Involves identifying anything wrong

‣ Must end discussion in tuning problems into positive solutions

◦Forced relationships

‣ Developing new idea by looking at product combination

• Generating ideas from relationship patterns between elements of problem

‣ developed through five stages

• Isolate elements of problem

• Find relationships between these elements

• Record relationships in orderly form

• Analyse resulting relationship between these elements

• Redevelop new ideas from these patterns

◦Gordon method

‣ Similar to brainstorming construct

‣ Individuals are NOT aware of the specific consumer problem

• Solutions are not clouded by preconceived ideas

‣ have a vague area of a consumer problem, but don’t focus on specifics (for consumer
problems)

• Can ideate around possible solutions

‣ Actual consumer problem will be revealed, through discovery

◦Free association

‣ Loose brainstorm

‣ start with one phrase/word

Downloaded by Jabs format (juhacrest@[Link])

 lOMoARcPSD|7910873

‣ Go in circle saying words that relate to this

‣ Creates a chain of ideas

◦Collective not book method

‣ One solution to the problem, at least three times a day

• Notebook to every team member

◦Attribute listing

‣ Break down problem into attributes

‣ Investigate each part from variety of angles

‣ Originally unrelated objects can be brought together to form a new combination

‣ See what’s essential, which isn’t

◦Big dream approach

‣ No constraints, no assumptions

• No limitations at all

◦Parameter analysis

The Building Blocks

• What is a company?

◦Cannot apply the same strategy to that of a company

◦A business organisation which sells a product/service in exchange for revenue/profits

I l l

known established
already cashflow

existing products

organisation andcustomers

• WHat is a startup?

◦A temporary organisation designed to search for a repeatable and scalable business model
I 1 I
willbydefinition by definition potential
notstmythisway experimental togrowmuch
anuntested
bigger
machine
moneymaking
Canwork
andsucceed
undervarious
Uriumshinus

Downloaded by Jabs format (juhacrest@[Link])

 lOMoARcPSD|7910873

The Customer Development Tool

Customer Customer
[Link] validation
Company
creation building

Riot
execution

Customer Discovery:

• translate founders vision into testable hypothesis

• Talk to customers/stakeholders, testing the hypothesis - based on perceptions/opinions/attitudes

Customer Validation:

• testing continues

• Try and make actual sales, commitment to payment

◦Behaviour is more relevant than opinions -> if they’re willing to buy, then good

• Testing the scalability of the startup

• Initial sales/demand creation plan is developed (no large scale investments in sales marketing yet

Pivot:
• What do you do when your hypothesis test doesn’t meet reality?

◦If you get the wrong answer

• blame the model, not the founders/engineers/sales people

◦Change business model

• substantive change to one or more business model components

◦Not an iteration - which is a minor change

Downloaded by Jabs format (juhacrest@[Link])

 lOMoARcPSD|7910873

Customer creation:

• builds on initial sales success

• Now invest in larger scales operations

◦Scale up

◦Marketing

Company Building:

• Transitioning out of startup status

◦No longer temporary and search orientated

◦Formal structured departments

◦Human resource management, organisational design are critical

◦The board often ousts the founder

Startup size

• small business/lifestyle

◦Hobby for money, for yourself

• Mid market firm with growth

◦Better for economy, bigger scale

• Scalable startup

◦Big leagues

Downloaded by Jabs format (juhacrest@[Link])

 lOMoARcPSD|7910873

Week 3

if

andexternal

productmarket fit

nternnl

finance

Value proposition sits right in the middle

• The promise made to consumers that will be delivered to them if they buy product

◦How is it defined?

‣ Must have dual structure, what they represent physically and how it translates into
consumer perceptions

‣ Value delivered to consumers

• Understanding of customer need

• Relates to customer segments: relationship is called product market fit

Library guides => guide by subject area => business/economic => entrapanaurship => company/
industry information =>industry => IBIS world

• PProduct orientation:
• Market orientation

◦Generating value focusing on what ◦The marketing concept, define

physical product is (features) value based on the consumer,

stakeholders,

Should find a fit between these two

Downloaded by Jabs format (juhacrest@[Link])

 lOMoARcPSD|7910873

[Link].g

Heproblems
must

understand

how

it
fits

into
the

industry

term

startwith the vision

long

what is thelongtermvisionofthe

company or is itjustsomething

doyou Marvel atyourown creations

You sell

are youtrulypassionate about it

Showcase

HO

Visw n

• Avoid thinking about product narrowly

• Or service:

◦Physical aspects
◦Core services

‣ Manufactured goods, commodities

◦Pre-sales or sales services

◦intangible aspects
‣ Help finding right solution,
‣ Design, copyrights, licenses
financing, free-delivery

◦financial aspects
◦After sales service

‣ Financial guarantees, insurances policies

‣ Free maintenance, disposal
◦digital aspects

‣ MP3 files, Ebooks

Downloaded by Jabs format (juhacrest@[Link])

 lOMoARcPSD|7910873

Feature Creep

• break up potential product offer into components

◦List into potential features

‣ Put In hierarchy

‣ Core features (hygiene factors/essential factors)

‣ Expected offers (not essential, but expected in the product, like air conditioner in a car)

‣ The augmented offer (getting more unique, such as unique design, unique features - where
real competition starts)

‣ The potential offer (complete industry change, paradigm shift)

Pains - problems we can solve for the consumer

• cost reduction

• Risk reduction

• Accessibility

• Convenience/usability

Gains - What benefits are we providing for the consumer?

• Newness

• Performance

• Customisation

• Getting the job done

• Design

• Brand/status

Competition

• Booz Allen innovation matrix

Downloaded by Jabs format (juhacrest@[Link])

 lOMoARcPSD|7910873

Week 4

• segmentation process

◦Define customer segments, based on opportunity value

‣ Where value lies within broader group of consumers

‣ Biggest opportunity to move forward within set of defined customers
• Consumer archetypes

• Consumer day-in-life

• Influencers/buyer groups

• Multi-sided markets

• Case: amazons market segments

◦More than one group that must be dealt with

Target Marketing process

Characterise total/served available market -> conduct market segmentation -> selecting market to
target

• value of segmentation = focus on opportunities that will bring more value to you

• Once segmented, much choose the right one

◦Choose the slice with the most opportunity value

1) Characterize total/served available market

2) What variables to use for market segmentation

• define sandbox

• Background customer characteristics

◦Demographics

◦Socioeconomic status

◦Family cycle/age

◦Geadmographics

◦Personality

◦Lifestyle

• Customer attitudes
industryrelated
◦Benefit segmentation (needs and wants, category attitudes

◦Perceptions and preferences

• Customer behaviours
behavioural database
◦Purchase behaviour

◦Consumption behaviour (heavy users)

modeltheir behaviors
◦Communication behaviour (opinion leadership)
modeltheirresponses
◦Response to marketing mix

◦Relationship seeking

Use opportunity value instead of a single variable

• define consumers by the largest profit potential

• Opportunity value

◦Worth

◦Influence

◦Reachability

Downloaded by Jabs format (juhacrest@[Link])

 lOMoARcPSD|7910873

Customer zday-in-life logs

• Profiles a typical customers activities throughout a typical day

• Identifies potential touch points to establish/channel relationship strategies

3) selecting a target market

• Two key questions

◦Which segments offer the greatest potential (opportunity value)

◦How many segments to enter? (Coverage strategy)

How man segments to target?

• Mass approach

• Segmented / diversified approach

• Niche approach

Some will say any entrepreneurial project must start with niche

Downloaded by Jabs format (juhacrest@[Link])

 lOMoARcPSD|7910873

Multi sided markets

• Bringing together two or more interdependent groups of customers

• Company creates value by facilitating interactions between them

• Note the associated multiple value propositions, revenue streams, costs, channels, etc

Downloaded by Jabs format (juhacrest@[Link])

 lOMoARcPSD|7910873

Week 5

Channel Mapping
• How does the product get from our company to the customer?

• Physical channels

• Virtual Channels
◦Is your value proposition physical or virtual?

◦
Physical

OEM

Systemintegrator

Valveaddedreseller

our
company S Consumer

wholesalers
retailers

Distribulers Dealers

donotselldirectly [Link]
I

consumers consumers

Direutsales

force

Virtual

Hatform
appstory

Online retailers

cramping Aggregators consumer

Dedicated

serial commerce
of
ecommerce

flesh sales

How do you decide? Consider channel functions

• logistics - moving goods to where consumers live/shop

• Sales function - generating demand for good/services

◦Aides in generating demand

◦This function is something that is bought, it is a service

• Finance function - facilitates money flows between sellers and buyers

• Inventory support - lower storage and warehousing costs, as they are specialists

• Post sale service - return policies, warranties, etc

• Provision of market information - educating consumers about product range, features

• Strategic function - help with differentiation, positioning, segmentation

Downloaded by Jabs format (juhacrest@[Link])

 lOMoARcPSD|7910873

Channel Economics
• Price waterfall

• Pocket price Band

Conventional

• group of vertically linked independent organisations

◦Each looking out for themselves

◦No larger overseer

• allows flexibility

• Competing with vertically integrated firms

Downloaded by Jabs format (juhacrest@[Link])

 lOMoARcPSD|7910873

Vertical marketing systems

• managing channel as a coordinated or programmed system of participating organisations (by one)

◦Programming and direction are directed by channel leader

◦Operating rules and guidelines indicate he functions and responsibilities of each participant

• Ownership of VMS

◦One company owns channels from source of supply to retailing (like ZARA)

‣ Maximal control, channel margins are internal

‣ Capital intensive, risk of overextension in retail

• COntractural VMS

◦Formal arrangements between channel participants, including franchising and voluntary

cooperatives

‣ Can be initiated manufacturers (car dealerships

‣ Wholesalers (IGA), retailers

‣ Coordination without capital burden

‣ Some margins sacrificed

• Administered VMS

◦One company has economic power to influence/control the channnel

‣ Control is achieved through market power

‣ Only few companies able to integrate channels this way

Horizontal Marketing System

• when two or more unrelated companies put together resources or programs o exploit a distribution
innovation opportunity

◦Joint venture, partnering, strategic alliances

Intensity or Exclusivity?
• intensive - distribution of products in as many retail outlets as possible

◦Maximise unit sales

◦Not good for premium categories

• Exclusive -Giving exclusive territorial rights to an intermediary to sell productss

◦Supports positioning

◦Premium image

◦Extra value from channel member

◦High channel costs

◦Opportunity costs I coverage/market share

• selective - the third secret way; a number of intermediaries selected in the territory based on their
ability to provide a desired level of sales support and service

◦Best of both worlds

◦May be getting lost in the middle

Downloaded by Jabs format (juhacrest@[Link])

 lOMoARcPSD|7910873

Channel Economics
Channel Hacking
Intensity vs Exclusivity

Downloaded by Jabs format (juhacrest@[Link])

 lOMoARcPSD|7910873

Week 6

Transitioning from fishing logic to nurturing logic

• old school mentality is focused primarily on customer acquisition

◦That is now shifting to customer retention

• much more profitable to market for retention rather than acquisition

Get-keep-grow model

• about being in front of

customers, about being
available

Earned and Paid media

costA
Aquisition

Similar

to

payingrent

payingfor

realestate

consumers

attention

to

pay

for
adds

needtodevelop
interest

yourown

mustbeinteresting

newdifferent

moreeffort

Downloaded by Jabs format (juhacrest@[Link])

 lOMoARcPSD|7910873

“Get Consumer” funnel - the classic approach

• consumer react to acquisition in steps

◦Must proceed through these steps (must be gone through in succession)

Attention -> interest -> consideration -> action

awareness attitudes rerkonal emotional

initialpurchase learn feel do

interest valueproposition

A betterwaytothink about it

Viral Loop

• if first purchasers are so satisfied with purchase, that they recommend the product via word of
mouth

◦This creates a runaway positive viral loop

• b

Keeping customers

• customer loyalty programs

• Subscription models

• Hard and soft lock-ins

Downloaded by Jabs format (juhacrest@[Link])

 lOMoARcPSD|7910873

customer profitability

Acquisitioncost L customerlifelinevalve
CLV
alltheamountsspent
agilityof
retentionstrategiessuccess
prob
togain acustomer
0 I

Margin 1 detentionauto
r yt
Lv SE
I 1 Discountrate o
t

Retention rate
CLV lls Margin
It Discountrate o retentionrate

Acquisition cost Acquisitionspending

customersaquined

Downloaded by Jabs format (juhacrest@[Link])

 lOMoARcPSD|7910873

Week 7

What is a resource?

What a company has vs what it does

• What are the most important assets required to make the business model work?

• Link to both the value part of the business model canvas: what do I need to be able to generated
value

◦Value proposition, channels, customer relationships, and revenue streams

• External, and efficiency parts

◦Efficiency - how will I use them, can somebody help and how much will these cost?

‣ Key activities, key partners, and costs

Four Critical Resources

• physical

• Financial

• Human

• Intellectual

Map of worries
• how will it impact the delivery of the value proposition?

Physical Resources:

• Base company facilities (indirect)

◦Office space, company location, buildings, manufacturing equipment

• Products/services-related (direct)

◦Materials needed for the actual products themselves

Many physical goods are very capital intensive

A key consideration will be: where are you getting these resources from
Are there any options for reducing capital intensity?
◦Partnering, outsourcing, renting/licensing

Financial Resources:

Downloaded by Jabs format (juhacrest@[Link])

 lOMoARcPSD|7910873

Human Resources:

• For the startup

◦Qualified employees: where do you find the talent you need? How do you motivate? Is it a good
idea to hire from large corporations?

◦Advisory board: different from your investors, VC’s, executive board

‣ Pool of people to rely on when there’s trouble

‣ They give advise,(might be industry experts, friends, experienced people etc)

• For the founder

◦Get a teacher for a particular subject

◦Coach: to hone specific skills, reach specific goals

◦Mentor: to guide you through your career

Intellectual property:

The illusion of explanatory depth

What are key activities

• what is it that you’re doing with your resources?

• Can you match the value proposition?

• Are you doing things in a unique, non replicable, sustainable way

Value Chain Analysis

• Understanding where unique advantages (in terms of superior consumer value or cost advantages)
are realised in he firm

Downloaded by Jabs format (juhacrest@[Link])

 lOMoARcPSD|7910873

Activity Systems - Why are they important?

• For the original value proposition hypothesis: often grow out of an entire system of activities, not a
single unique activity

• For the subsequent growth Hypothesis: Activity systems are much more difficult to imitate than
individual core competencies

Downloaded by Jabs format (juhacrest@[Link])

 lOMoARcPSD|7910873

Week 8

What roles can they play?

What roles can they not?
• Faster Time to the market
• Does not replace strategy

• Access to financing/cst savings

◦Okay to hone/pivot, but not to
• Reduce risk of uncertainty
outsource strategic brands
• Access to unique customer knowledge expertise

• Access to new markets/consumers

• Shared economics: economies of scale and scope

Must be a value exchange, both parties must benefit

Types of Partnership

• strategic alliances

◦Between non Competative entities

‣ Develop new product innovations

◦using partner to build whole new product

‣ Mainstream customer with complete solution (up sell)

‣ Compliment core product with other products/services (cross sell)

‣ BUT: whole products are not needed on the first day

• Early adopters are often happy with the base product ( for which you may not need
partnering at all)

• Mostly need partnering during growth phase

• Joint ventures

◦Starting whole new company, developing new business

◦Form corporate venturing or late in startups life cycle when targeting mainstream consumer

• Coopetition

◦Strategic partnerships between competitors

◦Can be highly strategic - to share resources and activities and access markets

◦Or tactical, to aim at indirect benefits

• Key Supplier relationships

◦Providing inputs for routine operations

‣ Outsourcing key functions to suppliers

‣ Managing direct suppliers as inputs/part of procurement

• Traffic Parnters (online)

◦Long term agreements with other companies with the goal of

‣ Delivering long term predictable levels of customers

◦Traffic partnerships can vary in terms of strategic embeddedness vs tactica exchange

‣ Cross referrals or swapping deals showing strategic interdependence

Partner risks

• size mismatch

• Planning cycle mismatch

◦Speed of operation

• No clear ownership of the customer

• Products may lack vision if overseen by committee

• Different underlying objectives in a relationship

Downloaded by Jabs format (juhacrest@[Link])

 lOMoARcPSD|7910873

• Churn in partners strategy or personnel

Downloaded by Jabs format (juhacrest@[Link])

 lOMoARcPSD|7910873

Week 9

Common Mistakes:

• “revenue streams is the price I charge for customers”

• “I set the price based o how much it costs me to make it”

• My price has to be less than my competitors price”

Revenue streams/Models vs Pricing

Revenue streams:
Pricing:

• the strategy the company uses to

• the tactics you use to set the price in each
generate cash from each customer segment
customer segment

• revenue streams are about the strategy of value

capture

◦“How would you design a mouse trap”

◦Not just a single customer segment, may be many

◦It is overall a strategic move

• Pricing is a single tactical decision that flows from the model/strategy

Start with answering the questions:

• what value are customers willing to pay for?

◦Big difference between what a customer likes and what they ar willing to pay for

• How do customers pay for products today?

◦Always a status quo, must understand this

• then differentiate: how can we do better?

Types of Revenue streams

Downloaded by Jabs format (juhacrest@[Link])

 lOMoARcPSD|7910873

Asset sale

• sale of ownership right to physical product

◦Most intuitive rev model: a simple exchange at a single point in time

Usage Fee

• if it is a service at her than product, something ongoing - hard to say what “one unit” may be

◦Fee is proportional to usage of service

‣ Pre-paid

◦value for consumer: small increments outlay

‣ Planability

‣ May not want/be able to buy in this format in smaller increments

◦Value for company: higher margin, access to diverse segments

Subscription Fee

• fee for continuous access to a service

◦Value to consumer: lower price per unit

◦Value for company: higher volume, locked-in/plannable future cash flows

‣ Rely on people paying for things and not actually using it

Renting

• fee for temporary access

◦Value for customer: avoiding large capital outlay and financing risks,

‣ They don’t have to buy/service the actual product

◦value for company: capital utilisation

Licensing

• Fee for the use of an IP

◦Not buying, not selling, just granting access

◦Value for consumer: low price access to high tech/unique IP

◦Value for company: secure cash flows with limited operational/market risk

Intermediation Fee

• a fee bringing together two or more parties involved in a marketplace transaction

◦Value for consumer: saving on transaction costs

◦Value for company: turning marketplace knowledge into capital with little marginal investment

‣ Airbnb brings homeowners with travelers

‣ Infinitely scalable

• How do you design transaction costs?

Advertising

• fee paid by brands and companies to get in front of potential customers

◦Value for customer (company that advertises): efficient brand equity investments, demand
generation

◦Value for company (media firm): returns on consumers-as-equity

‣ People paying attention

Single/multi-sided market
• single sided - at least one revenue stream from users who are also buyers

◦Your revenue stream strategy: care about revenues first

‣ Like an app

• multi-sided markets - users are different from buyers and revenues may come from just one side

◦Your revenue stream strategy: you may care about users first, revenues later

‣ Like a platform

Downloaded by Jabs format (juhacrest@[Link])

 lOMoARcPSD|7910873

SIngle/multiple revenue Streams

• single revenue stream - revenue mode with a single source of income

• Multiple revenue stream - revenue from multiple sources

◦More than one segments

Pricing is the tactics

• inside every revenue stream there may be different pricing tactics

◦Fixed

Cost plus/target pricing:

• solely based on internal costs

• Internal costs are marked up by a certain %

Competition based:

• looking at Competative context

◦Depends on what competition charges

◦“Head on”: charge exactly the same as competitors

◦“Differential”: decision to lower or increase the price vs competition based on strategic

objectives

• intuiative appeal about how customers might think

• May not take into account competitors internal competitors may have much higher efficiencies to
lower price even further

Consumer demand based pricing:

• charge as much as the “market will bear” - start with charging a certai price, adjust as go along

◦Demand curve estimation, basically

Value based pricing

• Takes into account the exchange value (economic/perceptual) consumers get from using the product

◦Often expressed as savings

Objective based pricing

• penetration

◦The new product is priced as low as possible to achieve as high market share early as possible

◦Gather market share early and gradually, increase margins later

• skimming

◦New product is priced as high as possible to make high profits early

◦Later prices are dropped to make money at lower margins butt at higher volume

Downloaded by Jabs format (juhacrest@[Link])

 lOMoARcPSD|7910873

Can combine methods:

◦Dynamic

Strategic flexibility to change price if something doesn’t work out

Negotiation

• List price is just the starting point of the conversation - price is determined by market power and
negotiator skill

◦Real time market discovery, discover willingness to pay and willingness of seller

◦Opportunity for price discrimination/tailoring

◦Transaction costs, uncertainty

Yield management

• used in industries with perishable inventories (airlines, hotels, car rental, etc)

◦Prices are optimised based on inventory available, time of purchase and detailed knowledge
about individual consumers

Real time markets

• Price is established dynamically based on supply and demand

◦Most often it Is a structural characteristic of the market - not amendable by a market participant
or innovator

‣ Like the stocke market, etc

Auction-based pricing

• prices are determined by bidding customers

◦Real time price discovery,

◦May alienate customers

Working Towards Formal Demand forecasting

• what’s the target market and estimate market share

• How many units can your channel(s) sell?

• How many customer activations

• How much will it cost to acquire a customer and what is the customer lifetime value?

Downloaded by Jabs format (juhacrest@[Link])

 lOMoARcPSD|7910873

Week 10

Is company cost driven or differentiation driven?

Break even analysis

• provide rough indicator of how/likely when the new venture will turn profits

• Break even point - sales level where neither profit nor loss is made

• Contribution - a portion of sales rev that is not consumed by variable costs and so contributes to the
coverage of fixed costs - at break even contribution fully covers fixed costs

• Contribution margin - the fraction of the sales price that contributes toward covering fixed costs

How to calculate

Fixedcosts

Break evenvolume fy Contribution unit

per
How to calculate contribution needed for break even

contribution
perunit 1 selling priceper
unit variable cost
per
unit Sl
contribution per unit 1
Contribution
margin
[Link]
selling

Downloaded by Jabs format (juhacrest@[Link])

 lOMoARcPSD|7910873

Typical Cost Driver Structures

• the pattern of different types of costs occurring

◦Payroll-centred: semi variable costs driven by employees directly or indirectly involved in the
output

◦Inventory driven - primary costs relate to maintenance of raw materials, finished goods,

◦Space/rent driven - costs driven by high cost per square foot of office rent

◦Marketing/advertising-driven - high marketing/advertising expenditures needed to attract and

retain critical mass of customers

Downloaded by Jabs format (juhacrest@[Link])