Essential of Technology Entrep. & Innovation- Chapter eight developing the right marketing mix

Introduction To EntrepreneurshipCS443 Course

p pSpring 2009, Modern Science & Arts University

Chapter Eight: Developing the Right Marketing Mix

Instructor:Al-Motaz Bellah Alaa Al-Agamawi

Chapter Source, “chapter Four: entrepreneurship starting and operating a small business” book, by Steve Mariotti, 2007, Pearson Education, Inc.

Developing the Right Marketing Mix By: Motaz Al-AgamawiChapter 8

Marketing Mix2

A marketing mix is the combination of four factors called the four P's that A marketing mix is the combination of four factors, called the four P s, that together communicate your competitive advantage to customer:

ProductPricePlacePromotion

If you tweak one "P," you must pay attention to how it affects the others If you raise your price, for example, are you now still selling the product in

the right place? Or will you need to move to a location that will put you in the right place? Or will you need to move to a location that will put you in contact with consumers willing to pay the new price? Where will you promote your product at the higher price? Will you have to take out an ad in a different

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magazine or newspaper to reach these more affluent consumers?

Marketing Mix3

Your marketing goal is to bring the right product to the right place at the right Your marketing goal is to bring the right product to the right place at the right price with the right promotion.

Product-The product (or service) should meet or create a consumer need. fThe packaging is also part of the product. Your customer might throwaway

your packaging but that does not mean it is unimportant. Starbucks revolutionized the coffee shop by creating different cup sizes and p y g p

using Italian names.Place-Place your product where customers who need it do their shopping.

Selling bathing suits in Alaska in February is not going to fill a customer need Selling bathing suits in Alaska in February is not going to fill a customer need. Where should you go to bring your product or service to the attention of your market?

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If you are selling a luxury item, you will need to place it in stores that are visited by consumers who can afford it.

Marketing Mix4

Price The product has to be priced low enough so the public will buy it and high Price-The product has to be priced low enough so the public will buy it, and high enough for the business to make a profit

Price also should reflect your marketing vision. If you are marketing a luxury item, a relatively low price might not send the right message to the consumer.

Promotion-Promotion consists of advertising publicity and other promotional devices such as discount coupons or giveaways. p g y

Publicity is free, while advertising is purchased. If a newspaper writes an article about your business, it's publicity. If you buy an ad in that newspaper you're advertisingIf you buy an ad in that newspaper, you re advertising.


Pricing5

According to Guerrilla Marketing Attack by Jay Levinson a study of consumers in According to Guerrilla Marketing Attack, by Jay Levinson, a study of consumers in the furniture industry found that

Price came ninth when consumers were asked to list factors affecting their decision make a purchase.

Quality was the number two influence on buying patterns, and Confidence in the product was number one. pService was third.


Pricing Strategies6

Cost-plus This method simply takes your cost and adds a desired profit marginCost-plus-This method simply takes your cost and adds a desired profit margin.This method fails to take marketing vision into consideration.

Penetration Strategy-This method uses a low price during the early stages of a d ' l f l k hproduct's life cycle to gain market share.

Japanese companies used this method to dominate the VCR market.Skimming Strategy-The opposite of penetration strategy, this method seeks to charge g gy pp p gy g

a high price during the introductory stage of the PLC, when a product is novel and has few competitors.

RCA used this strategy when it introduced color televisionRCA used this strategy when it introduced color television.Meet or Beat the Competition-This is a common strategy in service businesses.

Airlines tend to compete intensely by lowering their ticket prices. Th h h b i i diff f i i


The more you can show that your business is different from your competition, however, the less you will have to compete with your price.

Place, Location7

The type of business you are running will influence your choice of locationThe type of business you are running will influence your choice of location.For a retail business, location is the key to attracting customers. Ideally, you

will want your store or business to be where your market is.For nonretail businesses the key to location might be cost or convenience, rather

than proximity to the market. Wholesale businesses require a great deal of storage space and are best q g g p

located in out-ofthe-way areas where rent or property costs are low. As for service businesses, the Internet is making it easier for people who provide

services such as graphic or Web site design writing or accounting to start their services such as graphic or Web site design, writing, or accounting, to start their businesses in their homes


Promotion8

Promotion is the use of advertising and publicity to get your mar keting message Promotion is the use of advertising and publicity to get your marketing message out to your customers.

Publicity is free mention of your business in newspapers and magazines or on radio and TV stations.

An advertisement is a paid announcement that a product or a service is for sale.If your business is providing an unusual service, you might be able to get a local y p g y g g

newspaper to do an article. That article would be publicity for your business-you did not pay for it, yet consumers will learn about your service by reading the article.

Publicity is sometimes referred to as public relations or "PR " Publicity is sometimes referred to as public relations, or PR. Each piece of publicity has enormous value. It has a lot of credibility with

consumers because you did not pay someone to write it.


Promotion9

You can promote your business through:You can promote your business through:Banner AdsBillboardsBrochuresBusiness cardsDirect MailCatalogsDiscount CouponsFlyersFlyersFree GiftsSample and DemonstrationsS i l E


Special EventsSponsorship

Logo and Trademarks10

A Logo (short for logotype) is an identifying symbol for a product or businessA Logo (short for logotype) is an identifying symbol for a product or businessA Logo is printed on the business’s stationery, business cards, and flyers.when a logo has been registered with the US patent office to protect from being

used by others, it is called trademarkA company uses a trademark so that people will recognize its product instantly,

without having to read the company name or even having to think about it.g p y gCustomers do not have a lot of time to study different products before deciding

where to spend their money. If you can consistently offer a quality product or service and create a logo If you can consistently offer a quality product or service and create a logo

that successfully represents your company, you are on your way to success. Over time, your logo will become associated with your business. It is up to you k h h hi k f li h h h l


to make sure that the customer thinks of quality when he or she sees your logo.This association can become an advantage over the competition.

Copyright11

Art is another form of intellectual property If you are a songwriter author or Art is another form of intellectual property. If you are a songwriter, author, or painter, you will create works that you might sell.

If you do not protect your work, however, someone else can sell it. A f f ffA copyright is the form of legal protection offered to literary, musical, and artistic

works. The owner of a copyright has the sole right to print, reprint, sell and distribute, py g g p p

revise, record, and perform the work under copyright. The copyright protects a work for the life of the author/artist plus seventy years.


Electronic Rights12

Now that writing photographs art and music can be posted on the Web Now that writing, photographs, art, and music can be posted on the Web, entrepreneurs must protect their intellectual property online, as well.

The rights to reproduce someone's work online are called electronic rights.fUsing artwork without permission, even if it is a song or photo posted online, is

Internet piracy. President Clinton dealt a blow to Internet piracy in 1998 when he signed the p y g

Digital Millennium Copyright Act into law. The act protects copyrighted software, music, and text on the Internet by outlawing the technology used to break copyright protection devicesprotection devices.


Protect Your Electronic Rights13

"Work-made-for-hire" This means you are giving up the rights to your work Now Work-made-for-hire -This means you are giving up the rights to your work. Now the buyer can use it anywhere without paying you anything beyond the original fee you negotiated.

"All Ri h ""All Rights"-This means you are handing over all rights to your work to the buyer.Here are some strategies for protecting your electronic rights. I

Get the buyer to define exactly what is included in "electronicrights"-online y y gpublication? CD-ROMs? Anything else?

Put a limit on how long the buyer can have the electronic rights-one year, for instanceinstance.

Ask for an additional fee for each additional set of rights. A good rule of thumb would be to ask for 15 percent of the original fee every time your work i d h l i ll


is used somewhere electronically.

Marketing Materials– Competitive Advantage14

All promotional items for your business should reflect and reinforce your marketing All promotional items for your business should reflect and reinforce your marketing vision, which in turn will reinforce ‘Your competitive advantage’. They should include:

name of your business,your logo, and a slogan, if you have one.

All your business materials, in fact, such as order forms, invoices, and receipts, y pshould also reflect and reinforce your business's competitive advantage.

Good marketing materials serve three functions:Creating them will organize your business thinkingCreating them will organize your business thinking.They will enable you to teach others in your company about the business.They will enable you to go into the marketplace and sell your product or

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service.

Image is Important15

You will have a much stronger impact if all your business materials are tied You will have a much stronger impact if all your business materials are tied together with a strong, coordinated image:

Business cardsSStationeryFlyersBrochuresPress releasesMailing cards


Where to Advertise?16

An effective ad for a small business typically concentrates on the benefit the An effective ad for a small business typically concentrates on the benefit the product or service provides to the customer.

This is why it is important that you accomplished Step 1 of the marketing process: consumer analysis. You need to know who your customers are in order to know how to reach them with advertising.

If you are advertising a snowing trip, for example, it would be a waste of money y g g p p yto take out an ad in a magazine for senior citizens.

By visualizing your customer, you avoid wasting money on customers who aren't interested in your product or serviceinterested in your product or service.


Gaining Goodwill17

Many entrepreneurs try to make a difference in their communities by giving money Many entrepreneurs try to make a difference in their communities by giving money and time to organizations that help people.

Microsoft, for example, made it possible for the National Foundation for Teaching Entrepreneurship to develop an Internet-based entrepreneurship curriculum, BizTech. Microsoft has donated both money and computer programming expertise to this project.p g g p p j

Why would Microsoft do this?First, Microsoft's founder, Bill Gates, believes in NFTE's mission and wants to

help young people learn about business help young people learn about business. Second, Microsoft gains publicity and goodwill. Goodwill is composed of intangible assets, such as reputation name

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recognition, and customer relations. Goodwill can give a company an advantage over its competitors.

Relationship Marketing18

Most companies have moved away from "transaction oriented" marketing which Most companies have moved away from transaction-oriented marketing, which focuses on closing a sale with customers, and toward, "relationship" marketing, which focuses on creating long-term relationships with customers by making sure they are

fsatisfied. Relationship marketing acknowledges that making the sale is just the beginning of

the relationship between a company and a customer:p p yCompanies communicate to their customers through marketing. The most profitable

message a company can communicate is that it would like to serve customers over a lifetime in a mutually beneficial relationshiplifetime in a mutually beneficial relationship.


Marketing is a Fixed Cost19

Marketing is part of your business's fixed costs Fixed costs are costs that do not Marketing is part of your business s fixed costs. Fixed costs are costs that do not vary with sales:

Utilities (gas, electric, telephone) . S l iSalariesAdvertisingInsuranceInterestRentDepreciation

There are also variable costs, such as commissions, that vary with sales. For a b i t i th h it t b bl t it fi d t M t fi d t business to survive, though, it must be able to cover its fixed costs. Most fixed costs, are hard to cut back if your sales are slow.

Marketing costs are more flexible. They fall under advertising, and may also show


up under salaries, if you hire a marketing consultant or a full-time marketing staff.

Business Plan Practice (Project Section)…20

Chapter 4, entrepreneurship starting and operation a small business bookPage 112, Question number 5Page 112, Question number 7Page 112, Question number 8Page 113, Application Exercise

Assignment Deadline: Week After Next.


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Q&A…
