Primary Tasks Involved in Running a Business

- Marketing and Advertising

- Production

- Management and Human Resources

- Financial Planning and Analysis

- Legal Issues and Responsibilities

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Marketing

What is Marketing?

The management task that links the business to the customer

by identifying and meeting the needs of customers profitably.

Get the right product at the right price to the right

place at the right time.

Marketing has TWO fundamental roles:

1. To sell what a business makes

2. Manage a business’s brand or brands

Marketing involves Market research Product development Sales Advertising Distribution Promotion

Without marketing, not much would get sold.

Customers wouldn’t know what goods or services were being sold, would not know about trends, how products improved.

Manufacturers wouldn’t have research to know what to make, wouldn’t have the distribution channels to get the products into hands of the consumers.

The 4 P’s

• Referred to as The Marketing Mix

– All four are essential to the success of a marketing plan for

either a product or a service

• 4 P’s stand for

– Product

– Price

– Place

– Promotion

• A mix of the four is necessary to sell a product

The Marketing Mix

Think of a Cake

All cakes need 4 things – flour, egg, sugar, milk

However, you can play with the flavour of your cake by

changing the ingredients slightly

Example: Sweeter cake – add

more sugar

The Marketing Mix

The same thing is true with the marketing mix

You can very the type of message you are sending

out about your product/service by mixing

different elements of each of the P’s

Example: Want to be seen as a luxury item –

make the price high, have limited selection

Product

• Refers to the benefits of buying a product

– What need does the service/product fulfill

– Quality

• What will the quality of your service/product be?

• Some people really want quality (Ferrarri) vs. others that don’t really

matter (McD’s)

– Features

• How will your product/service differ from the competition

• What will you do differently?

– Design

• How is it going to look?

• Consumers often will purchase because “it looks cool”

Product

Packaging – if your selling a product what image will

the packaging communicate?

If a service – how will the appearance of your operation

communicate an image about your business

Range of Products – what complimentary products

may you offer

If service: Will you offer other products with your service

Example: Nike– Sporting goods, sneakers, trackpants, t-

shirts, etc.

Example: Think of the range of products that Apple has

Price

• Marketing is responsible for establishing the price of their

service/product

• Must consider the costs of all the inputs (materials, labour,

etc)

• Mark-up Price – How much profit do you want to make

on every product/customer

• Example: Selling Cupcakes

– Every cupcake uses $1 of materials and labour roughly costs

$0.25 to make one muffin

– You must charge at least $1.25 to break-even

Price

The price of your product or service tells the customer a lot

about your product

$550 $1550

Price

Different Pricing Strategies

Competition – basing your prices on those of the

competition

Penetration – making your price low while new just to

get some business

Bundle – putting the product/service with another

item and bundling the prices

Psychological – making the price say something about

the quality of your product

Place

• Simply refers to how & where you are going to sell the

product to the consumer – Channels of Distribution

• Direct Distribution – selling your product directly to the

consumer

– Brick & Mortar vs. Virtual Store

• Indirect Distribution – sold through a 3rd party

–What retailers are the best for reaching your Target

Market?

– Example: Selling protein powder – where do I sell?

Place

For a service : where are you going to locate in order to best

reach your target market

You want to be in an area that

your target market frequents

Says something about your business

Notice how car dealerships are

always on the outskirts of

town or close to a highway?

Brantford Commons

Promotion

A successful product or service means nothing unless the benefit

of that product/service can be communicated to the Target

Market

There are many ways to get the “word out”

How many can we think of...

Promotion

BuzzSales

AdvertisingPublic Relations

Marketing Mix Activity

Let’s Rank each of the elements of the marketing mix in terms of

importance for the following products/services/businesses

Set Up a blank piece of paper like this:

Business Product Price Place Promotion

Air Canada

The GAP

Nike

Pepsi

Tim Horton’s

The Two C’s of Marketing

In order to adequately put together the four P’s of

marketing, businesses must also consider two major

external factors:

1. The Competition

2. The Consumer (The target market)

1. The Competitive Market

The competitive market consists of the total dollars in sales spent on a particular type of product.

Example:

The US soft drink industry is worth $68 billion dollars.

The portion of that $68 billion that was Coca Colasales or any other company’s sales is called marketshare.

Market share is expressed in terms of %’s.

2007 Estimated U.S Market Share for Major Soft

Drink Brands ($68 billion)

BRAND % Market Share

Coca-Cola Classic 16.5

Pepsi 12.3

Diet Coke 10.2

Mountain Dew 6.5

Diet Pepsi 5.9

Sprite 5.8

Dr. Pepper 5.7

Total 62.9%

Note: That leaves 37.1% of the market for the other 200 brands of soft drinks

available in the market.

Increasing a Company’s Market Share

There are two ways in which a company can increase its market share.

1. Creating a new segment of the market

Example: Bottled water in the 1990’s.

Energy drinks in 2000’s.

2. Taking sales away from your competition

Market SegmentMarket Segment

Market segment is a part of the overall market that has similar characteristics.

Example:

Within the soft drink market, you have:

1. The flavoured segment, such as Root Beer,Orange Crush, etc;

2. The diet segment such as Diet Coke, DietPepsi; and

3. The energy drink segment such as Red Bull.

Types of Competition

Direct Competition

Companies who sell similar products to ours.

Examples:

Coke vs. pepsi

One brand of sunscreen versus another brand

Loblaws versus Metro

Companies compete through quality, price, design, features, benefits and simply image preference.

Indirect Competition

Products and/or companies that don’t necessarily sell similar or related products.

Examples:

Will you go to the movies or go bowling instead?

Will you fly or will you take the train?

Will you go out to dinner or spend it on a new outfit instead?

2. The Consumer Market Companies also compete with each other by studying the types of

consumers who buy their products.

The store clerk is not asking for your postal code because s/he has a personal interest in you – but the company s/he works for does.

The better a company knows their customers, they better equipped they are to know what to do to target similar consumers and increase their sales.

The Consumer Market Consumers can be identified or targeted in at least

two ways:

1. Through demographics

2. Through lifestyle characteristics

Understanding the categories under which consumers fit, helps marketers when making pricing, advertising, product development and distribution decisions.

a. Demographics

Demographics

Organizing individuals into categories such as:

1. Age

2. Gender

3. Family Life Cycle

4. Income Level

5. Education Level

6. Ethnicity and Culture

Age Demographics

Age often defines our tastes, needs, and our wants.

Examples:

Teenagers want…..

Adults are interested in….

Seniors are interested in ….

Age DemographicsGatekeepers

The person making the purchasing decision, but may not be the consumer

Example:

Parents may decide upon the cereal to purchase for their child to consume, thus affecting what features may be advertised for parents (low in sugar).

Saturday morning cartoons may still feature a cereal commercial with a cartoon character for the child to identify with.

Gender Demographics Times have changed and products whose advertising use

to target a particular gender is now changing to target the other or/and both.

Examples:

More women are making the purchasing decision when it comes to buying a car, tools, and sporting equipment.

Hotel rooms added hair dryers and ironing boards as more women entered the workplace and business industry.

b. Family Life Cycle Demographics

Needs, wants, and interests typically

vary depending on what stage in life

one is in.

Examples:

1. Newly married couples are interested in…

2. Parents with a new baby are interested in..

3. A couple with 3 teenagers are interested in…

4. Retired seniors are interested in….

Income Level Demographics Business selling luxury goods and services are interested in

learning about wealthy consumers.

Most businesses target average incomes and compete for the discretionary income of consumers.

Examples

Postal codes indicate the area in which someone lives. Income levels can be estimated based on the type of homes found in most areas.

A company selling a luxury yaught is not going to advertise in the Penny Saver, but rather a luxury travel magazine.

Discretionary Income

Discretionary Income

Income/money that is not committed to pay for basic necessities

such as food, clothing, and shelter.

Teenagers generally have the

highest amount of discretionary

income from their part-time

jobs. Why?

Disposable Income is used to pay for basic

necessities, such as food, clothing and shelter.

Ethnicity and Culture Demographics

Canada’s diverse population brings with it diverse interests, wants and needs.

Examples:

Restaurants targeting variouscultural food tastes

Newspapers and magazines are

available in over 100 languagesin Canada.

2. Lifestyle or Psychographics

Characteristics

Characteristics including the way people live, - their

values, beliefs, and motivations.

Examples:

1. Environmentally conscious person may purchase….

2. An extreme sports enthusiast may be interested in….

3. A tech savy enthusiast may be interested in…