Chapter 9: Marketing Your Business
Chapter 9: Marketing Your Business
Marketing Mix
The blending of the four marketing elements of product, distribution, price, and promotion used to reach a target market
Product mix
The different products and services a business sells
- Select Product features
o Color
o Size
o Quality
o Business operations
▪ Hours
▪ Delivery
▪ Warranties
▪ Installation
- Branding – name, symbol of designed used to identify your product
- Package – the box
- Labeling – where you put info on the box
Chapter 9: Marketing Your Business
Positioning
Is placing a product in a certain market to get a desired customer response
- family car vs. luxury car
Distribution
Channels of Distribution:
The routes that products and services take from the time they are produced to the time they are consumed
Channels of Distribution for retail Goods
- be open during hours that are convenient for customers
- catalogs, fliers, or direct mail
- Phone or Fax
- Internet
Chapter 9: Marketing Your Business
Receiving Goods to Sell
Places to buy merchandise
- American Wholesales & Distributors Directory
- The Thomas Register
- AT&T Business Directory
- Trade Magazines
Channels of Distribution for Service Business
- usually sold directly to customer
(single direct channel of distribution)
Channels of Distribution for Manufacturing Business
- Sell to other businesses / Who sell to final customers
- Use all distribution possible
Physical Distribution
- transportation, storage, product handling
Chapter 9: Marketing Your Business
Price: (pricing strategy)
Set prices low enough so customers will buy from you but high enough to make a profit
- Maximize sales
- Discourage Competition
- Attract Customers
- Maintain an Image
- Increase profits
Return on Investment
Think about the cost (investment) to make and market a product
Obtain Market Share
Think about buying market share with low prices
Market Share – the percentage of sales for all companies in the market that a business captures
Chapter 9: Marketing Your Business
Determining Price
Demand-Based Pricing:
Pricing base upon how much customers are willing to pay for a product or service
Cost-Based Pricing
Price determined by using wholesale cost (or mfg cost) as the basis for the price charged
Markup Price: determined by adding an amount to the whole sale price
Wholesale cost X markup % = Markup
Wholesale cost + Markup = Price
Markdown Price: A price determined by subtracting an amount from the retail price
Retail price X discount % = Discount
Retail price – discount = price
Chapter 9: Marketing Your Business
Determining Price (cont’d)
Competition Based Pricing
Pricing determined by what the competition charge for the same goods or services
Pricing a Service
Time-based Pricing
Price based on the number of hours needed to complete the service
Hourly Charge X # hours = Price
Bundling
Services bundled together and sold at one price
Breakeven Point
The lowest price at which the seller’s costs are covered but there is no profit
Chapter 9.2: The Marketing Mix Promotion
Promotional Mix:
The strategy for promoting your business using advertising, publicity and other methods of promotion
Advertising:
A paid form of communication sent out by a business about a product or service
- used to convey a positive image
o business
o product
- Public relations
o The act of establishing a favorable relationship with customers
- Choose your message
Chapter 9.2: The Marketing Mix Promotion
Choose your medium:
o Television
▪ Pros
• Reached millions
• Short commercials
• Long infomercials
• Customer can see product
• Customer can hear promotion
▪ Cons
• Very expensive
• Too broad an audience
• May not reach target audience
o Radio
▪ Pros
• Less expense that TV
• More certain of target audience
• Can get demographic profile of listener
▪ Cons
• Customer can’t see product
• May ignore ads
Chapter 9.2: The Marketing Mix Promotion
Choose your medium: (cont’d)
o Newspaper
▪ Pros
• Relatively inexpensive
• Target limited geographical area
• Reaches large number of people
▪ Cons
• Many people who are reached may not care about your product
• Lots of other ads in same paper
o Direct Mail
▪ Pros
• Can buy target group mailing lists
• Effective if people read it
▪ Cons
• Often thrown out as “junk mail”
Chapter 9.2: The Marketing Mix Promotion
Choose your medium: (cont’d)
o Telephone Directory Ad
▪ Pros
• People see ad when they need what you sell
• People always know where your ad is
▪ Cons
• People only look when they already need something
o Magazine advertising
▪ Pros
• Excellent way to get to target audience
• Nationally distributed
▪ Cons
• May be outdated
Chapter 9.2: The Marketing Mix Promotion
Choose your medium:
o Outdoor advertising
▪ Pros
• Keep business name “out there”
▪ Cons
• Limit viewing time = limited info
o Transit Advertising
▪ Pros
• Similar to billboards but more viewing time
• Good if trying to reach people who use public transportation
▪ Cons
• Not seen by people who don’t use public transportation
Chapter 9.2: The Marketing Mix Promotion
Publicity:
The free promotion generated by media coverage
Press release:
A written statement meant to inform the media about an event or product
Selling
Personal Selling
Direct communication between a prospective buyer and a sales representative who tries to persuade buyer to make a purchase
Product Knowledge
To be an effective salesman you must know all aspects of your product
Chapter 9.2: The Marketing Mix Promotion
Selling (cont’d)
Determine customer’s wants and needs
- perform a “needs assessment”
- discover how buy will make decision
o rational – sell logical facts
▪ safety
▪ quality
▪ reliability
▪ economy
o emotional – sell desire
▪ protection
▪ appearance
▪ comfort
▪ recreation
- use the Problem Solving Approach
Chapter 9.2: The Marketing Mix Promotion
Other Types of Promotion
Sales promotions:
Offer incentive to customers in order to increase sales
- contests
- free samples
- coupons
- frequent purchaser programs
- rebate (refund offered to buyers of products)
Telemarketing
Using the telephone to market your product
- expensive
- annoying to some customers
- effective
Chapter 9.3: Set Marketing Goals
Establish Goals
Short Term Goals:
What do you want your business to achieve in the next year?
- number of customers
- level of sales
- profits
- etc.
Medium-Term Goals
What do you want your business to achieve in the next two to five years?
- Short term goals plus
- market share
- networking
Long Term Goals:
Thinking about 5, 10, 20 years out will help you plan and effect current decisions
Write your Marketing Plan
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