Chapter 9: Marketing Your Business

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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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