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

CS443 Course
Introduction To Entrepreneurship
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Spring 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 Chapter 8 By: Motaz Al-Agamawi

Marketing Mix
2

A marketing mix is the combination of four factors called the four P's that
factors, P s,
together communicate your competitive advantage to customer:
Product
Price
Place
Promotion
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
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
magazine or newspaper to reach these more affluent consumers?
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Marketing Mix
3

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.
The packaging is also part of the product. Your customer might throwaway
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your packaging but that does not mean it is unimportant.
Starbucks revolutionized the coffee shop by creating different cup sizes and
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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
need.
Where should you go to bring your product or service to the attention of your
market?
If you are selling a l
lli luxury item, you will need to place it i stores that are
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visited by consumers who can afford it.

Marketing Mix
4

Price The product has to be priced low enough so the public will buy it and high
Price-The it,
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.
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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 advertising
newspaper, you re advertising.


Pricing
5

According to Guerrilla Marketing Attack, by Jay Levinson a study of consumers in
Attack Levinson,
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.
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Service was third.


Pricing Strategies
6

Cost-plus This method simply takes your cost and adds a desired profit margin
Cost-plus-This margin.
This method fails to take marketing vision into consideration.
Penetration Strategy-This method uses a low price during the early stages of a
product's life cycle to gain market share.
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Japanese companies used this method to dominate the VCR market.
Skimming Strategy-The opposite of p
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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 television
television.
Meet or Beat the Competition-This is a common strategy in service businesses.
Airlines tend to compete intensely by lowering their ticket prices.
The
Th more you can show that your business is diff
h h b i i different from your competition,
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however, the less you will have to compete with your price.

Place, Location
7

The type of business you are running will influence your choice of location
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
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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
design, writing, accounting
businesses in their homes


Promotion
8

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


Promotion
9

You can promote your business through:
Banner Ads
Billboards
Brochures
Business cards
Direct Mail
Catalogs
Discount Coupons
Flyers
Free Gifts
Sample and Demonstrations
Special Events
S i lE
Sponsorship

Logo and Trademarks
10

A Logo (short for logotype) is an identifying symbol for a product or business
A 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 trademark
A 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.
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Customers 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
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
to make sure that the customer thinks of quality when he or she sees your logo.
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This association can become an advantage over the competition.

Copyright
11

Art is another form of intellectual property. If you are a songwriter author, or
property songwriter, author
painter, you will create works that you might sell.
If you do not protect your work, however, someone else can sell it.
A copyright is the form of legal protection offered to literary, musical, and artistic
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works.
The owner of a copyright has the sole right to print, reprint, sell and distribute,
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revise, record, and perform the work under copyright.
The copyright protects a work for the life of the author/artist plus seventy years.


Electronic Rights
12

Now that writing, photographs, art, and music can be posted on the Web,
writing photographs art Web
entrepreneurs must protect their intellectual property online, as well.
The rights to reproduce someone's work online are called electronic rights.
Using artwork without permission, even if it is a song or photo posted online, is
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Internet piracy.
President Clinton dealt a blow to Internet piracy in 1998 when he signed the
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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 devices
devices.


Protect Your Electronic Rights
13

"Work-made-for-hire"-This means you are giving up the rights to your work. Now
Work-made-for-hire This work
the buyer can use it anywhere without paying you anything beyond the original fee
you negotiated.
Rights"-This means you are handing over all rights to your work to the buyer.
"All Ri h "
Here are some strategies for protecting your electronic rights. I
Get the buyer to define exactly what is included in "electronicrights"-online
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publication? CD-ROMs? Anything else?
Put a limit on how long the buyer can have the electronic rights-one year, for
instance
instance.
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
is
i used somewhere electronically.
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Marketing Materials– Competitive Advantage
14

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,
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should also reflect and reinforce your business's competitive advantage.
Good marketing materials serve three functions:
Creating them will organize your business thinking
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
service.
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Image is Important
15

You will have a much stronger impact if all your business materials are tied
together with a strong, coordinated image:
Business cards
Stationery
Flyers
Brochures
Press releases
Mailing cards


Where to Advertise?
16

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
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to 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 service
service.


Gaining Goodwill
17

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
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programming expertise to this project.
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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
business.
Second, Microsoft gains publicity and goodwill.
Goodwill is composed of intangible assets, such as reputation name
recognition, and customer relations. Goodwill can give a company an
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advantage over its competitors.

Relationship Marketing
18

Most companies have moved away from "transaction oriented" marketing which
transaction-oriented marketing,
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
satisfied.
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Relationship marketing acknowledges that making the sale is just the beginning of
the relationship between a company and a customer:
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Companies 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 relationship
relationship.


Marketing is a Fixed Cost
19

Marketing is part of your business s fixed costs. Fixed costs are costs that do not
business's costs
vary with sales:
Utilities (gas, electric, telephone) .
Salaries
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Advertising
Insurance
Interest
Rent
Depreciation
There are also variable costs, such as commissions, that vary with sales. For a
b i t i th h 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 book
Page 112, Question number 5
Page 113, Application Exercise

Assignment Deadline: Week After Next.


21

Q&A…

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

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