1. Entrepreneurship Chapter 5
Market Your Business

2. Develop Marketing Plan
Section 5-1
Goals:
Explain the importance of marketing a business.
Discuss how to develop a marketing strategy for a business.
Describe what information is included in a marketing plan.

3. What is Marketing?
Marketing: is all of the processes used to determine and satisfy the needs of customers and the company.
Planning Pricing Promoting
Distributing Selling
Why is it important? It’s the process needed to reach the TARGET MARKET.

4. Marketing Concept:
Uses the needs of customers as the primary focus of a product or service during the stages of:
Planning
Production
Distribution
Promotion

5. Marketing Concept A successful marketing concept will:
Identify what will satisfy the customers’ needs and wants
Develop and market products or services that customers consider better than other choices
Operate profitably

6. Marketing Mix Marketing Mix
Helps meet customer needs and enables the business to earn a profit.
reaching target market through a blend of:
Product Chapter 5
Price
Distribution Chapter 6
Promotion

7. The Marketing Strategy
a plan that identifies how business goals will be achieved by outlining:
product introduction or innovation
pricing
distribution
promotion
projected profitability
sales or market share

8. The Marketing Strategy
Marketing Goals Should:
consistent with overall goals for your business
be achievable with your available resources
reflect short, medium and long-term goals
written to follow SMART guidelines (CH1)
S - Specific
M - Measurable
A - Attainable
R - Realistic
T - Timely

9. Short Term Goals Achievements for the next year
5.1
Short Term Goals
Achievements for the next year
Can be stated in terms of:
number of customers
level of sales
level of profits
Helps determine how to target your marketing

10. Medium-Term Goals Long-Term Goals
5.1
Medium-Term Goals
Achievements for the next two to five years
Strategy determined largely by short term
Important to make sure your marketing strategy will help you achieve medium too.
Long-Term Goals
Achievements for a 5, 10, or even 20 years.
Long-term goals can help define current marketing plans.

11. Checkpoint Questions
Why is goal setting important when developing a marketing strategy?
Establishing goals ensures that the marketing you do today fits in with the total vision you have for your business tomorrow.

12. Write Your Marketing Plan
5.1
Write Your Marketing Plan
After goals & marketing strategy determined
A marketing plan will define:
your market
your customers and competitors
outline a strategy for attracting & keeping customers
identify & anticipated changes

13. Write Your Marketing Plan
Written Marketing Plan:
helps determine whether it is solid and consistent
may help obtain financing
Becomes a guiding document to operate your business.
Can always make adjustments to marketing
Marketing Plan becomes part of Business Plan

14. Investor will expect answers to the following questions:
What product will I offer?
Who are my prospective customers?
Is there a constant demand for this product?
How many competitors are providing the same product?
Can I create a demand for the product I want to offer?
Can I compete effectively in price, quality and delivery for my product?

15. To Answer Those Questions
5.1
To Answer Those Questions
The marketing plan must include information on the following topics:
Product or Service
Target Market
Competition
Marketing Budget
Business Location
Pricing Strategy
Promotional Strategy
Distribution Strategy

16. Actual results should be compared to performance standards quarterly.
Marketing plans should include performance standards that measure effectiveness.
Actual results should be compared to performance standards quarterly.
Am I meeting sales forecasts?
Is my promotional campaign reaching the target market?
Is my company doing everything it can to meet customers’ needs?
Is it easy for my customers to locate my product and is it competitively priced?

17. Checkpoint Question
Why is it important to put your marketing plan in writing?
Helps you determine whether it is solid
All parts are consistent
Guiding document to operate business
Becomes part of your business plan
May help obtain finances

18. The Marketing Mix - Product
Section 5-2
Goals:
Explain how the marketing concept affects decisions regarding the product mix.
Define and describe the importance of product features, branding, and positioning.

19. Marketing Concept & The Product
The Marketing Concept:
The belief that the wants and needs of customers are the most important consideration when developing any product or marketing effort.
The U.S. market is consumer-driven.
Consumers more educated
Competition increased (Global)

20. 5.1
Product Mix
Product Mix: the different products and services a business sells
Entrepreneurs may carry some products that are not profitable because they provide a convenience for customers.
Often a small % of the product selection makes up the majority of sales revenue.

21. Checkpoint Question
How does the marketing concept affect decisions made about the product mix?
When applying the marketing concept, you will select a mix of products that you feel will most appeal to your target customers.

22. Development of Features, Branding & Positioning
Consumers buy a product because it meets their buying needs.
But there is more to a product than many consumers may realize. Companies spend a lot of time developing:
Features • Branding • Packaging
Labeling • Positioning

23. Selecting Product Features
Features: product characteristics that will satisfy customer needs including:
Color • Size • Quality • Hours
Warranties • Delivery • Installation
The target market should be considered when selecting product features.

24. Branding, Packaging & Labeling
Branding: the name, symbol, or design used to identify your product
Package: the box, container, or wrapper in which the product is placed
Label: where information about the product is given on the package
The brand, package & label you choose for a product helps differentiate it from others.
Makes your product stand out from the rest!
5.2

25. Position Your Products or Services
Different products/services within the same category serve different customer needs.
Examples: Honda & BMW
Both Automobiles (transportation)
Positioned very differently
Positioning: creating an image for the product in the customer’s mind
5.2

26. Position Your Products or Services
Businesses position a product with the customers in mind.
Positioning can focus on:
Features
Price
Quality
BMW – Desire high quality and status
Honda – Inexpensive family safe car

27. Checkpoint Question
Why are product features, branding and positioning important?
Product feature, branding and positioning:
make a product “stand out” from others
differentiate it in the market.

28. The Marketing Mix - Price
Section 5-3
Goals:
Identify pricing objectives for a business.
Calculate the price for products using various methods.
Discuss factors to consider when pricing services.
List and describe various pricing techniques.

29. Set Pricing Objectives
Price
Actual amount a customer pays for a product
Needs to be LOW enough that customers buy from you and not from your competitors
Needs to be HIGH enough so your revenues will exceed your expenses

30. Price Strategy
Objectives for a pricing program should be established prior to selecting a pricing strategy.
Objectives might include:
maximize sales
discourage competition
establish an image
increase profits
attract customers

31. Return on Investment Investment Return on Investment (ROI)
the costs of making and marketing a product
Return on Investment (ROI)
amount earned as a result of the investment
usually expressed as a percentage
Example – Smoothie Stand
Invest $5000, want a 15% ROI (5000x.15=750)
You need to price your product to earn $750

32. Amount of Sales ÷ Total Market Size = Market Share
5.3
Market Share
Market Share: a business’s percentage of the total sales generated by all companies in the same market
Must know total market for a product in order for market share to be determined.
Amount of Sales ÷ Total Market Size = Market Share
$192,500 ÷ $1,750,000 = 11%

33. 5.3
Market Share
Your market share will depend on the level of competition in your market.
If you create a market for an entirely new product, your market share will be 100%
Multiple ways to increase market share including:
lowering prices
advertising and promotion – attract more customers
networking with potential customers
networking: establish informal ties w/ people who can help the business grow – attend trade shows meetings

34. Checkpoint Question
Why is it important to determine pricing objectives before pricing goods and services?
You must decide if you want to:
maximize sales
increase profits
discourage competition
attract customers
establish an image
Your price must help you meet the determined objectives.

35. Determine a Price for a Product
Once pricing objectives have been determined  Determine your Price
There is usually more than one price that can be charged for a product.
Pricing may be based on:
Demand
Cost
Amount of Competition

36. 5.3
Demand-Based Pricing
Demand-Based Pricing: pricing that is determined by how much customers are willing to pay for a product or service
Survey customers to determine what they would be willing to pay for a product.
The highest price identified is the maximum price that can be charged.

37. 5.3
Cost-Based Pricing
Cost-Based Pricing: determined by using the wholesale cost of an item as the basis for the price charged
Markup Prices
Markdown Prices

38. Cost-Based Pricing
Markup Price: determined by adding a % amount to the wholesale cost of an item
Markup Amt = Wholesale cost × Percentage markup
Retail Price = Wholesale cost + Markup amount
Markdown Price: determined by subtracting a percentage amount from the retail price
Markdown Amt = Retail price × Percentage markdown
Markdown Price = Retail Price - Markdown amount

39. Competition-Based Pricing
5.3
Competition-Based Pricing
Competition-Based Pricing: pricing that is determined by considering what competitors charge for the same product
What does your competitor charge?
Charge the same price?
Charge slightly more?
Charge slightly less?

40. Checkpoint Question
List three methods for determining the price to charge for a product.
Three methods:
Demand-Based Pricing
Cost-Based Pricing
Competition-Based Pricing

41. Price a Service
To set a price for a service, you must consider the following:
cost of items used in providing the service
amount of time required to produce the service

42. Time-Based Pricing
The amount of time it takes to complete a service will be the basis for determining the price of the service.
Providers must decide whether the cost of materials will be:
included in the price
listed as a separate charge

43. Time-Based Pricing Examples
Plumber
charges $100/hr
completes a job in an 1 ½ hours
$100 x 1.5 = $150
Hair dresser
Cost of a hair highlight included the hair stylist’s time and the price of materials

44. Bundling Bundled Pricing
when all services are combined under one charge

45. Checkpoint Question
Which pricing method would be the best for a housepainter to use to price services?
And Why?
Would probably use time-based pricing
But might charge separately for paint & materials.
Competition-based pricing may also be used.

46. Pricing Techniques • Pricing can make or break a business.
• Pricing techniques may change over time.
Introductory Pricing
Psychological Pricing
Discount Pricing

47. #1 ~ Introductory Pricing
At product introduction, sale will be low, marketing costs high and earn little, if any, profit
Price Skimming:
used for products that are new and unique
high price charged to cover product development costs
Competition with similar product will lower cost
Penetration Pricing:
low intro price charged to build a strong customer base
low price also discourages competition

48. Psychological Pricing
5.3
Psychological Pricing
Psychological Pricing: certain prices have an
impact on how customers perceive a product
used most commonly in retail
Techniques used include the following:
Prestige Pricing
a high price to create a feeling of superiority (status)
Odd/Even Pricing
prices ending in odd numbers are perceived to be bargains

49. Techniques Continued…
5.3
Techniques Continued…
3. Price Lining
Offering different prices for a specific category of products based on specific features and qualities
4. Promotional Pricing
temporarily offering lower prices to increase sales (limited-time sales)
5. Multiple-Unit Pricing
pricing items in multiples (10 for $10)
consumers buy more if they perceive a bargain

50. Discount Pricing Discount Pricing: offers customers a reduced price
encourages purchases
Techniques used include the following:
Cash Discounts
encourages early payment of invoices
2/10, net 30 ~ 2% discount if paid within 10 days, full due in 30
Quantity Discounts (volume discounts)
offers lower prices based on the purchase of a large quantity
Trade Discount
when a manufacturer offers a discount to wholesaler or buyer in the same trade
Seasonal Discounts
used to sell seasonal merchandise out of season

51. Checkpoint Question
Name two techniques used in psychological pricing and provide an example of each.
1. Prestige Pricing
2. Odd/Even Pricing
3. Price Lining
4. Promotional Pricing
5. Multiple-Unit Pricing

52. Checkpoint Question
Name two techniques used in discount pricing and provide an example of each.
Cash Discounts
Quantity Discounts
Trade Discount
Seasonal Discounts