Entrepreneurship 9th Edition Hisrich Solutions Manual

Entrepreneurship 9th Edition Hisrich
Solutions Manual
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Chapter 08 - The Marketing Plan
8
THE MARKETING PLAN
LEARNING OBJECTIVES
1: To understand the relevance of industry and competitive analysis to the market planning
process.
2: To describe the role of marketing research in determining marketing strategy for the marketing
plan.
3: To illustrate an effective and feasible procedure for the entrepreneur to follow in engaging in a
market research study.
4: To define the steps in preparing the marketing plan.
5: To explain the marketing system and its key components.
6: To illustrate different creative strategies that may be used to differentiate or position the new
venture’s products or services.
8-1
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or
distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in
whole or part.
CHAPTER OUTLINE AND TEAC HING NOTES
OPENING PROFILE—Russell Rothstein

I. INDUSTRY ANALYSIS Learning Objective 1.
To understand the relevance of industry
A. The industry analysis section of the business and competitive analysis to the market
plan is completed prior to the preparation of the Discussion point: Having sample planning process.
marketing plans may be beneficial for
marketing plan. class discussion. The marketing plan
1. The primary focus of the industry analysis is section of several business plans will
work as well. A good source for sample
to provide sufficient knowledge of the business plans can also be found on
environment that can affect marketing Entrepreneur Magazine’s Web site
strategy decision making. (www.entrepreneur.com/article/157738)
2. It begins with the broadest based assessment

of environmental and industry trends then
proceeds to more local market trends.
3. Secondary sources can provide much of the
information needed.
4. To secure more specific information the
entrepreneur may also want to undertake a
market research initiative.
5. The upside down pyramid approach to
industry analysis helps the entrepreneur
understand the competitor's strengths and
weaknesses.
B. Competitor Analysis Discussion point: A good tool for
analyzing competition is SWOT.
1. This step begins with documenting the Students probably have been exposed
8-2
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned,
duplicated, forwarded, distributed, or posted on a website, in whole or part.
current strategy of each primary competitor. to this tool by now, but a refresher may
be appropriate.
a. This information can be gathered using
as much public information as possible
then complementing this with a
marketing research project.
b. Information on competitors can be found
using a simple Google, Yahoo!, or MSN
search.
c. These articles should be scanned to
identify names of individuals who can be
Discussion point: Have several articles
contacted for further information. about a firm. If this firm was a
d. Once summarized the strategy should be competitor, what could you learn from
these articles?
used to identify the strengths and
weaknesses of each competitor.
2. All of this information can then be utilized to
Text Table 8.1
formulate the market positioning strategy of “An Assessment of Competitor
the new venture. Marketing Strategies and Strengths and
Weaknesses” (Text figure on page 212)
II. MARKETING RESEARCH FOR THE

NEW VENTURE
A. Information for developing the marketing plan In the Press: More words from Jim Learning Objective 2.
may require some marketing research. Clark, serial entrepreneur turned To describe the role of marketing
venture capitalist: “You have to be very research in determining marketing
1. Marketing research involves the gathering of pragmatic about whether people will pay strategy for the marketing plan.
for a product based on your great idea.
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data to determine such information as: You can’t just say, ‘This should be great,
and I am sure the world will beat a path
a. Who will buy the product? to my door.’ Once you have an idea for
a product or service, you need to test
b. What is the size of the potential market? the market. Talk to your potential
c. What is the most appropriate distribution customers about what they want.”
(Copeland, Michael V., Malik, Om, &
strategy? Schonfeld, Erick “Do This, Get Rich”
d. What price should be charged? Business 2.0, May 2005, pg. 78.)
e. What is the most effective promotion

strategy?
2. Marketing research may be conducted by the
entrepreneur or by an external supplier or
consultant.
3. Market research begins with a definition of
objectives or purpose. In the Press: So what sorts of Learning Objective 3.
4. Many entrepreneurs don’t know what they questions should you ask – especially if To illustrate an effective and feasible
you are just trying to see if this procedure for the entrepreneur to follow
want to accomplish from a research study. product/service has merit? Here are in engaging in a market research study.
B. Step 1: Defining the Purpose or Objectives some suggestions:
1 What would it take to get you to
1. The most effective way to begin the use or buy this product/service?
marketing plan is to make a list of the 2 What is the best thing about the
product/service?
information that will be needed to prepare 3 What is the worst thing about the
the marketing plan. product/service?
4 How would friends and close
2. Possible objectives: associates relate to this idea?
a. Determine what people think of the 5 What do you do just before/after
you use this product/service?
product or service and if they would buy 6 What do you see that is new or
it. different about this
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b. Determine how much customers would product/service?

(Smith, Alexa “Asked Overlooked
be willing to pay for the product or Questions for Greater Insights”
service. Marketing News September 15, 2003,
pg. 27)
c. Determine where the customer would
prefer to purchase the product or service.
d. Determine where the customer would
expect to hear about such a product or
service.
C. Step 2: Gathering Data from Secondary Sources.
1. Secondary sources such as trade magazines,
newspaper articles, the Internet, and
government agencies can provide
information on the industry market and
competitors.
2. The Internet can be used to gather informal
primary data through chat groups.
3. Commercial data may also be available, but
the cost may be prohibitive.
4. Free secondary information is available
through:
a. The U.S. Bureau of Census and the
Department of Commerce.
Entrepreneur in Action: Ben Talbot
b. State Departments of Commerce, decided to quit his interior design job to
Chambers of Commerce, local banks, branch out on his own. He set up his
state departments of labor and industry, office, bought new business cards and
8-5
and local media. waited. Six months later he had only

one client and his business was nearing
c. Private sources of data, such as Reuters closure. He didn’t have an organized
Business Insight, Dun and Bradstreet’s and ongoing marketing plan. (Moran,
Gwen “23 Hours to a Great Marketing
Million Dollar Directory, and the SBA’s Plan” Entrepreneur June 1, 2001
Directory of Business Development http://www.entrepreneur.com/
Publications, can be found in a good marketing/marketingbasics/
marketingplan/article159816.html)
business library.
D. Step 3: Gathering Information from Primary
Sources.
1. Information that is new is primary data.
2. Observation is the simplest approach.
a. Networking, an informal method to
gather primary data from experts in the
field, can be a valuable low-cost research Text Table 8.2
“Sources of Secondary Market
method. Research Data” (Text table on page
b. One study of new ventures found that the 214)
most successful ventures were focused AS SEEN IN BUSINESS NEWS:

on information about competitors, the Provide Advice to an Entrepreneur
customer, and the industry, using On Social Media Strategy
(Box in text on page 215)
networking, trade associations, and
recent publications.
c. Less successful ventures were more
focused on gathering information on
general economic and demographic
trends.
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3. Interviewing or surveying is the most

common approach; it is more expensive than
observation, but more likely to generate Text Table 8.3
meaningful information. “A Comparison of Survey Methods”
(Text table on page 216)
4. The Internet is becoming an important
resource to gather information both formally
and informally.
a. The informal sources involve the use of
social networking sites.
b. More formal research methods such as
the Web-based survey tools, like Survey
and Zoomerang may involve some
expense.
4. The questionnaire used by the entrepreneur
should include questions designed to fulfill
one or more of the objectives of the
entrepreneur.
a. Questions should be designed so they are
clear and concise, without bias, and easy Discussion point: Let’s say the
to answer. objective to a particular market research
project was to see if there might be a Text Table 8.4
b. If the entrepreneur has no experience in need for an alternative to the campus “Sample Questionnaire for Personal
designing questionnaires, they should bookstore. How could this be done by Errand Service” (Text table on page
observation? By survey? By focus 217)
seek assistance for this important step. group?
5. Focus groups
a. A focus group is a sample of 10 or 12
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potential customers who participate in a

discussion relating to the entrepreneur’s
research objective.
b. Groups discuss issues in an informal,
open format.
c. These groups should be led by an
experienced monitor or by someone other
than the entrepreneur.
E. Step 4: Analyzing and Interpreting the Results
1. The entrepreneur can enter the results on a
computer or hand-tabulate the results.
2. Summarizing the answers to questions will
give preliminary insights.
3. Data can then be cross tabulated to provide
more focused results.
III. DIFFERENCE BETWEEN A BUSINESS
PLAN AND A MARKETING PLAN
A. The marketing plan focuses on all marketing
activities of a venture for one year or more.
1. It will vary significantly for a firm depending
on the industry, target market, and the size
and the scope of the firm.
2. It is an integral part of the business plan and
also the standalone document that needs to
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be managed on a short-term basis.

B. The business plan is the road map for the entire
organization over time.
1. It focuses not only on the marketing issues
but also on decisions such as research and
development, operations, manufacturing, and
other such facets of a business.
2. It should be updated on a regular basis to
help management stay focused.
IV. UNDERSTANDING THE MARKETING

PLAN
A. The marketing plan serves a number of
important functions or purposes.
1. It establishes how the entrepreneur will
compete and operate in the marketplace.
2. Once the strategies have been established,
the entrepreneur can assign costs to these
strategies.
B. The marketing plan should answer three basic
questions:
1. Where have we been?—The history of the Discussion point: From the business
marketplace, marketing strengths and plans gathered for last chapter, analyze
several marketing plans to see if they
weaknesses, and market opportunities and meet this criteria.
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threats.
2. Where do we want to go in the (short
term)?—Marketing objectives and goals of
the new venture in the next twelve months.
3. How do we get there?—Specific marketing
strategy that will be implemented.
C. The marketing plan should be a guide for
implementing marketing decision making and
not a generalized, superficial document.
Text Table 8.5
D. Organizing the thinking process while preparing “Outline for a Marketing Plan” (Text
a marketing plan helps in understanding and table on page 219)
recognizing critical issues.
V. CHARACTERISTICS OF A
Learning Objective 5.
MARKETING PLAN To explain the marketing system and its
key components.
A. An effective marketing plan should:
1. Provide a strategy to accomplish the
company mission.
2. Be based on facts and valid assumptions.
3. Describe an organization to implement the
marketing plan.
4. Provide for continuity.
5. Be simple and short.
6. Be flexible.
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7. Specify performance criteria that can be Discussion point: Again, using the K EY
T ER M
gathered business plans, do the
monitored and controlled. marketing sections meet these criteria? Marketing plan
B. The marketing plan is the statement of Written statement of marketing
marketing objectives, strategies, and activities to objectives, strategies, and activities to
be followed in business plan
be followed in the business plan.
C. The marketing system identifies the major K EY
T ER M
interacting components, both internal and

Marketing system
external, that enable the firm to provide Interacting internal and external factors
products/ services to the marketplace. that affect venture’s ability to provide
goods and services to meet customer
D. Environment factors, although largely needs
uncontrollable, should be identified and
discussed in the Industry Analysis section of the Text Table 8.6
“Facts Needed for Market Planning”
marketing plan. (Text figure on page 220)
Entrepreneur in Action: Caryl Felicetta
E. Internal environmental factors are more founded The Argyle Studio and, in the
first few years, the business grew “in Text Figure 8.1
controllable by the entrepreneur: “The Marketing System” (Text figure on
spite of itself.” When she took on a
1. Financial resources. The financial plan partner it became clear that she needed page 221)
should outline the financial needs for the something more formal than the ideas in
her head and created what she and her
venture. partner called “The Living and Breathing
2. Management team. The entrepreneur must Document.” While it isn’t the “correct”
format for a typical marketing plan, it
build an effective management team and helps to keep the pair focused on what
assign responsibilities to implementing the is important for their firm. (Moran, Gwen
marketing plan. “23 Hours to a Great Marketing Plan”
Entrepreneur June 1, 2006 ETHICS
3. Suppliers. Suppliers used are generally based http://www.entrepreneur.com/ Employee’s Right to
marketing/marketingbasics/ Privacy
on a number of factors, such as price, (Box in text on page 222)
marketingplan/article159816.html)
delivery time, and quality.
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4. Company mission. Every new venture should

define the nature of its business and what it
hopes to accomplish.
Discussion Point: List a number of K EY

VI. THE MARKETING MIX T ER M
branded products or services with which
A. The actual short-term marketing decisions in the students are familiar. Have them identify Marketing mix
the pricing (in relation to competition),
marketing plan will consist of four important Combination of product, price,
distribution, and promotion components promotion, and distribution and other
marketing variables, called the marketing mix: of the marketing plan. While the marketing activities needed to meet
students will be unable to be exact and
1. Product or service marketing objectives
comprehensive, they are likely to be
2. Pricing able to come up with good estimates.
3. Distribution
4. Promotion
Text Table 8.7
B. Each variable should be described in detail in the “Critical Decisions for Marketing Mix”
strategy or action plan section of the marketing (Text table on page 223)
plan.
Learning Objective 4.
VII. STEPS IN PREPARING THE
To define the steps in preparing the
MARKETING PLAN marketing plan.
K EY
A. Step 1: Defining the Business Situation T ER M
1. The situation analysis is a review of where Situation analysis

the company has been and considers many of Describes past and present business
achievements of new venture
the factors defined in the environmental and
industrial analyses included in the business
plan.
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2. The entrepreneur should provide a review of

past performance of the product and the
company.
3. This section simply reviews key elements of
the Industry and Competitive Environment
section of the plan to help provide a context
for the marketing segmentation and actions.
B. Step 2: Defining Target Market: Opportunities Discussion point: Collect ads from a
number of different sources. Can the
and Threats students identify the target market(s)
K EY
1. The entrepreneur should have a good idea of from the ad? T ER M
who the customer or target market will be. Target market

2. The defined target market will usually Specific group of potential customers
toward which venture aims its marketing
represent one or more segments of the entire plan
market.
K EY
3. Market segmentation is the process of T ER M
dividing the market into smaller Market segmentation

homogeneous groups. Process of dividing a market into
definable and measurable groups for
4. The process of segmenting and targeting purposes of targeting marketing strategy
customers is to:
Text Figure 8.2
a. Decide what general market or industry “Sample Flowchart of a Marketing Plan”
you wish to pursue. (Text figure on page 224)
b. Divide the market into smaller groups Entrepreneur in Action: Faust

based on characteristics of the customer Capobianco founder of Majestic Athletic
provides clothing to 16 out of 30 major
or buying situation. league baseball teams, beating out
competition such as Adidas, Nike, and
8-13
c. Select segment or segments to target. Reebok. His attention to detail, focus on

one market, and speed of delivery are
d. Develop marketing plan integrating the his keys to success. (Rist, Curtis “The
parts of the marketing mix. Sultan of Stitch By focusing on a single
market, tiny Majestic Athletic broke into
C. Step 3: Considering Strengths and Weaknesses the big leagues.” Business 2.0
It is important for the entrepreneur to consider September 2004, pg. 56
http://money.cnn.com/magazines
strengths and weaknesses in the target market. /business2/business2_archive/
D. Step 4: Establishing Goals and Objectives 2004/09/01/379513/index.htm)
1. Before strategy decisions can be outlined, the K EY

T ER M
entrepreneur must establish realistic
marketing goals and objectives. Marketing goals and objectives
Statements of level of performance
2. These objectives answer the question desired by new venture
In the Press: Here are five tips for
“Where do we want to go?” developing a marketing plan from
3. These goals should specify such things as SCORE:
1. Determine specific goals and the
market share, profit, sales, market time frame in which you want to
penetration, pricing policy, number of achieve them.
distributors, awareness level, sales 2. Decide what tools can best help you
meet your goals and how they’ll be
promotion, and advertising support. used.
4. Not all goals and objectives must be 3. Come up with a budget that reflects
your goals.
quantified—nonquantitative goals can be set. 4. Delegate responsibility for
(i.e., change the name of the product or find implementing each segment of the
a new distributor.) plan. K EY
5. Monitor the results and make T ER M
5. It is a good idea to limit the number of goals adjustments as necessary.

(SCORE, “SCORE’s Top Marketing and Marketing strategy and action plan
to between six and eight. Specific activities outlined to meet the
Public Relations Tips” Entrepreneur
E. Step 5: Defining Marketing Strategy and Action December 6, 2005 venture’s business plan goals and
http://www.entrepreneur.com/ objectives
8-14
Programs growyourbusiness/scoreresources
/top5tips/article81286.html) Learning Objective 6.
1. Marketing strategy and action decisions To illustrate different creative strategies
answer the question “How do we get there?” that may be used to differentiate or
position the new venture’s products or
These decisions reflect on the marketing mix services.
variables.
2. Product or Service
a. This includes a description of the product
and may include more than the physical
characteristics.
b. It involves packaging, brand name, price,
warranty, image, service, delivery time,
features, and style.
3. Pricing
a. Prior to setting the price the entrepreneur
will need to consider three important
elements: costs, margins or markups, and
In the Press: Follow these 7 tips to
competition. increase the odds of successfully
b. Costs introducing a new product:
1. Study your competition.
i. An important initial consideration 2. Target the ideal customer.
in any pricing decision is to 3. Create a unique value
proposition.
determine the costs directly related 4. Define your marketing strategy
to the product or service. and tactics.
5. Test your concept and
ii. The entrepreneur would then need marketing approach.
to ascertain the approximate costs 6. Roll out your campaign.
7. Know your product’s lifecycle.
8-15
for overhead. (Gordon, Kim T. “Marketing Tips for

Launching a New Product” Entrepreneur
iii. Based on sales estimates, the February 21, 2005
entrepreneur would then add the http://www.entrepreneur.com/marketing
/marketingcolumnistkimtgordon/
unit costs of overhead to the cost of article76364.html)
manufacture or cost of goods to
determine the final price.
iv. It may also be necessary to consider
the role of competition and
markups.
c. Markups or Margins
i. In some industries retailers use a
standard markup to price goods in
their stores.
ii. Standard markups can be
ascertained from trade publications
or by asking suppliers.
iii. Lower markup in relation to
competitors can increase demand in
the short term.
d. Competition
i. When products cannot be easily
differentiated, the entrepreneur is
generally forced to charge the same
price as the competition.
ii. If the product has unique benefits,
8-16
the product may warrant a higher Entrepreneur in Action: Epocrates is a

Palm based application that helps
price. doctors determine proper medication
iii. New innovations may warrant a and other medical treatments. The
handheld Palm makes finding
higher price or skimming strategy information they need quick and
in order to recover some of its high convenient. By 2004 they had signed up
development costs. nearly 500,000 medical professionals
and had revenues of $23 million.
iv. In a nondifferentiated product (Schonfeld, Erick “Helping Doctors Go
market, the only justification for Digital” Business 2.0 July 2005, pg. 54
charging a higher price would be /business2/business2_archive/
additional services provided to the 2005/07/01/8265497/index.htm)
consumer.
v. If the product or service is unique
in the marketplace, the entrepreneur
has more flexibility.
vi. The final price is a combination of
total cost and profit margins;
changing one of these will impact
the other two.
4. Distribution
a. This factor provides utility, or makes the
product convenient to purchase when it is
needed.
Text Table 8.8
b. Market concentration “Major Considerations in Channel
Selection” (Text table on page 229)
i. If the market is highly
concentrated, the entrepreneur may
8-17
consider direct sales to the

In the Press: Distribution for a service
customer. means being in a location convenient to
ii. If the market is dispersed across a the potential clients. 24 Hour Fitness
has capitalized on many mid-sized
wide geographic area, the use of a grocery stores going out of business.
longer channel with wholesalers Their former store sites are the right size
and retailers may be necessary. and convenient location for 24 Hour
Fitness with high visibility and closeness
c. Attributes of the product (expensive, to neighborhoods. (Joseph, Nicole “New
perishable, or bulky) also affect the Muscle for Old Strip Malls” Business 2.0
July 2005, pg. 50
channel decision. http://money.cnn.com/magazines/
d. Middlemen such as wholesalers and business2/business2_archive/2005
/07/01/8265507/index.htm)
retailers can add important value to the
product.
i. Their costs of providing these
benefits are much lower because
they operate with economies of
scale.
ii. They can provide functions such as
storage, delivery, and sales staff
that would not be feasible for a start
up venture.
e. Environmental issues: Special
considerations and regulations regarding
such products as chemicals or food and
drug products are too costly for a small
start up to absorb.
8-18
f. Manufacturer’s representatives
i. Manufacturer’s representatives do
not take title or physical possession
of any products, but act on behalf
of noncompeting companies that
will share the cost of their services.
ii. They are only paid a commission
and only when a sale is made.
iii. Brokers are more common in food
or dry goods businesses.
g. It may be necessary to use more than one
channel to service customers more
efficiently and increase sales potential.
h. Channel decisions will also change over
time.
5. Promotion
a. The entrepreneur needs to inform
customers about the product’s
availability using advertising media such
as print, radio, or television.
b. Usually television is too expensive unless
cable television is a viable option.
Entrepreneur in Action: Hawthorne
c. Larger markets can be reached using Direct is an entrepreneurial firm that
direct mail, trade magazines, or produces a product many entrepreneurs
are beginning to rely on – the
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newspapers. infomercial. While not the least

expensive method of promotion – spots
d. A Web site may also create awareness range from $35,000 to $350,000 –
and promote the product and services of infomercials have launched such
products as Proactiv ($2.1 billion in
the venture. sales), Bowflex ($1.3 billion), and the
e. Owing to limited budgets entrepreneurs George Foreman's Grill ($1 billion).
(Mucha, Thomas “Stronger Sales in Just
who need to be creative in their 28 Minutes” Business 2.0 June 2005,
promotions are turning to social media. pg. 56
F. Marketing Strategy: Consumer versus Business- /business2/business2_archive/ AS SEEN IN BUSINESS NEWS: Web-
to-Business Markets 2005/06/01/8263460/index.htm) Based Marketing Research: Advice to
an Entrepreneur
1. Marketing strategy decisions for a consumer (Box in text on page 231)
product may be very different from the
decisions for a business-to-business product.
2. Consumer markets involve sales to
households for personal consumption.
3. Usually business-to-business marketing
strategy involves a more direct channel of
distribution than the consumer market.
a. Advertising and promotions for the
business-to-business market involve
more trade magazine advertising and
direct sales.
b. Attendance at trade shows can be one of
the most effective means to reach
potential buyers in one location.
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G. Step 6: Budgeting the Marketing Strategy

1. Planning decisions must also consider the
costs involved in the implementation of these
decisions.
2. This budgeting will be useful in preparing
Discussion point: In retrospection, can
the financial plan. students find this information in an
H. Step 7: Implementation of the Market Plan existing plan?
1. The marketing plan is meant to be a

commitment to a specific strategy.
2. A commitment to make adjustments as
needed by market conditions is also valuable.
3. Someone in the venture should be assigned
the responsibility of coordinating and
implementing the plan.
I. Step 8: Monitoring Progress of Marketing
Actions
1. Monitoring of the plan involves tracking
specific results of the marketing effort.
2. What is monitored is dependent on the
specific goals and objectives outlined.
3. It is important for the entrepreneur to be
prepared for contingencies.
VIII. IN REVIEW: SUMMARY.
8-21
See “Learning Objectives Revisited” below.
8-22
LEARNING OBJECTIVES REVISITED
Learning Objective 1: To understand the relevance of industry and competitive analysis

to the market planning process.
● The industry analysis section begins with broad based assessments of
environmental and industry trends then proceeds to more local market
trends.
● In addition to secondary source the entrepreneur may also want to undertake
a market research initiative to secure more specific information.
● Information for competitor analysis can be gathered using public
information; this can be complemented with a marketing research project.
Learning Objective 2: To describe the role of marketing research in determining

marketing strategy for the marketing plan.
● Marketing research may be conducted by the entrepreneur or by an external
supplier or consultant.
● Market research begins with definition of objectives.
Learning Objective 3: To illustrate an effective and feasible procedure for the

entrepreneur to follow in engaging in a market research study.
● Step 1: Defining the purpose or objectives.
● Step 2: Gathering data from secondary sources.
● Step 3: Gathering information from primary sources.
● Step 4: Analyzing and interpreting the results.
Learning Objective 4: To define the steps in preparing the marketing plan.

● Step 1: Defining the business situation.
● Step 2: Defining target market: opportunities and threats.
● Step 3: Considering strengths and weaknesses.
● Step 4: Establishing goals and objectives.
● Step 5: Defining marketing strategy and action programs.
● Step 6: Budgeting the marketing strategy.
● Step 7: Implementing of the marketing plan.
8-23
whole or part.
● Step 8: Monitoring progress of marketing actions.
Learning Objective 5: To explain the marketing system and its key components.
● The marketing system identifies the major interacting components, both
internal and external, that enable the firm to provide products to the
marketplace.
● Environmental factors, although largely uncontrollable, should be identified.
● Internal environmental factors—such as financial resources, management
team, suppliers, and company mission—are more controllable by the
entrepreneur.
Learning Objective 6: To illustrate different creative strategies that may be used to

differentiate or position the new venture’s products or services.
● Product or service includes a description of the product or service and
involves packaging, brand name, price, warranty, image, service, features,
and style.
● Pricing must consider factors such as costs, markups, and competition.
● Distribution provides utility to the customer and is affected by variables
such as market concentration, middlemen, and environmental issues.
● Through promotion the entrepreneur informs customers about the product’s
availability using advertising media such as print, radio, or television.
● Marketing strategy decisions for a consumer product may be very different
from the decisions for a business-to-business product.
KEY TERMS
Marketing goals and objectives: Statements of level of performance desired by new

venture
Marketing mix: Combination of product, price, promotion, and distribution and other
marketing activities needed to meet marketing objectives
Marketing plan: Written statement of marketing objectives, strategies, and activities to be
followed in the business plan
Market segmentation: Process of dividing a market into definable and measurable groups
for purposes of targeting marketing strategy
8-24
whole or part.
Market strategy and action plan: Specific activities outlined to meet the venture’s
business plan goals and objectives
Marketing system: Interacting internal and external factors that affect venture’s ability to
provide goods and services to meet customer needs
Situation analysis: Describes past and present business achievements of new venture
Target market: Specific group of potential customers toward which venture aims its
marketing plan
RESEARCH TASKS AND CLASS DISCUSSIONS
The text includes several topics for student research and class discussions. These questions
are open-ended, and the answers will be different for each student. There are no “correct”
answers.
Research tasks:
1. Participate in an online focus group. Then conduct research on the
advantages and disadvantages of conducting a focus group online versus a
“face-to-face” focus group.
2. Choose an industry and then use the library or the Internet to find data from
secondary sources that will be highly useful in developing a marketing plan.
3. Find an example of a small business that is using social media such as
Facebook, Twitter, or LinkedIn to promote their products or services. How
effective do you think this strategy is? Give some advantages and
disadvantages of the use of social media by this company.
4. Find a marketing strategy that is being used now that you believe will be
ineffective. Be prepared to justify your answer.
8-25
whole or part.
Class Discussions
1. What are the three most effective advertisements on television? Why are
they effective? What are the three least effective advertisements on
television? Why are they ineffective? Are they really ineffective if you have
been able to recall them?
Answer:
Student answers will vary. There could be various aspects in an
advertisement that makes it effective. The advertisement will need to focus
on getting the target market’s attention and creating an awareness of the
benefits that the product will provide.
2. Define a customer group and then invent a product and come up with a
price, promotion, and distribution strategy. Have some fun in coming up
with a particularly creative marketing mix.
Answer:
Student answers will vary. A customer group or target market may be
defined as a specific group of potential customers toward which venture
aims its marketing plan.
3. Segment the class into groups, label those groups, and determine a specific
demand that is unique to each group. You may be asked to reveal your
market (class) segmentation to the rest of the class, and people will have a
chance to respond to your classification.
Answer:
Student answers will vary.
4. Is marketing segmentation just a nice way of using “stereotypes” to sell your

products? Can people really be classified so easily into groups that share
common needs, wants, and demands?
Answer:
Student answers will vary. People can be classified into groups that share
common needs, wants, and demands but the process is not easy. This can be
achieved through the process of marketing research.
8-26
whole or part.

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4: To define the steps in preparing the marketing plan.

5: To explain the marketing system and its key components.

CHAPTER OUTLINE AND TEAC HING NOTES

OPENING PROFILE—Russell Rothstein

2. It begins with the broadest based assessment

CHAPTER OUTLINE AND TEAC HING NOTES

II. MARKETING RESEARCH FOR THE

CHAPTER OUTLINE AND TEAC HING NOTES

e. What is the most effective promotion

CHAPTER OUTLINE AND TEAC HING NOTES

b. Determine how much customers would product/service?

CHAPTER OUTLINE AND TEAC HING NOTES

and local media. waited. Six months later he had only

most successful ventures were focused AS SEEN IN BUSINESS NEWS:

CHAPTER OUTLINE AND TEAC HING NOTES

3. Interviewing or surveying is the most

CHAPTER OUTLINE AND TEAC HING NOTES

potential customers who participate in a

CHAPTER OUTLINE AND TEAC HING NOTES

be managed on a short-term basis.

IV. UNDERSTANDING THE MARKETING

CHAPTER OUTLINE AND TEAC HING NOTES

CHAPTER OUTLINE AND TEAC HING NOTES

interacting components, both internal and

CHAPTER OUTLINE AND TEAC HING NOTES

4. Company mission. Every new venture should

Discussion Point: List a number of K EY

1. The situation analysis is a review of where Situation analysis

CHAPTER OUTLINE AND TEAC HING NOTES

2. The entrepreneur should provide a review of

who the customer or target market will be. Target market

dividing the market into smaller Market segmentation

b. Divide the market into smaller groups Entrepreneur in Action: Faust

CHAPTER OUTLINE AND TEAC HING NOTES

c. Select segment or segments to target. Reebok. His attention to detail, focus on

1. Before strategy decisions can be outlined, the K EY

5. It is a good idea to limit the number of goals adjustments as necessary.

CHAPTER OUTLINE AND TEAC HING NOTES

CHAPTER OUTLINE AND TEAC HING NOTES

for overhead. (Gordon, Kim T. “Marketing Tips for

CHAPTER OUTLINE AND TEAC HING NOTES

the product may warrant a higher Entrepreneur in Action: Epocrates is a

CHAPTER OUTLINE AND TEAC HING NOTES

consider direct sales to the

CHAPTER OUTLINE AND TEAC HING NOTES

CHAPTER OUTLINE AND TEAC HING NOTES

newspapers. infomercial. While not the least

CHAPTER OUTLINE AND TEAC HING NOTES

G. Step 6: Budgeting the Marketing Strategy

1. The marketing plan is meant to be a

VIII. IN REVIEW: SUMMARY.

CHAPTER OUTLINE AND TEAC HING NOTES

See “Learning Objectives Revisited” below.

LEARNING OBJECTIVES REVISITED

Learning Objective 1: To understand the relevance of industry and competitive analysis

Learning Objective 2: To describe the role of marketing research in determining

Learning Objective 3: To illustrate an effective and feasible procedure for the

Learning Objective 4: To define the steps in preparing the marketing plan.

● Step 8: Monitoring progress of marketing actions.

Learning Objective 6: To illustrate different creative strategies that may be used to

Marketing goals and objectives: Statements of level of performance desired by new

RESEARCH TASKS AND CLASS DISCUSSIONS

4. Is marketing segmentation just a nice way of using “stereotypes” to sell your