ENTREPRENEURSHIP
Definition of Entrepreneurship
"Entrepreneurship is the purposeful
activity of an individual or a group of
associated individuals, undertaken to initiate,
maintain or aggrandize profit by production
or distribution of economic goods and
services" - A. H. Cole
"Entrepreneurship is based on purposeful
and systematic innovation. It included not
only the independent businessman but also
company directors and managers who
actually carry out innovative functions."
- Joseph A. Schumpeter
"Entrepreneurs are people who have the
abilities to see and evaluate business
opportunities, together with the necessary
resources to take advantage of them, and to
ensure appropriate action to ensure
success." - International Labour Organization
"An entrepreneur is a person who starts a
new venture, taking the initiative and risk
associated with it and does so by creating
something new to provide value to
customers." - David Holt
Other Definitions of Entrepreneurship
"Entrepreneurship is the process by which
individuals pursue opportunities without
regard to resources they currently control."
- Stevenson & Jarillo
"Entrepreneurship is the art of turning an
idea into a business." - Fred Wilson
Entrepreneurial Traits
 Innovation
- does something new and different, seeking
to do something different and unique, try to
meet the changing requirements of
customers.
 Risk-Bearing
- must be able to assume the risk involved in
the enterprise, needs to be a risk taker not
an avoider, should have ability of risk
bearing.
 Passion for the Business
- This passion typically stems from the
entrepreneur's belief that the business will
positively influence people's lives.
 Product/Customer Focus
- An entrepreneur's keen focus on products
and customers typically stems from the fact
that most entrepreneurs are, at heart, crafts
people.
 Execution Intelligence
- The ability to fashion a solid business idea
into a viable business is a key characteristic
of successful entrepreneurs.
 Achievement motivated
 Alert to opportunities
 Creative
 Decisive
 Energetic
 Has a strong work ethic
 Is a networker
 Initiative Taker
 Lengthy attention span
 Optimistic disposition
 Persuasive
 Responsive to criticism
 Self-confident & Self-starter
 Tenacious
 Tolerant of ambiguity
 Visionary
Entrepreneurs v/s Managers
 Entrepreneur refers to a person who
creates an enterprise, by taking financial
risk in order to get profit.
 Manager is an individual who takes
the responsibility of controlling and
administering the organization.
.
 Steps in the Entrepreneurial
Process
Once the decision to become an
entrepreneur is taken, the entrepreneurial
process begins.
• The 5 stages of entrepreneurial
process are:
1. Discovery
2. Concept Development
3. Resourcing
4. Actualization
5. Harvesting
Steps in the Entrepreneurial Process
1. Discovery: The stage in which the
entrepreneur generates ideas, recognizes
opportunities, and studies the market.
2. Concept Development: Develop a
business plan: a detailed proposal describing
the business idea.
3. Resourcing: The stage in which the
entrepreneur identifies and acquires the
financial, human, and capital resources
needed for the venture startup, etc.
4. Actualization: The stage in which the
entrepreneur operates the business and
utilizes resources to achieve its
goals/objectives.
5. Harvesting: The stage in which the
entrepreneur decides on business's future
growth/development, or demise.
Role of Entrepreneurship in
Economic Development
• Entrepreneurship is one of the most
important input in the economic
development of a country.
• The entrepreneur acts as a trigger head to
give spark to economic activities by his
entrepreneurial decisions.
• The entrepreneur plays a pivotal role not
only in the development of industrial sector
of a country but also in the development of
farm and service sector.
The crucial role played by the entrepreneurs
in the development of the Western countries
has made the people of underdeveloped
countries too much conscious of the
significance of entrepreneurship for
economic development.
Role of Entrepreneurship in Economic
Development
1. Promotes Capital Formation
2. Creates Large-Scale Employment
Opportunities
3. Promotes Balanced Regional Development
4. Reduces Concentration of Economic
Power
5. Wealth Creation and Distribution
6. Increasing Gross National Product and Per
Capita Income
7. Improvement in the Standard of Living 8.
Promotes Country's Export Trade
9. Induces Backward and Forward Linkages
10. Facilitates Overall Development
• Promotes Capital Formation
 Entrepreneurs promote capital
formation by mobilizing the idle
savings of public.
 They employ their own as well as
borrowed resources for setting up
their enterprises.
• Creates Large-Scale Employment
Opportunities
 Entrepreneurs provide immediate
large-scale employment to the
unemployed which is a chronic
problem of underdeveloped nations.
• Promotes Balanced Regional
Development
 Entrepreneurs help to remove
regional disparities through setting
up of industries in less developed
and backward areas.
 The growth of industries and
business in these areas lead to a
large number of public benefits like
road transport, health, education,
entertainment, etc.
• Reduces Concentration of Economic
Power
 Industrial development normally
lead to concentration of economic
power in the hands of a few
individuals which results in the
growth of monopolies.
 In order to redress this problem a
large number of entrepreneurs need
to be developed.
• Wealth Creation and Distribution
 It stimulates equitable redistribution
of wealth and income in the interest
of the country to more people and
geographic areas, thus giving
benefit to larger sections of the
society.
• Increasing Gross National Product and
Per Capita Income
 Entrepreneurs are always on the
look out for opportunities.
 They explore and exploit
opportunities,, encourage effective
resource mobilization of capital and
skill, bring in new products and
services and develops markets for
growth of the economy.
 In this way, they help increasing
gross national product as well as per
capita income of the people in a
country.
• Improvement in the Standard of Living
 Increase in the standard of living of
the people is a characteristic feature
of economic development of the
country.
 Entrepreneurs play a key role in
increasing the standard of living of
the people by adopting latest
innovations in the production of
wide variety of goods and services in
large scale that too at a lower cost.
• Promotes Country's Export Trade
 Entrepreneurs help in promoting a
country's export-trade, which is an
important ingredient of economic
development.
• Induces Backward and Forward Linkages
 Entrepreneurs like to work in an
environment of change and try to
maximize profits by innovation.
 When an enterprise is established in
accordance with the changing
technology, it induces backward and
forward linkages which stimulate the
process of economic development
in the country.
• Facilitates Overall Development
 Entrepreneurs act as catalytic agent
for change which results in chain
reaction by multiplying their
entrepreneurial activities, thus
creating an environment of
enthusiasm and conveying an
impetus for overall development of
the area.
Recognize and Understand the
Market
A market analysis provides insights into
potential customers and your competition.
How to Conduct a Market Analysis for
Your Business?
The core components of the market analysis
are:
1. Industry analysis: Assesses the
general industry environment in which
you compete.
2. Target market analysis: Identifies
and quantifies the customers that you
will be targeting for sales.
What is Industry Analysis?
• Industry analysis is a market assessment
tool used by businesses to understand the
competitive dynamics of an industry.
• Make sense of what is happening in an
industry
 demand-supply statistics
 degree of competition within the
industry
 future prospects of the industry
taking into account technological
changes, credit system within the
industry
  In your existing and new recruits so
Why carry out Industry Analysis?
that they can help you grow the
• Able to retain valuable and existing business.
customers It's critical to hire someone who has the
 understand the competitors required skills industry supports.
 understand the offerings in the  Without which you'll not be able to
market generate competitive advantage for
 understand how business can your organization
enhance its value creation
• Understanding the business and
 understand how company can
creating a big picture
provide more value to existing
 helps create a helicopter view for
customers
the business
• Attracting new customers  helps a business to see the big
 Understand the customers needs picture and create pixel view
 how many prospective customers  goals and short terms objectives to
are out there for their competitors work upon
to serve ?
 If offering is not what customers the Types of Industry Analysis
want then...
• Porter's 5 Forces
 Value proposition needs to be
changed • Broad Factors Analysis
 Industry Analysis not only about (PESTLAnalysis)
competitors but also about
• SWOT Analysis
customers
• Ensuring sustainability of business: Porter's 5 Forces
 IA will let business know what the
competitor is launching next • Introduced by Michael Porter in his 1980
 How to grasp business from book "Competitive Strategy: Techniques
competitors? for Analyzing Industries and
Competitors"
 How to create barriers for
competitors to enter? • According to Porter, analysis of the five
 How to become a threat for forces gives an accurate impression of the
competitors? industry and makes analysis easier.
 How to keep business sustainable
for next 20 to 30 years?
• Aligning organizational strategy in
culture
 IA gives you framework for strategy
 Without making a change in
corporate culture you will not be
able to create competitive
advantage.
 Industry analysis will help a business
 Intensity of Industry Rivalry
align its strategy with the
organizational culture. • The number of participants in the industry
and their respective market shares are a
• Attracting new and retaining existing
direct representation of the competitiveness
star performers
of the industry.
Industry analysis will help you understand
what skills you should look for: • Lack of differentiation in products tends to
add to the intensity of competition.

• High exit costs like high fixed assets,
government restrictions, labor unions, etc.
also make the competitors fight the battle a
little harder.
Rivalry Determinants:
 Industry Growth
 Fixed/storage costs
 Product Differences Brand Identity
 Exit Barriers
 Diversity of competitors
 Switching costs
 Threat of Potential Entrants
• This indicates the ease with which new
firms can enter the market of a particular
industry.
• If it is easy to enter an industry, companies
face the constant risk of new competitors.
• If the entry is difficult, whichever company
enjoys little competitive advantage reaps the
benefits for a longer period.
• Also, under difficult entry circumstances,
companies face a constant set of
competitors.
• To avoid new entrants, and to keep the
industry profitable, the industry needs
several entry barriers in place.
Entry Barriers:
 Economies of Scale
 Capital Requirements
 Proprietary Product differences
 Switching Costs
 Government Policy
 Access to Distribution
Economies of scale are cost advantages that
companies experience when production
becomes efficient. This happens because
costs are spread over a larger number of
goods. Companies can achieve economies of
scale by increasing production and lowering
costs'. There are two types of economies of
scale:
1. Internal Economies of Scale: These
originate within a company due to changes
in how the company functions or produces
goods.
2. External Economies of Scale: These are
based on factors that affect the entire
industry, rather than a single company.
The size of a business generally matters
when it comes to economies of scale. Larger
companies can achieve more cost savings
and higher production levels, leading to
lower per-unit costs. Economies of scale are
an important concept for businesses in any
industry, as they represent the cost savings
and competitive advantages larger
businesses have over smaller ones.
 Bargaining Power of Suppliers
• If the industry relies on a small number of
suppliers, they enjoy a considerable amount
of bargaining power.
• This can affect small businesses because it
directly influences the quality and the price
of the final product. E.g. What if Parachute
Coconut Oil's supplier Union says they want
to increase prices of raw materials by 20% ?
What will happen?
 Bargaining Power of Buyers
• The complete opposite happens when the
bargaining power lies with the customers.
• If consumers/buyers enjoy market power,
they are in a position to negotiate lower
prices, better quality, or additional services
and discounts.
• This is the case in an industry with more
competitors but with a single buyer
constituting a large share of the industry's
sales.
• Do you know why modern retail is taking
away the business from small retail outlets?
 It is because these modern retail
companies have huge bargaining
power due to bulk buying.
 Hence they are crushing the small
retailers.
 Modern retailers will have huge
bargaining power due to which a
small retailer can consider them as a
huge problem when establishing his
own business.
  Threat of Substitute
Goods/Services
• The industry is always competing with
another industry in producing a similar
substitute product.
• all firms in an industry have potential
competitors from other industries.
• This takes a toll on their profitability
because they are unable to charge
exorbitant prices.
• Substitutes can take two forms:
 Products with the same
function/quality but lesser price, or
 Products of the same price but of
better quality or providing more
utility.
Broad Factors Analysis
(PEST Analysis)
• Broad Factors Analysis, also commonly
called the PESTLE Analysis stands for
Political, Economic, Social, Technological,
Legal, and Environmental. PESTLE analysis is
a useful framework for analyzing the external
environment.
(PEST Analysis) To use PEST as a form of
industry analysis, an analyst will analyze each
of the 4 components of the model. These
components include:
Political
• Political factors that impact an industry
include specific policies and regulations
related to things like taxes, environmental
regulation, tariffs, trade policies, labor laws,
ease of doing business, and the overall
political stability
Economic
• The economic forces that have an impact
include inflation, exchange rates (FX).
interest rates, GDP growth rates, conditions
in the capital markets (ability to access
capital), etc.
Social
• The social impact on an industry refers to
trends among people and includes things
such as population growth, demographics
(age, gender, etc), and trends in behavior
such as health, fashion, and social
movements.
Technological
• The technological aspect of PEST analysis
incorporates factors such as advancements
and developments that change the way a
business operates and the ways in which
people live their lives (ie. advent of the
internet).
SWOT Analysis
SWOT Analysis stands for Strengths,
Weaknesses, Opportunities, and Threats.
It can be a great way of summarizing various
industry analysis methods and determining
their implications for the business in
question.
Internal
 Internal factors that already exist and
have contributed to the current position
and may continue to exist.
External
 External factors which are contingent
events. Assess their importance based on
the likelihood of them happening and
their impact on the company. Also,
consider whether management has the
intention and ability to take advantage of
the opportunity/avoid the threat.
A market analysis is a thorough
assessment of a market within a specific
industry. These analyses have many benefits,
such as reducing risk for your business and
better informing your business decisions. A
market analysis can be a time-intensive
process, but it is straightforward and easy to
do on your own in seven steps.
To perform a market analysis for your
business, follow the steps:
What does a market analysis include?
A thorough marketing analysis should
answer the following questions:
•Who are my potential customers?
•What are my customers’ buying habits?
•How large is my target market?
•How much are customers willing to pay for
my product?
•Who are my main competitors?
•What are my competitors’ strengths and
weaknesses?
These are some other major benefits of
conducting a market analysis:
1. Risk reduction: Knowing your market
can reduce risks in your business, since you’ll
have an understanding of major market
trends, the main players in your industry,
and what it takes to be successful, all of
which will inform your business decisions. To
help you further protect your business, you
can also conduct a SWOT analysis, which
identifies the strengths, weaknesses,
opportunities and threats for your business.
2. Targeted products or services: You
are in a much better position to serve your
customers when you have a firm grasp on
what they are looking for from you. When
you know who your customers are, you can
use that information to tailor your business’s
offerings to your customers’ needs.
3. Emerging trends: Staying ahead in
business is often about being the first to
spot a new opportunity or trend, and using a
marketing analysis to stay on top of industry
trends is a great way to position yourself to
take advantage of this information.
4. Revenue projections: A market
forecast is a key component of most
marketing analyses, as it projects the future
numbers, characteristics and trends in your
target market. This gives you an idea of the
profits you can expect, allowing you to
adjust your business plan and budget
accordingly.
5. Evaluation benchmarks: It can be
difficult to gauge your business’s success
outside of pure numbers. A market analysis
provides benchmarks or key performance
indicators (KPIs) against which you can judge
your company and how well you are doing
compared to others in your industry.
6. Context for past mistakes: Marketing
analytics can explain your business’s past
mistakes or industry anomalies. For example,
in-depth analytics can explain what
impacted the sale of a specific product, or
why a certain metric performed the way it
did. This can help you avoid making those
mistakes again or experiencing similar
anomalies, because you’ll be able to analyze
and describe what went wrong and why.
Marketing optimization: This is where
an annual marketing analysis comes in
handy – regular analysis can inform your
ongoing marketing efforts and show you
which aspects of your marketing need work,
and which are performing well in
comparison to the other companies in your
industry.
A business vicinity map is a type of map
that depicts the location of your business
and its surrounding area, including
landmarks and establishments. It helps
professionals, architects, and engineers to
get an accurate reference to the area around
their project sites, such as highways and
roads. It can also be used to determine
whether your business will be successful in
the current location and to promote your
business by giving easy directions to your
business.
A business vicinity map depicts the
landmarks and establishments around your
business to determine whether your
business will be successful in the current
location. It also helps promote your business
by giving easy directions to your business.
Customers are, first and foremost, the
lifeblood of every company; without
them, there would be no business.
Businesses must use every effort to attract
and retain customers since they are the
source of the income required for survival
and expansion.
Is the customer always right?
The phrase ‚the customer is always right‛ is
a slogan that was popularized by successful
retailers and service providers.
 It suggests that businesses should
prioritize customer satisfaction and
cater to their needs.
However, it is important to note that this
phrase is not meant to be taken literally.
In reality, customers are not always right,
but their opinions and feedback are valuable
for businesses to improve their products and
services .
Aside from that, saying the customer is
always right doesn't make it true.
 Sometimes customers are wrong, and
employees need to be trained to
handle these sticky situations. Taking
ownership of an issue the business
isn't accountable for can lead to even
more unrealistic expectations and set
your team up for failure.
Customer requirements refer to the
specifications or features of a product or
service that are deemed necessary by
customers.
 These requirements motivate
customers to buy a product or service.
To determine customer requirements,
companies can research their target
market to understand their desires
and needs.
20 Types of Customer
Requirements
1. Price
The price of a product or service can affect
customers' purchasing decisions, as each
customer has unique budget allowances
or constraints. They may compare prices
between competitors to determine which
offers the best deal or decide whether they
are willing to pay for quality versus
convenience. Companies must understand
their customers to set the right price or
discounts. However, these companies must
also price their product or services high
enough to ensure they make money.
For example, a haircare company might
offer a bundle of three products for a
discount. While the customer saves money
because the bundle costs less than buying
products separately, the company increases
its revenue because the value of their
purchase ends up being larger.
2. Quality
The quality of a product or the materials
used to manufacture it can impact
purchasing decisions.
The definition of quality can vary but may
refer to its durability. A customer may
consider a highquality product to be one
that lasts a significant amount of time, rather
than one that breaks easily. Quality can also
depend on the customer's preferences.
 For example, they may prefer buying
organic foods because they believe those
foods have benefits that create a higher
quality product. Similarly, a customer may
want to purchase a sweater made out of a
natural fiber such as cashmere rather than a
synthetic material like polyester. Both
options serve the same function, but the
customer has a particular opinion on which
materials provide more quality.
3. Functionality
Every product or service has a purpose,
which is its function. Often, customers
require products and services that solve
specific problems or meet specific goals or
desires. For example, a customer may want
to purchase a couch that they not only can
sit on but can also convert into a bed for
sleeping.
Functional requirements are an essential
component of software development—these
requirements define what the system does. If
a company creates an app, they want to
ensure that it accomplishes the tasks desired
by customers. For example, the user can click
a button to start watching a video.
4. Reliability
When customers purchase something, they
want the ability to rely on it to perform its
intended function. Along with reliability,
customers seek durability. They expect that
the product or service will last a reasonable
lifespan or throughout continued use.
Companies looking to provide reliability
often need to test their products and
services to ensure they can withstand
potential challenges. For example, when a
customer purchases a car, they expect they
can drive it often and in all types of weather.
Therefore, car manufacturers perform tests
to ensure their models can handle varying
temperatures and road conditions.
5. Performance
Customers not only require that a product or
service performs its intended purpose but
also that it does it well. The definition of
good performance varies, but examples may
include its speed or accuracy when
conducting tasks. Customers also purchase
products specifically to improve the
performance of another product. For
example, a person who plays video games
on their computer can buy a new graphics
card to enable higher video quality.
6. Sustainability
Some customers seek products that do not
have negative environmental impacts. In
response, companies launch products that
use less energy to manufacture or recycled
materials. Or they may sell products that
promote sustainability.
For example, car manufacturers sell
hybrid or electric models that can help
reduce pollution. Another company might
notice customers' call for sustainability and
begin selling glass straws, which provides a
reusable alternative to plastic straws.
7. Transparency
Customers require transparency, which
means they want to know what to expect
when purchasing a product or service. To
enable transparency, companies must avoid
hiding information, such as fees or
ingredients, when promoting their offerings.
One way to promote transparency is
through direct communication, such as
companies that use social media to inform
customers about any service outages.
Enabling customers to publish online
product reviews is another form of
transparency. Establishing transparency can
be an advantage for companies because it
creates trust, which can lead to other
benefits such as customer loyalty.
8. Convenience
Customers seek products and services
that can save them time and effort.
Companies can meet these requirements by
understanding how customers use their
offerings and determine ways to make
them even easier to use.
Some, for example, provide convenience
by offering same-day delivery. By giving
customers the ability to make a purchase
online and have it delivered to their home, it
saves them the time and effort of having to
go to the store, find the item and transport it
home.
9. Efficiency
Somewhat similar to convenience, customers
seek products or services that can help
streamline everyday processes.
For example, the checkout line at a store
can become a timeconsuming aspect of
shopping. Some stores implement self-
service stations, allowing customers to
bypass the traditional lines and quickly pay
for their items. Another option is the use of
apps that let customers pay directly from
their phones. Similarly, this can speed up the
payment process because customers only
need to pull out their phones rather than go
into their wallet and find cash or a credit
card.
10. Risk reduction
When making purchases, some customers
consider risk—for example, they want to
ensure that they will not lose money. To
ease such concerns, many companies
offer and promote return or guarantee
policies. These policies may help attract
customers and make them feel more
comfortable making a purchase.
For example, a shoe company might
provide customers a 30-day window to try
their purchase. If the customer determines
they do not like the shoes, they can return
the product and receive their money back
11. Safety
Safety can be an important consideration
for customers, as they want to ensure the
product does not cause harm to them or
those around them. Companies can
promote products by confirming they meet
relevant safety regulations or standards.
For example, a person might buy a
particular car based on how well it performs
in crash tests. Or a parent purchasing a toy
for their young child looks at features to
assess whether their children can play with it
safely—for example, they want a toy that
does not have sharp edges or small pieces
that pose a choking hazard.
12. Compatibility
When customers require compatibility, they
want the product or service to work or
integrate with another one. Often, they
want to ensure compatibility with something
that they already have access to or own.
Companies often include compatibility
details to help customers make purchasing
decisions.
For example, a company that sells
memory cards provides a chart or list that
tells customers which of its memory cards
are compatible with specific models of
digital cameras.
13. Options
Every customer is unique, so they require
options when making purchases. Multiple
options allow companies to meet the
needs of various customers rather than
one specific type.
For example, an apparel company offers
a t-shirt style in a variety of colors and
patterns for customers to choose from.
Streaming services often offer multiple
subscription plans that vary in price, with
some offering ad-free or higher video
quality features. With these options,
customers weigh the cost of the service
versus getting additional features.
14. Control
Customers may seek control when
interacting with a service or making a
purchase. Control can sometimes overlap
with the options requirement, as multiple
options allow customers to control which
subscription plan they purchase from a
company, for example. Companies can also
provide control to their customers by
enabling them to customize their
purchases. For example, a shoe company
may offer a fully customizable style of shoes.
Customers can choose from a variety of
colors, patterns and other features to create
a unique product that suits their preferences.
15. Experience
Defining what constitutes a positive
customer experience will vary on the
company and its offerings, so customer
research is essential. Generally, a positive
experience refers to products or services
that are easy to understand and use. The
customer experience is crucial when
developing software or websites, for
example. Users must have the ability to
easily navigate the website to achieve their
goals, such as purchase a product or find an
article to read.
What are the first two
fundamental questions a potential
investor is going to ask?
1. How much profit do I make from
this venture or investment?
2. When can I recover my initial
investment?
Profitability is the ability of a company
or business to generate revenue over and
above its expenses. It is usually measured
using ratios like gross profit margin, net
profit margin, etc.
 These ratios help analysts, shareholders,
and stakeholders to analyze and
measure the company’s ability to
generate revenue.
The payback period – refers to the
amount of time it takes to recover the cost
of an investment.
 It is the length of time an investment
reaches a breakeven point.
 The payback period is calculated by
dividing the amount of the investment
by the annual cash flow.
 It is a useful metric for investors and
corporations to calculate investment
returns and make informed decisions.
 Please note that the payback period
does not consider the time value of
money.
 It is one of the many metrics used in
corporate finance to evaluate the
profitability and viability of an
investment

Profitability analysis helps analysts,

shareholders, and stakeholders evaluate the
company’s capacity to generate revenue and
cover operational costs.
By adding value to the balance sheet and
demonstrating the ability to undertake
growth projects, profitability contributes to
business growth.

Return on Investment (ROI) is a popular

profitability metric used to evaluate how well
an investment has performed.
 It is expressed as a percentage and
calculated by dividing an investment’s
net profit (or loss) by its initial cost or
outlay.
 ROI can be used to compare the
efficiency of different investments and
rank them. However, it does not
consider the holding period or passage
of time, so it may miss opportunity
costs of investing elsewhere.
 ROI is a useful measurement for
investors to assess the profitability of an
investment and make informed
decisions.

Marketing Mix
What is Marketing Mix?
 a set of actions, tactics, strategies, and tools
that a company uses to promote its brand and
products within their market.
 It is about putting the right product or a
combination thereof in the place, at the right
time, and at the right price.
Why is Marketing Mix Important?
Marketing Mix provides a roadmap for your
business objectives. It keeps you on track, while
keeping your target market in the forefront of your
mind.
Marketing Mix will help make sure the business is
marketing the right product, to the right
people, at the right price and time.
PRODUCT
A product is what a seller must sell and what a
buyer must buy to satisfies the needs of customers.
Customers purchase products because they realize
some benefits out of the product. A marketer can
satisfy the needs and wants of his customers by
‘offering something’ (good or service) in exchange
for money. And this ‘offering’ is basically called
product.
Stanton defines, ‚A product is a set of tangible
and intangible attributes, including packaging,
colour, price, manufacturer’s and retailer’s services,
which the buyer may accept as offering for his
satisfaction or wants or needs‛.
Alderson defines, ‚A product is a bundle of
utilities consisting of various product features and
accompanying services.‛
According to Philip Kotler, ‚A product is
anything that can be offered to a market for
attention, acquisition, use or consumption that
might satisfy a want or need. It includes physical
objects, services, persons, places, organization and
ideas‛.
According to Cravens, Hills and Woodruff
‚Product is anything that is potentially valued by
a target market for the benefits or satisfactions it
provides, including objects, services, organizations,
places people and ideas‛.
Product has the want satisfying attributes which
drive a customer to purchase the product. It is
something more than a physical product. This is
because a product encompasses several social and
psychological attributes and other intangible
factors which provide satisfaction to the consumer.
Product Life Cycle
A product life cycle is the amount of time a
product goes from being introduced into the
market until it's taken off the shelves. There are
four stages in a product's life cycle— introduction,
growth, maturity, and decline.
1. Introduction Stage – In this stage, the
product is being released into the market.
Marketing and promotion are at a high - and the
company often invests the most in promoting the
product and getting it into the hands of
consumers. Costs are generally very high and there
is typically little competition. The principal goals of
the introduction stage are to build demand for the
product and get it into the hands of consumers
aiming to attain growing popularity.
2. Growth – In this stage, consumers are already
taking to the product and increasingly buying it.
The product concept is proven and is becoming
more popular - and sales are increasing. Other
companies become aware of the product and its
space in the market, which is beginning to draw
attention and increasingly pull in revenue. If
competition for the product is especially high, the
company may still heavily invest in advertising and
promotion of the product to beat out competitors.
As a result of the product growing, the market
itself tends to expand.
3. Maturity – When a product reaches maturity,
its sales tend to slow or even stop - signalling a
largely saturated market. At this point, sales can
even start to drop. Pricing at this stage can tend to
get competitive, signalling margin shrinking as
prices begin falling due to the weight of outside
pressures like competition or lower demand.
Marketing at this point is targeted at fending off
competition, and companies will often develop
new or altered products to reach different market
segments. In this stage, saturation is reached, and
sales volume is very successful. Companies often
begin innovating to maintain or increase their
market share, changing or developing their
product to meet with new demographics or
developing technologies.
4. Decline – In the decline stage, product sales
drop significantly and consumer behavior changes
as there is less demand for the product. The
company's product loses more and more market
share, and competition tends to cause sales to
deteriorate.
“What can I do to offer a better product to this
group of people than my competitors”
In developing the right product, the following
questions must be answered:
1. What does the client want from the service or
product?
2. How will the customer use it?
3. Where will the client use it?
4. What features must the product have to meet
the client’s needs?
5. Are there any necessary features that you
missed out?
6. Are you creating features that are not needed
by the client?
7. What’s the name of the product?
8. Does it have a catchy name?
9. What are the sizes or colors available?
10. How is the product different from the
products of your competitors?
11. What does the product look like?
Why is Product the most important in
7 P’s of marketing?
Importance of PRODUCT in marketing mix
The product is one of the most important elements
of the 7Ps of the marketing mix. It refers to a good
or service that satisfies the needs and wants of
customers. It is offered in the market by an
organization to earn revenue by meeting the
requirements of customers. It is regarded as an
asset of an organization and referred to as the
backbone of marketing mix. Hence, utmost care
should be taken to handle product decisions. A
bad product not only generates bad name for the
firm but also negatively affects the price set for the
product, discourages the channel members and
reduces the believability of the promotional
measures. Other elements of marketing mix such
as. price, promotion and place are complementary
to the product.
PRICE
What is the definition of PRICE in Marketing
Mix?
Price: refers to the value that is put for a product.
It depends on costs of production, segment
targeted, ability of the market to pay, supply –
demand.
Low pricing hinders your business’ growth while
high pricing kicks you out of the competition.
What is the role of Price in Marketing Mix?
Pricing is the only element in the marketing mix
that generates a turnover for the organization
which is REVENUE. The other 3 elements of the
marketing mix are the variable cost for the
organization as product, promotion and place.
Price must support the other elements of the
marketing mix. Pricing is difficult and must reflect
supply and demand relationship. Pricing a
product too high or too low could mean lost sales
for the organization.
Why is Pricing an important element in
Marketing Mix?
 Price is important to marketers because it
represents marketers’ assessment of the value
customers see in the product or service and are
willing to pay for a product or service.
 While product, place and promotion affect
costs, price is the only element that affects
revenues, and thus, a business’s profits. Price
can lead to a firm’s survival or demise.
 Adjusting the price has a profound impact on
the marketing strategy, and depending on the
price elasticity of the product, it will often
 affect the demand and sales as well. Both a
price that is too high and one that is too low
can limit growth. The wrong price can also
negatively influence sales and cash flow.
PRICING STRATEGIES
A pricing strategy is a model or method used to
establish the best price for a product or service. It
helps the company choose prices to maximize
profits and shareholder value while considering
consumer and market demand.
3 TYPES OF PRICING STRATEGIES
1. Demand-based pricing, also known as
customer-based pricing, is any pricing method
that uses consumer demand based on perceived
value –as the central element.
6 Types of Demand-based Pricing:
a. price skimming;
b. price discrimination;
c. psychological pricing;
d. bundle pricing’;
e. penetration pricing; and
f. value-based pricing
A. Price Skimming is a pricing strategy in which
the producer sets a high introductory price to
attract buyers with a strong desire for the product
and the resources to buy it, and then gradually
reduces the price to attract the next and
subsequent layers of the market. It involves setting
a high price before other competitors come into
the market. This is often used for the launch of a
new product which faces little or no competition –
usually due to some technological features.
Example, when IPhone4s was introduced in the
market 4 years ago, its price was huge. Few people
could actually afford an IPhone. With the passing
of time, prices of the IPhone4s have decreased
gradually, such that nowadays many people can
afford an iPhone.
B. Price Discrimination is the practice of
charging a different price for the same good or
service.
Three Types of Price Discrimination
a. first-degree – alternatively known as perfect
price discrimination, the company set flexible
prices for products or services based on current
market demands.
Example: During high demand periods like
holiday season and weekends, prices go up
with a rise in demand, and vice versa.
b. second-degree – means charging a different
price for different quantities.
Example - quantity discounts for bulk purchases.
c. third-degree – means charging a different price
to different consumer groups.
Examples: cinema goers can be subdivided into
adults and children; telephone supply. (most
common)
C. Psychological Pricing is the practice of
setting prices slightly lower than a whole number.
This practice is based on the belief that customers
do not round up these prices, and so will treat
them as lower prices than they really are.
An example of psychological pricing is an item
that is priced P10.99 but conveyed by the
consumer as 10 pesos and not 11 pesos, treating
P10.99 as a lower price than P11.00.
D. Price Bundling is a strategy where businesses
combine multiple different products or services
into one package at a single price. These
complementary products are typically sold at a
lower price than if they were purchased
individually.
Common examples include option packages on
new cars, value meals at restaurants and cable TV
channel plans.
E. Penetration Pricing is a marketing strategy
used by businesses to attract customers to a new
product or service by offering a lower price during
its initial offering. The lower price helps a new
product or service penetrate the market and attract
customers away from competitors.
Examples include an online news website offering
one month free for a subscription-based service
or a bank offering a free checking account for six
months.
F. Value-based Pricing is setting a price based
on how much the customer believes what you're
selling is worth. In its literal sense, it implies basing
pricing on the product benefits perceived by the
customer instead of on the exact cost of
developing the product. For example, a painting
may be priced as much, more than the price of
canvas and paints: the price in fact depends a lot
on who the painter is.
2. Cost-plus pricing is a pricing strategy in
which the selling price is determined by adding a
specific markup to a product's unit cost.
3. Competitive Pricing Strategy is a method
of pricing that calls for price-setting based on
prices charged by competitors.
Three choices:
a. Price the product lower,
b. Price the product higher, or
c. Same price set by the competitors
PLACE
What Is Place (Physical Distribution) In
Marketing Mix?
Place is the process of moving products from the
producer to the intended user. In other words, it is
how your product is bought and where it is
bought. This movement could be through a
combination of intermediaries such as distributors,
wholesalers and retailers.
What is a Distribution Channel?
A distribution channel can be defined as the
activities and processes required to move a
product from the producer to the consumer. Also
included in the channel are the intermediaries that
are involved in this movement in any capacity.
These intermediaries are third party companies
that act as wholesalers, transporters, retailers and
provide warehouse facilities.
Types of Distribution Channels
1. Direct 2. Indirect 3. Dual Distribution
1. DIRECT DISTRIBUTION CHANNEL
In this channel, the manufacturer directly provides
the product to the consumer. In this instance, the
business may own all elements of its distribution
channel or sell through a specific retail location.
Internet sales and one on one meetings are also
ways to sell directly to the consumer. One benefit
of this method is that the company has complete
control over the product, its image at all stages
and the user experience.
2. INDIRECT DISTRIBUTION CHANNEL
In this channel, a company will use an intermediary
to sell a product to the consumer. The company
may sell to a wholesaler who further distributes to
retail outlets. This may raise product costs since
each intermediary will get their percentage of the
profits. This channel may become necessary for
large producers who sell through hundreds of
small retailers.
3. DUAL DISTRIBUTION
In this type of channel, a company may use a
combination of direct and indirect selling. The
product may be sold directly to a consumer, while
in other cases it may be sold through
intermediaries.
There are four main types of
intermediaries:
1. Agents. The agent is an independent entity
who acts as an extension of the producer by
representing them to the user. An agent never
actually gains ownership of the product and usually
make money from commissions and fees paid for
their services.
2. Wholesalers. They are also called
independent entities. But they actually purchase
goods from a producer in bulk and store them in
warehouses. These goods are then resold in
smaller amounts at a profit. Wholesalers seldom
sell directly to an end user. Their customers are
usually another intermediary such as a retailer.
3. Distributors. Like wholesalers, distributors
differ in one regard. A wholesaler may carry a
variety of competition brands and product types. A
distributor, however, will only carry products from
a single brand or company. A distributor may have
a close relationship with the producer.
4. Retailers. Wholesalers and distributors will sell
the products that they have acquired to the retailer
at a profit. Retailers will then stock the goods and
sell them to the ultimate end user at a profit.
How Important is PLACE in Marketing Mix?
 Place in marketing mix plays a major role in the
distribution and flow of goods, because it
ensures that the product is in the right place
at the right time. Without proper product
placement, customers are likely to look
elsewhere for what they need or desire.
PROMOTION
What is PROMOTION in Marketing Mix?
In marketing, promotion refers to any type of
marketing communication used to inform or
persuade target audiences of the relative merits of
a product, service, brand or issue. It is the way the
business makes its products known to the
customers, both current and potential. It is also
used to persuade customers that the product is
better than competing products and to remind
customers about why they may want to buy.
TYPES OF PROMOTION
1. Advertising
2. Direct Marketing
3. Sales Promotion
4. Personal Selling
5. Public Relation
1. Advertising
 Means to advertise a product, service or a
company with the help of television, radio or
social media. It helps in spreading awareness
about the company, product or service.
Advertising is communicated through various
mass media, including traditional media such as
newspapers, magazines, television, radio,
outdoor advertising or direct mail; and new
media such as search results, blogs, social
media, websites or text messages.
 It is another way to reach your audience. It
helps build awareness and create a positive
image of your business. Instead of PR
competing, it can support initiatives in a way
advertising and marketing cannot.
Why is PROMOTION Important in Marketing
Mix?
Role of Promotion in Marketing Mix
 Promotion is the voice of your company which
send out your brand’s message loud and
clear to the audience. Various media platforms
can be used to promote your company and
brand. They include television, radio, shopping
outlets, billboards, magazines, and social
media.
 The goal of promoting a product is to reveal
to consumers why they need it and why they
should pay a certain price for it.
 It is a key element in putting across the
benefits of your product or service to the
customers.

2. Direct Marketing Benefits of Promotion in Business

 Is a form of advertising where organizations Promoting your brand will help you in many
communicate directly to customers through a different ways:
variety of media including cell phone text
• Increase brand awareness
messaging, email, websites, online adverts,
• Provide appropriate information
database marketing, fliers, catalog distribution,
• Increase Customer Traffic
promotional letters and targeted television,
• Build sales and profits
newspaper and magazine advertisements as
well as outdoor advertising.

3. Sales Promotion
 Is a marketing strategy where the product is
promoted using short-term attractive initiatives
TARGET
to stimulate its demand and increase its sales.
MARKET
 This strategy is usually brought to use in the
following cases such as to introduce new
products, sell out existing inventories, attract
more customers, and to lift sales temporarily.

4. Personal Selling
 Is a method where companies send their agents
to the consumer to sell the products personally. PEOPLE
It is where businesses use people (the "sales
force") to sell the product after meeting face- - This includes everyone who is involved in the
to-face with the customer. product or service whether directly or indirectly.
 Great examples include cars, office equipment
(e.g. photocopiers) and many products that are
sold by businesses to other industrial
customers.

5. Public Relation (PR)

 Is the process of maintaining a favorable image
and building beneficial relationships between
an organization and the public communities,
groups, and people it serves.
 Importance of PEOPLE in
Marketing Mix
 The Building Blocks of a Marketing Mix
Strategy
1. People are the ones who make the products
2. People are the ones who bring the products to
the customers
3. People are the ones who talk to the customers
PACKAGING
Packaging is the science, art and technology of
enclosing or protecting products for distribution,
storage, sale, and use. It also refers to the process
of designing, evaluating, and producing
packages.
 Packaging is an integral marketing strategy to
glamorize a product to attract the
consumer’s attention. Many consumers will
judge a product by its packaging before buying
it, so creating compelling and alluring
stationary will build first time buyers’ intrigue.
Importance Of Packaging
 Packaging is important because it preserves
and protect the product throughout the
manufacturing, transport, storage, and
consumption chain. Good packaging
guarantees the health and safety of
consumers.
POSITIONING
Positioning is a brand’s unique way of providing
value to its customers. Where does a brand sit in
the hearts and minds of customers?
 Refers to an overall strategy that "aims to
make a brand occupy a distinct position,
relative to competing brands, in the mind of
the customer".
 Positioning defines how the brand’s offering is
unique, how it provides a distinct benefit to
customers. Businesses use marketing to
communicate their market position to
customers and influence their perception of the
brand’s products or services.

Examples:
FUNCTIONS/PURPOSE OF PACKAGING
Lux, print
1. To protect the product from damage.
advertisement
Product packaging not only protects the product
(1916) positioned
during transit from the manufacturer to the retailer,
the soap as a
but it also prevents damage while the product sits
gentle product for
on retail shelves.
washing delicate
2. Packaging Facilitates Purchase Decision. clothing
Information contained on a package may push the
Within the prestige
reader to buy the product without ever having to
vehicle category,
speak to a store clerk.
Volvo positions
3. Packaging can differentiate one brand itself as a car
of product from another brand. Packaging offering superior
helps consumers to identify the product as it sits safety and
among the competition’s products on store performance
shelves.
J & J Baby Bath
4. Information transmission. Packages and Products are
labels communicate how to use, transport, recycle, positioned against
or dispose of the package or product. a user or segment,
5. Marketing. The packaging and labels can be namely children
used by marketers to encourage potential buyers
to purchase the product.
Importance of Positioning
6. Convenience. Packages can have features that
 Positioning creates an image of the company’s
add convenience in distribution, handling, stacking,
products in the mind of consumers,
display, sale, opening, re-closing, use, dispensing,
highlighting the most important benefits that
reuse, recycling, and ease of disposal.
differentiate the product from similar products
7. Security. Packages can be made with improved in the market. It establishes the image or
tamper resistance to deter tampering and can have identity of a brand or product so that
tamper-evident features to help indicate consumers perceive it in a certain way.
tampering.