Chapter 5

Market Your Business

5.1 Develop the Marketing Plan
5.2 The Marketing Mix─Product
5.3 The Marketing Mix─Price

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 Lesson 5.1

Developing the Marketing

Plan
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.

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 Vocabulary
 marketing
 marketing concept
 marketing mix
 marketing strategy
 marketing plan

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 What is Marketing?
 marketing
 all of the processes used to determine and
satisfy the needs of customers and the
company
 planning
 pricing
 promoting
 distributing
 selling

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  marketing concept
 Uses the needs of customers as the primary
focus of a product or service during:
 planning
 production
 distribution
 promotion

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  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

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  marketing mix
 reaching the target market through a
blend of:
 product
 price
 distribution
 promotion

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 Why is marketing important to a
business?

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 The Marketing Strategy
 marketing strategy
 a plan that identifies how business goals
will be achieved through marketing efforts
 product introduction or innovation
 pricing
 distribution
 promotion
 sales or market share
 projected profitability

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  marketing goals should:
 be achievable with your available resources
 be written following the SMART guidelines
 reflect short, medium and long-term goals

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 Short-Term Goals
 Achievements for the next year are the
focus of short-term goals.
 number of customers
 level of sales
 level of profits

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 Medium-Term Goals
 Achievements for the next two to five
years are the focus of medium-term
goals.
 Make sure your marketing strategy
facilitates achievement of medium-term
goals.

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 Long-Term Goals
 Achievements for a 5, 10, or 20 year
time horizon are the focus of long-term
goals.
 Long-term goals can help define
current marketing plans.

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 Why is goal setting important when
developing a marketing strategy?

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 Write Your Marketing Plan
 marketing plan
 defines your market
 identifies your customers and competitors
 outlines a strategy for attracting and
keeping customers
 anticipates changes

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  The marketing plan should include the
following information:
1. Product or Service
2. Target Market
3. Competition
4. Marketing Budget
5. Business Location
6. Pricing Strategy
7. Promotional Strategy
8. Distribution Strategy
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  Marketing plans should include
performance standards that are
measurable.
 Actual results should be compared to
performance standards quarterly.

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 Why is it important to put your
marketing plan in writing?

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 Lesson 5.2

The Marketing Mix─Product

Goals
 Explain how the marketing concept
affects decisions regarding the product
mix.
 Define and describe the importance of
product management.

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 Vocabulary
 product mix
 features
 brand
 positioning

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 The Marketing Concept and the
Product
 If you can convince your customers that
your products satisfy their needs better
than any competitor’s products, then
your products become a marketing tool
for your business.

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 Consumer-Driven Market
 The wants and needs of customers are
the most important consideration when
developing any product or marketing
effort.
 The U.S. has changed from a product-
driven market to a consumer-driven
market.
 Consumers are more educated.
 Competition includes the global market.
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 Product Mix
 product mix
 the different products and services a business
sells
 Entrepreneurs may carry some products
that are not profitable just to please
customers.
 A small percentage of the product
selection often makes up the majority of
sales revenue.
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 How does the marketing concept
affect decisions made about the
product mix?

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 Product Management

 There is more to a product than

consumers may realize.
 features
 branding
 packaging
 labeling
 positioning

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 Select Product Features
 features
 product characteristics that will satisfy
customer needs
 The target market should be
considered when selecting product
features.

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 Consider Branding, Packaging,
and Labeling
 brand
 the name, symbol, or design used to
identify your product
 package
 the box, container, or wrapper in which the
product is placed

Chapter 5 Entrepreneurship: Ideas in Action 5e

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  label
 where information about the product is given
on the package
 The brand, package, and label that you
choose for a product help differentiate it
from others on the market.

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 Position Your Products or
Services
 Different products and services within
the same category serve different
customer needs.
 positioning
 creating an image for the product in the
customer’s mind

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 Why is product management
important?

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 Lesson 5.3

The Marketing Mix─Price

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 strategies.

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 Vocabulary
 return on investment
 market share
 demand-based pricing
 cost-based pricing
 competition-based pricing
 psychological pricing
 discount pricing

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 Set Pricing Objectives
 price
 the amount a customer pays for a product
or service
 needs to be low enough that customers
buy from you
 needs to be high enough so revenues
exceed expenses

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  Price objectives might include:
 maximize sales
 discourage competition
 establish an image
 increase profits
 attract customers

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 Return on Investment
 investment
 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

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 Market Share
 market share
 a business’s percentage of the total sales
generated by all companies in the same
market
 The total market for a product must be
known in order for market share to be
determined.

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  Market Share =
Amount of Sales ÷ Total Market Size

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Chapter 1 Entrepreneurship: Ideas in Action 5e
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  There are multiple ways to increase
market share including:
 lowering prices
 advertising and promotion
 networking with potential customers

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 Why is it important to determine
pricing objectives before pricing
goods and services?

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 Determine a Price for a Product

 There is usually more than one price

that can be charged for a product.

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 Demand-Based Pricing
 demand-based pricing
 pricing that is determined by how much customers
are willing to pay for a product or service
 Survey potential 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.

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 Cost-Based Pricing
 cost-based pricing
 determined by using the wholesale cost of
an item as the basis for the price charged
 markup price
 determined by adding a percentage
amount to the wholesale cost of an item

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  Markup amount =
Wholesale cost × Percentage markup
 Retail Price =
Wholesale cost + Markup amount

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  markdown price
 determined by subtracting a percentage
amount from the retail price

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  Markdown amount =
Retail price × Percentage markdown
 Markdown Price =
Retail price - Markdown amount

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 Competition-Based Pricing
 competition-based pricing
 pricing that is determined by considering
what competitors charge for the same
good or service

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 List three methods for determining the
price to charge for a product.

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 Price a Service or an Idea
 To set a price for a service, consider
the following:
 the cost of items used in providing the
service
 the amount of time required to produce the
service

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 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

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 Bundling
 bundled pricing
 when all services are combined under one
charge

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 Pricing an Idea
 You can sell your ideas by
 working as a consultant
 licensing
 selling your idea to a company for the
development and launch of a new product
 licensing payments can occur through
 up-front payment
 royalties
 annual minimum
Chapter 1 Entrepreneurship: Ideas in Action 5e
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 Which method would be the best for a
housepainter to use to price services?
Why?

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 Pricing Strategies
 Pricing can make or break a business.
 Pricing techniques may change over
time.

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 Introductory Pricing
 price skimming
 used for products that are new and unique
 a high price is charged to cover product
development costs
 penetration pricing
 a low introductory price is charged to build
a strong customer base
 discourages competition

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 Psychological Pricing
 psychological pricing
 certain prices have an impact on how
customers perceive a product
 used most commonly in retail

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  Techniques used in psychological
pricing include the following:
 prestige pricing
 a high price to create a feeling of superiority
 odd/even pricing
 prices ending in odd numbers are perceived to be
bargains
 prices ending in even numbers suggest higher
quality

Chapter 5 Entrepreneurship: Ideas in Action 5e

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  price lining
 for a specific category of products
 offering different prices
 based on specific features and qualities
 promotional pricing
 temporarily offering lower prices to increase sales
 multiple-unit pricing
 pricing items in multiples
 consumers buy more units if they perceive a
bargain

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 Discount Pricing
 discount pricing
 offers customers a reduced price
 encourages purchases

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  Techniques used in discount pricing
include the following:
 cash discounts
 encourages early payment of invoices
 quantity discounts (volume discounts)
 offers lower prices based on the purchase of a
large quantity

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  trade discount
 price reductions granted by a manufacturer or
wholesaler to buyers in the same trade
 seasonal discounts
 used to sell seasonal merchandise out of season

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