CHAPTER 11

Unique Marketing Issues

Group 1
 Soe Thu Aung

Learning Objectives
After studying this chapter you should be ready to:
1) Explain the three steps (segmenting the market, selecting a target market,
and establishing a unique market position) entrepreneurial firms use to
identify their customers.
2) Define a brand and explain why it is important to an entrepreneurial firm’s
marketing efforts.
3) Identify and explain the 4Ps of marketing activities (product, price,
promotion, and place) used by entrepreneurial firms.
4) Describe the seven-step sales process an entrepreneurial firm uses to
identify prospects and close sales.
Selecting a Market and establishing a position
• To succeed, a new firm must know who its customers are and how to
reach them.
• A firm uses a three-step process to determine who its customers are.
• Target market is the limited group of individuals or businesses that it
tries to appeal to.
• Important - new venture choose its target market and position inside
in its target market
I. Segmenting the Market
• study the industry in which the firm intends to compete and
determine the different potential target markets in that industry
called market segmentation
• only enough resources to target one market segment
• Markets can be segmented in many ways, such as by
geography (city, state, country),
demographic variables (age, gender, family size, income),
Psychographic variables (personality, lifestyle, values),
behavioral variables (benefits sought, product usage rates, brand loyalty), and
product type (varies by product).
I. Segmenting the Market (Continue)
• a firm segments its market on more than one dimension to drill down
to a specific market segment that the firm thinks it is uniquely
capable of serving.
• For example, GreatCall probably segmented by age and benefits
sought. Its ideal customer is someone who is older (age) and is
looking for a cell phone that’s easy to use (benefits sought).
I. Segmenting the Market (Continue)
Consider these requirements for successful market segmentation:
 Homogeneity of needs and wants appears within the segment.
 Heterogeneity of needs and wants exists between the segments.
 Differences within the segment should be small compared to differences
across segments.
 The segment should be distinct enough so that its members can be easily
identified.
 It should be possible to determine the size of the segment.
 The segment should be large enough for the firm to earn profits.
I. Segmenting the Market (Continue)
• Despite its importance, market segmentation is a process
entrepreneurs commonly overlook.
• Overlooking this step can result in a faulty assessment of the size of
the potential market for a new product or service.
II. Selecting a Target Market
• market must be sufficiently attractive, and the firm must be able to serve it
well.

Niche market – is a place within a market segment that represents a narrow

group of customers with similar interests.

• By focusing on a clearly defined market, a firm can become an expert in

that market and then be able to provide its customers with high levels of
value and service.
• A firm’s choice of target markets must also be in sync with its business
model and the backgrounds and skills of its founders and other employees.
III. Crafting a unique Market position
• position is concerned with how the firm is situated relative to
competitors.
• A firm’s market position is defined by its products or services.
Determining which position in a market to occupy and compete in is a
strategic call on the part of a company based on its mission

Tagline - a catchy phrase that’s used consistently in a company’s

literature, advertisements, stationery, and even invoices
III. Crafting a unique Market position (continue)
Mercure
product attribute map Hilton

Everfit

ZTA

360 Gym
Branding
• A brand is the set of attributes—positive or negative—that people
associate with a company.

Positive - trustworthy, innovative, dependable, or easy to deal with.

Negative - cheap, unreliable, arrogant, or difficult to deal with. The
customer loyalty a company creates through its brand is one of its most
valuable assets.

• Some companies monitor the integrity of their brands through brand

management, which is a program used to protect the image and value of
an organization’s brand in consumers’ minds.
Table 11.2 What’s a brand? Different Ways of thinking
about the Meaning of a brand
■ promise to serve stakeholders’ interests.
■ firm’s guarantee of a level of performance.
■ promises a firm makes to those it serves.
■ firm’s reputation.
■ firm’s credentials.
■ indicator of trust and reduced risk.
■ company’s nature.
■ handshake between a firm and its customers.
Branding (continue)
• So how does a new firm develop a brand?
• Philosophical level, a firm must have meaning in its customers’ lives.
It must create value—something for which customers are willing to pay.
• Practical level, brands are built through a number of techniques, including
advertising, public relations, sponsorships, support of social causes, social
media, and good performance.
Branding (continue)
• Most experts warn against placing an overreliance on advertising to
build a firm’s brand. A more affordable approach is to rely on word of
mouth, the media, and ingenuity to create positive buzz about a
company.
• Creating buzz means creating awareness and a sense of anticipation
about a company and its offerings.
• Focusing too much on the features and benefits of their products is a
common mistake entrepreneurs make when trying to gain attention
from the media.
Branding (continue)
• Journalists are typically skeptical when entrepreneurs start talking
about how great their products are relative to those of their
competitors.
• What journalists usually prefer is a human interest story about why a
firm was started or a story focused on something that’s distinctly
unique about the star
• Strong brand - very powerful asset for a firm
• A successful brand can also increase the market value of a company
by 50 to 75 percent
Branding (continue)
• co-branding - two companies form a partnership to combine their
brands.

• short term - to promote a specific event or product launch

• long term - opening co-branded stores
Branding (continue)
• co-branding - two companies form a partnership to combine their
brands.

• short term - to promote a specific event or product launch

• long term - opening co-branded stores
 May Pyae Aung

The 4Ps of Marketing for New Ventures

• marketing mix - the set of controllable, tactical marketing tools that it
uses to produce the response it wants in the target market

1. Product
2. Price
3. Place
4. Promotion
1. Product
• the good or service it offers to its target market.
• A product is something that takes on physical form and
• Service is intangible
• Both products and services are lumped together under the label
“product.”
• Determining the product or products to be sold is central to the firm’s
entire marketing effort.
• The most important attribute of a product is that it adds value in the
minds of its target customers.
1. Product (continue)
• the firm prepares to sell its product, an important distinction should
be made between the core product and the actual product
• When first introducing a product to the market, an entrepreneur
needs to make sure that more than the core product is right.
• Attention to be paid to the actual product—the features, design,
packaging, and so on that constitute the collection of benefits that
the customer ultimately buys.
1. Product (continue)
• Initial rollout - one of the most critical times in the marketing of a new
product.
• All new firms face the challenge that they are unknown and that it takes a
leap of faith for their first customers to buy their products.

• A reference account is an early user of a firm’s product who is willing to

give a testimonial regarding his or her experience with the product.

• To obtain reference accounts, new firms must often offer their product to
an initial group of customers for free or at a reduced price in exchange for
their willingness to try the product and for their feedback.
2. Price
• the amount of money consumers pay to buy a product
• price a company charges for its products also sends a clear message
to its target market
2. Price (continue)
 Cost-based Pricing - adding a markup percentage to a product’s cost. The
markup percentage may be standard for the industry or may be arbitrarily
determined by the entrepreneur.

• Advantage -straightforward, easy to justify the price of a good or service.

• Disadvantage -not always easy to estimate ,difficult to raise it, even if a
company’s costs increase in an unpredicted manner.

• cost-based pricing is based on what a company thinks and what the

market thinks
2. Price (continue)
 Value-based Pricing - estimating what consumers are willing to pay
for a product.
• determined the perceived value of the product and by the number of
choices available in the marketplace

• A firm influences its customers’ perception of the value through

positioning, branding, and the other elements of the marketing mix.
• Most experts recommend value-based pricing because it hinges on
the perceived value of a product or service rather than cost plus
markup,
2. Price (continue)
• Most experts warn entrepreneurs to resist the temptation to charge
a low price for their products in the hopes of capturing market share.

• price-quality attribution - higher-priced product and the better-

quality product

• if a company gets it wrong, it can be extremely damaging to both the

company’s short-term profits and future viability.
 Kyaw Thu Aung

3. Promotion
• activities the firm takes to communicate the merits of its product to
its target market

• Advertising - making people aware of a product in hopes of

persuading them to buy it.

• Major goals are to:

■ Raise customer awareness of a product
■ Explain a product’s comparative features and benefits
■ Create associations between a product and a certain lifestyle
3. Promotion (continue)
• number of media including direct mail, magazines, newspapers, radio, the
Internet, blogs, television, and billboard advertising

• Major weaknesses,
• Low credibility
• possibility that a high percentage - the ad will not be interested
• Message clutter
• Costliness
• Intrusive
3. Promotion (continue)
• Because of these weaknesses, most start-ups do not advertise their products
broadly.
• Very frugal and selective in their advertising efforts or engage in hybrid
promotional campaigns that aren’t advertising per se, but are designed to
promote a product or service.
• Many start-ups advertise in trade journals or utilize highly focused pay-per-click
advertising provided by Google, Bing, or another online firm to economize the
advertising dollars.
• Another medium for advertising, social media sites, such as Facebook.
• Allows companies to deliver highly targeted ads based on where people live and
how they describe themselves on their Facebook profiles
3. Promotion (continue)
3. Promotion (continue)
Public relations
• to efforts to establish and maintain a company’s image with the public.
• The major difference between public relations and advertising is that
public relations is not paid for directly.
• The cost of public relations to a firm is the effort it makes to network with
journalists, blog authors, and other people to try to interest them in saying
or writing good things about the company and its products.
3. Promotion (continue)
• Many start-ups emphasize public relations over advertising primarily
because it’s cheaper and helps build the firm’s credibility
• Advertising as the self-serving voice of a company
• A firm’s public relations effort can be oriented to telling the company’s
story through a third party
Press kit - a folder that contains background information about the
company and includes a list of its most recent accomplishments
Trade show - an event at which the goods or services in a specific industry
are exhibited and demonstrated.
 3. Promotion (continue)
Social Media - primarily of blogging and establishing a presence and
connecting with customers and others through social networking sites such as
Facebook or Twitter.
• idea behind blogs - familiarize people with a business and help build an
emotional bond between a business and its customers
• key to maintaining a successful blog is to keep it fresh and make it
informative and fun.
Social plug-ins - tools that websites can use to provide their users with
personalized and social experiences. Facebook’s most popular social plug-ins
 3. Promotion (continue)
Other Promotion-related activities
• Give away free samples of their products.
• This technique is used by pharmaceutical companies that give physicians
free samples to distribute to their patients as appropriate.
• A similar technique is to offer free trials, such as a three-month subscription
to a magazine or a two-week membership to a fitness club, to try to hook
potential customers by exposing them directly to the product or service.

Viral marketing
• Get good word of mouth by using social networking
 3. Promotion (continue)
Guerrilla marketing is a low-budget approach to marketing that relies on
ingenuity, cleverness, and surprise rather than traditional techniques.
 Myo Thura Aung

4. place (or Distribution)

• Place - a firm’s product from its place of origin to the consumer
• Distribution channel is the route a product takes from the place it is made to
the customer who is the end user.
• Distribution directly to consumers or through intermediaries such as
wholesalers or distributors.
 4. place (or Distribution) (continue)
• Selling Direct - sell directly to customers
• Advantage - instead of relying on third parties is a major advantage of direct
selling
• Disadvantage - more of its capital tied up in fixed assets because it must
own or rent retail outlets, must maintain a sales force, and/or must support
an e-commerce website
• Process of eliminating layers of middlemen, such as distributors and
wholesalers, to sell directly to customers is called disintermediation
 4. place (or Distribution) (continue)
• Selling Through intermediaries - selling through intermediaries typically
pass off their products to wholesalers or distributors
• Advantage - not need to own as much of the distribution channel
• Disadvantage - loses a certain amount of control of its product
 4. place (or Distribution) (continue)
• Exclusive distribution arrangements- a retailer or other intermediary the
exclusive rights to sell a company’s products.
• Advantage - to motivate a retailer or other intermediary to make a
concerted effort to sell a firm’s products without having to worry about
direct competitors.
• more channels a firm sells through, the faster it can grow.
• Problems associated with selling through multiple channels
• Lose control of how its products are being sold.
 Sales Process and Related Issues
• identify prospects and close sales
• selling directly to customers or through intermediaries
• includes seven steps
Sales Process and Related Issues
 Si Thu

Chapter Summary_LO 1
• The first step - selecting a target market
• To study the industry - called market segmentation.
• Markets can be segmented in a number of ways, including product type,
price point, distribution channels used, and customers served.
• The next step is - position - how it is situated relative to its competitors.
• From a marketing perspective, this translates into the image of the way a
firm wants to be perceived by its customers.
• Importantly, position answers the question, “Why should someone in our
target market buy our good or service instead of our competitor’s?”
 Chapter Summary_LO 2
• A company’s brand is the set of attributes people associate with it.
• When positive and effective, a brand can create loyal customers for the
entrepreneurial firm.
• On a philosophical level, a firm builds a brand by having it create meaning in
customers’ lives.
• On a more practical level, brands are built through advertising, public
relations, sponsorships, supporting social causes, and good performance.
• Creating a strong and identifiable personality for the firm is a key to
effectively developing a strong brand.
 Chapter Summary_LO 3
• Most marketers organize their marketing mix around the 4Ps:
• product, price, promotion, and place (or distribution).
• Product is a good or service (physical form and intangible form )
• Price is the amount of money customers are willing to pay to purchase a
product.
• cost-based pricing - price is determined by adding a markup percentage to the
product’s cost.
• value-based pricing - price by estimating what consumers are willing to pay for a
product and then backing off a bit to provide a cushion.
 Chapter Summary_LO 3
• Promotion is the actions the firm takes to communicate the value its
product creates to customers
• Advertising and Public relation
• major difference between the two is that advertising is paid for and public relations
isn’t—at least directly
• Place or distribution
• sell its products directly to consumers or through intermediaries
 Chapter Summary_LO 3
• Selling direct
• Advantage - allows a firm to maintain control of its products rather than relying on
third parties.
• Disadvantage - ties up more capital in fixed assets because the firm must own (or
rent) retail outlets or must field a sales force to sell its products.
• Selling through intermediaries
• Advantage - firm doesn’t have to own much of its distribution channel (e.g., trucks
and retail outlets).
• Disadvantage - firm loses some control of its product, no guarantee that the retailers
it sells through will talk up and push its products as much as the manufacturer would
if it had its own stores.
 Chapter Summary_LO 4
• A firm’s sales process depicts the steps it goes through to identify leads and
close sales.
• The seven-step sales process
Step 1: Prospect for (or gather) sales leads;
Step 2: Make the initial contact;
Step 3: Qualify the lead;
Step 4: Make the sales presentation;
Step 5: Meet objections and concerns;
Step 6: Close the sale; and
Step 7: Follow up.
Thank You