Transcript Ch 4 Outline - Black Hills State University

Ch 4 Outline
1.
2.
3.
4.
Introduction
Identifying the Target Market
Communication With the Target Market
Persuading the Target Market
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4-1 Introduction
• The total revenue generated by a venture is a
function of a simple equation:
– Revenue = Price × Volume
• Volume is a difficult aspect of business for many
entrepreneurs to master because it involves both
logic and creativity.
– The logic of volume refers to the need to conduct
market research to understand the consumer needs that
drive demand for the venture’s products and services.
– The creativity aspect of volume generation is often
referred to as marketing.
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4-1 Introduction (cont.)
• Entrepreneurs have a multitude of tools to
generate sales volume. The most used tool is
price.
– It is the process by which the tools are applied that
determines the revenue achievements of the venture.
– Three primary steps are involved in driving volume to
achieve revenue goals:
• Identify the venture’s target market
• Communicate with the target market
• Persuade the target market to do business with the company
rather than a competitor or substitute
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4-1 Introduction (cont.)
• In standard marketing classes, students are
taught the so-called Four Ps:
–
–
–
–
Product
Price
Placement (aka Distribution)
Promotion
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4-2 Identifying the Target Market
– First step in determining the venture’s target
market is to segment the overall market. The
venture’s market can be segmented using a
variety of criteria.
• One of these is demographics, which refers to age,
gender, ethnic background, household income, and
number of children.
• Entrepreneurs can use the data generated by these
sources to segment their market and to adjust their
product or service offering to match the needs of the
target market.
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4-2 Identifying the Target Market
• Other criteria (cont.)
that entrepreneurs use to
segment markets and identify a target
market are:
– Geographic location of the market
– Psychographic profile of the market
• Understanding these characteristics of a
market segment is an important part of
developing a volume strategy, whether or
not the target market is chosen for
psychographic reasons.
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Exhibit 4-1 Steps in Market
Segmentation, Targeting, and
Positioning
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Types of Market Segmentation
Strategies
• Unsegmented Strategy (Mass Marketing)
– A strategy that defines the total market as the target
market
• Multisegmented Strategy
– A strategy that recognizes different preferences of
individual market segments and develops a unique
marketing mix for each
• Single-Segmentation Strategy
– A strategy that recognizes the existence of several
distinct segments but focuses on only the most
profitable segment
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Small Business
(Community Writing Company)
An
Unsegmente
d Market
Marketing Mix 1
Product:
Price:
Promotion:
Distribution:
Lead Pencil
$0.79
Television
Extensive
Market
All Potential
Users of a
Writing
Instrument
9 9.3
Fig.
Small Business
(Community Writing Company)
Marketing Mix 2
Marketing Mix 1
Marketing Mix 3
Product:
Felt-Tip Pen
Product:
Felt-Tip Pen
Product:
Gold Fountain Pen
Price:
$1.00
Price:
$0.49
Price:
$50.00
Promotion: Professional Magazines
Promotion: Campus Newspapers
Promotion:
Personal Selling
Distribution: Direct from Factory
Distribution: Bookstores
Distribution: Department Stores
Market
Segment A
Students
A
Multisegment
ation Market
Strategy
Market
Segment B
Professors
Market
Segment C
Executives
109.4
Fig.
Small Business
(Community Writing Company)
A SingleSegmentation
Market
Strategy
Marketing Mix 1
Product:
Price:
Promotion:
Distribution:
Felt-Tip Pen
$0.49
Campus Newspapers
Bookstores
Market
Segment A
Students
Market
Segment B
Professors
Market
Segment C
Executives
119.5
Fig.
Communication With the Target
Market
a.
b.
c.
d.
e.
f.
g.
h.
Direct Salespeople
Employees
Television Adv.
Radio Adv.
Print Publications
Telemarketing
Internet
Direct Mail
i.
j.
k.
l.
m.
n.
o.
p.
Marketing Collateral
Billboards
Location
Signage
Strategic Alliances
Trade Shows
Promotion
Credit
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4-3a Direct Salespeople
• Probably the most effective of the volume tools,
but they are also the most expensive.
– They are effective because they have personal contact
with customers, so they can build relationships with
customers and sell themselves as well as the venture’s
products and services.
– Most new ventures find that the use of a direct sales
force is not feasible from a cost perspective unless the
venture’s offering is a big-ticket item or unless the
initial sale generates a large repeat purchase series.
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4-3b Employees
• One often neglected yet very effective
volume tool is the employees of the
venture—especially those on the front line
who have customer-facing jobs.
– Customer-facing employees are the venture’s
ambassadors.
– It is wise for entrepreneurs to make sure that
people in these key roles are:
• Well versed in the company’s products
• Motivated to treat customers right
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4-3c Television Advertising
• An effective volume tool for many new ventures.
– Combines visual impressions with audio to focus the
attention of the viewer on the important aspects of the
product or service.
– Ventures that have defined their target market using
geography can take advantage of television’s limited
reach.
– For ventures that don’t have a target market defined by
geography, a mass-market approach may be effective.
– Prime time of day or evening will result in the highest
advertising charges.
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4-3d Radio Advertising
• This has many of the same characteristics of
television advertising but is generally less
expensive than television, although consolidation
in ownership of television and radio broadcasting
has resulted in higher radio rates in recent years.
– It is sold in much the same way that television ads are
sold.
– Most stations have sales representatives who provide
the entrepreneur with a rate sheet.
– Entrepreneurs who launch nonprofit ventures are able
to save money on advertising by using a public service
announcement (PSA).
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4-3e Print Publications
• Newspapers and magazines present entrepreneurs
with a more targeted volume tool than radio or
television advertising.
– Entrepreneurs who have done their demographic
homework find a straightforward choice of which print
publication will be most effective.
– Research indicates that for situations in which
responses are required, the best advertisements are
those that offer an impressive, relevant benefit to the
reader.
– On the low end of the print advertising spectrum is
classified advertising.
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4-3e Print Publications (cont.)
• Magazines are usually national in distribution, but
many regional magazines have been established in
recent years.
– Some publications are distributed for free at local
businesses.
– Entrepreneurs have many choices in print publications
and must be careful to monitor the return on each
investment.
– Other less expensive print media can also be effective
volume tools like neighborhood newspapers, trade
magazines.
– Each of these publications circulates within a narrow
interest group.
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4-3f Telemarketing
• Another way that businesses can advertise their
products and offer their services.
– Businesses often use professional telemarketers or call
centers to make telephone calls and send faxes to
potential customers on their behalf.
– Today, many firms use inexpensive foreign call center
firms.
– Telemarketing and telemarketers have received
criticism in recent years.
• Millions of consumers registered through the national Do Not
Call Registry.
– Telemarketing is still a very useful tool in business-tobusiness relationships, where the restrictions do not
apply.
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4-3g The Internet
• The Internet as a tool of volume is still
developing.
– Entrepreneurs must understand how the market
evaluates and purchases a venture’s products to create
the most effective Web presence.
– One of the biggest differences between Internet
marketing and traditional marketing is the time and
space considerations.
– The best way for a business to encourage repeat visits
to its website is by establishing contact with the people
who do visit the site.
– One effective way to collect personal information is to
offer educational and interesting content via an e-zine.
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4-3g The Internet (cont.)
• E-zines use a technique known as opt-in
marketing.
– After a business makes contact with people, the
next step is to build a relationship with them.
• Personal contact is wonderful but limited and time
consuming.
– Finally, to build their brand and inform
customers of their offerings, many companies
use banner ads on websites other than their own
company website.
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4-3i Marketing Collateral
• The term refers to a company’s
communications material that can be
physically distributed and left behind.
– Includes such items as brochures, handbills,
and business cards
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Sales Promotion Tools
• Sales Promotion
– An inclusive term for any promotional techniques that
are neither personal selling or advertising
• Used in combination with personal selling and advertising.
• Specialties
– Tangible and enduring functional items of worth
distributed personally to recipients that serve as
reminders of the firm.
• Pens, key chains, magnets, and clothing imprinted with the
name, logo, or slogan of the firm.
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Sales Promotion Tools (cont’d)
• Publicity
– Information about a firm and its products or
services that appears as a news item, usually
free of charge.
• Provides visibility for the firm
• Requires regular contacts with
the news media
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Sales Promotion Tools (cont’d)
• When to Use Sales Promotion
– For manufacturers
• To stimulate channel members—retailers and
wholesalers—to market a firm’s products.
– For wholesalers
• To induce retailers to buy inventories earlier than
they normally would.
– For retailers
• To persuade customers to make a purchase.
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4-4 Persuading the Target Market
• Persuading the target market to respond to the
venture’s communication is the third step in the
volume process.
– Persuasive message must be responsive to the
characteristics of the customers in the target market.
– Persuasive messages should help differentiate the
entrepreneurial venture from existing competitors and
at the same time accurately communicate the offering.
• Marketers have very few choices about how to
differentiate their offering from those of
competitors.
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4-4 Persuading the Target Market
(cont.)
• Research into product differentiation has defined
three strategies for differentiating a product:
–
–
–
–
Cost/price leadership strategy
Quality leadership strategy
Niche strategy
Each strategy has advantages and disadvantages.
• Many entrepreneurs hire marketing consultants,
advertising agencies, or public relations firms to
assist in the development of a persuasive message.
• The marketing vendor has been trained to ask
penetrating questions that force the entrepreneur
to think differently and in a more focused manner
about the true value proposition of the venture’s
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offerings.