Transcript Ch 10 PPT (NS) - Public Schools of Robeson County

Chapter 10
The Marketing Plan
Entrepreneurship & Small Business
Management
Developing the Marketing Mix
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After completing your market analysis and identifying your business.
You must identify what you want to do with your marketing efforts.
You must define your marketing objectives.
Most businesses objectives relate to sales, market share, growth, and
profit.
Short-term marketing objectives are for one year.
Long-range marketing objectives might reflect what you hope to
achieve in three to five years.
These are sometimes called goals.
When objectives are clearly written, they provide a blueprint for
developing your individual marketing strategies and your overall
marketing plan.
They also help you measure your success.
Next, you must create an appropriate marketing plan. The marketing
plan consists of four strategies – product, place, price and promotion.
To reach your marketing objectives, all four P’s must be mixed
appropriately.
They must be directed toward the target market.
The combination of the product, place, and promotion strategies that
you use to reach your market is the marketing mix.
Entrepreneurship & Small Business
Management
The Product Strategy
• The product strategy deals with goods or
services.
• Product decisions are crucial to the success of
your business.
• Products that don’t match up with customer
needs or expectations will not sell.
• While conducting market analysis, you have
probably already gathered some product
information and made some product decisions.
• Now you must address such considerations
thoroughly and systematically.
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Product Features
• Think about your product as a package of
features or benefits for the customer.
• Goods such as cars, appliances, or clothing
include physical features.
• They have style, color, quality, and options.
• Also consider intangibles such as warranties,
service contracts, delivery, installation, and
instructions.
• Service businesses such as financial institutions
and video arcades, offer intangible benefits.
• They include convenience, health, a sense of
well-being, and entertainment.
• What will your product offer?
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Branding, Packaging, and Labeling
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How will you identify your product?
How can it stand out from the competition?
Part of the answer lies in branding, packaging, and
labeling.
A brand is the name, symbol, or design used to identify a
product.
A package is the physical container or wrapper that holds
it.
The label is the part of the package used to present
information.
All three contribute something to the product and, in the
process, become part of it.
For example, when you buy Puma footwear, you expect a
certain quality of athletic shoe in a specific type of box
with a clearly marked label.
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Product Selection
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What products will you sell?
Are you going to manufacture them or sell them?
Developing and manufacturing new products to sell
involves several steps.
First you generate product ideas and sort out the good
ones from the bad.
Then you study the product’s potential costs and
revenues.
You develop the product and test-market it.
Finally, if everything looks promising, you introduce it.
In contrast, choosing products for resale is largely a
matter of gathering information.
First you study consumer demands and product
availability, then make decisions to bring the two
together.
If you begin selling more than one item, consider how well
the new product might fit in with the other items you sell.
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Product Positioning
• Product positioning refers to how consumers see your
product.
• Luxury cars such as Mercedes-Benz and Cadillac are
positioned as the most prestigious.
• Economy cars are positioned as the best bargain.
• How you position your product depends on your
marketing goals.
• Who is your target consumer?
• You can position your product through its quality,
availability, pricing, and uses.
• Branding, packaging, and labeling also affect your
product’s image and positioning.
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Product Mix
• Finally, you will need to consider your product mix.
This term refers to all the products a company makes
or sells.
• If you are going to offer multiple products, you should
think about how they relate to each other.
• If you want to reach a single market, you may decide
to include only products that complement each other.
• Alpine concentrates on car stereo equipment.
• If you try to reach multiple markets, you may decide
on a more diversified mix.
• Sony sells audio equipment of all kinds, as well as
video, computer, and home appliances.
• What you sell will depend on the image you want to
project and the market are targeting.
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Product Decisions
• As you consider the product strategy for your
marketing plan, ask yourself the following
questions, keeping your target market in mind.
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What products should I manufacture or sell?
At what quality level should I make my goods?
How much inventory should I maintain?
How will my products be better than my competitors?
How will I position my products?
What will my customer service policy be?
Will the physical layout of my business encourage
sales?
– Do my hours of operation match the times that my
target market prefers to do business?
Entrepreneurship & Small Business
Management
The Place Strategy
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Place strategy involves how you will deliver your goods and
services to your customers.
Where will customers buy your product?
When will they buy it?
Will your product actually be there, ready and available for sale?
Note that all these questions involve movement of your product-to
your location and to your customers.
Therefore, this part of the marketing mix is also known as the
distribution strategy.
You have already considered some aspects of distribution.
As you conducted market analysis, you noted how your
competitors operate.
What can you learn from their distribution?
How can you do better?
Likewise, as you investigated potential sites, you identified the
suitability of loading and storage areas.
You also checked the sites’ proximity to distribution systems.
Examining the following areas will help you finalize your strategy.
Entrepreneurship & Small Business
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Channels of Distribution
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To formulate your place strategy, you need to understand the
possible channels of distribution. A channel of distribution is the
path a product takes from producer (or manufacturer) to final
user (or consumer).
There are two basic types of channels-direct and indirect.
A direct channel moves a product from producer to customer with
no one in between.
Service businesses are typical examples. If you give an H&R Block
tax preparer y9our financial records, he or she will return to you a
finished tax return a few days later. No one else is involved.
In contrast, an indirect channel employs intermediaries. These
are people or businesses that move products between producers
and final users. They include wholesalers and retailers (who sell in
the consumer market), distributors (who sell in the industrial
market), and agents (who arrange sales). For example, a clothing
designer might use an agent to contact wholesalers and retailers.
This way, he or she can reach a large market without having to
worry about maintaining a sales staff or store. This allows the
designer to concentrate on what he or she does best-designing.
Entrepreneurship & Small Business
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Channels of Distribution
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The type of business you have will determine where you fit in your
channel of distribution.
If you are a producer, you will be concerned with sending
products through a channel.
If you are a retailer, you will be concerned with receiving them.
If you are a wholesaler, you will be concerned with both.
You may also use or be involved in more than one channel.
The channel of distribution you choose can affect your product in
many ways.
It can raise or lower your product’s cost.
It can affect the potential for loss or damage to your product in
transit.
Most important, it can determine how quickly your product
reaches your customers.
If you can find a channel that is more efficient than the ones
similar businesses are using, you can gain a competitive edge.
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Channels of Distribution –
Consumer Market
Manufacturers/Producers
Agents
Wholesalers
Retailers
Consumer
Consumer
Consumer
Consumer
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Consumer
Channels of Distribution –
Industrial Market
Manufacturers/Producers
Agents
Industrial Distributors
Industrial User
Industrial User
Industrial User
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Industrial User
Intensity of Distribution
• How broadly will you distribute your product?
• You have three choices.
• Intensive distribution involves placement of a
product in all suitable sales outlets. For example,
you can find best-selling paperbacks in
bookstores, supermarkets, and magazine stands.
• Selective distribution limits the number of sales
outlets in an area. For example, textbooks are
only found near schools.
• Exclusive distribution limits the number of
outlets to one per area. For example, a museum
might sell a special book for an exhibit.
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Transportation
• The physical movement of goods will also enter into
your place decisions.
• How will your product be shipped?
• Your choices include by truck, train, airplane, or
pipeline.
• If you are dealing in information, you might be able to
send it through the Internet.
• The method of transportation affects how fast your
product reaches consumers.
• It will also determine your shipping costs.
• Generally, air transportation is the most expensive and
waterway is the cheapest.
• Finally, it will dictate in some measure how your
product will be packaged.
Entrepreneurship & Small Business
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Location, Layout, and Availability
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As you learned earlier, location, or site, considerations are
important to your place strategy.
They are especially important to retail and service business that
depend on customers to come to them.
If yours is such a business, you can increase customer access and
encourage sales by selecting a location near transportation
routes.
You might decide to have entrances on different sides of your
site.
You might also favor evening over morning hours of operation.
What do these options have in common?
They are designed to match the needs and opportunities of
potential customers.
In order words, they are designed to make it easy for people to do
business with you.
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Place Decisions
• When you make your place decisions, keep your target
market in mind and ask yourself the following
questions:
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How will my products be sold and distributed?
Will my product go directly from producer to user, or will it
go through an intermediary?
Can I use more efficient channels of distribution?
What are the channel members I will use to obtain my
products?
What are the channel members I will use to distribute my
products?
How intensively will I distribute my products?
Is my location appropriate for my target market (or markets)?
Will the physical layout of my business encourage or
discourage sales?
Do my hours of operation match the times that my target
market prefers to do business?
Entrepreneurship & Small Business
Management
Reviewing & Revising
The Marketing plan
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In business, change is constant.
Technology makes products obsolete.
Clothing styles go forward from season to season.
A sport that is popular now will be replaced by a new one
next year.
How can you measure change?
How can you predict it and prepare for it?
Such adjustments are made according to market research.
Suppose you own and manage a CD store.
The releases that are selling well this week may not even
be on the charts next month.
To stay profitable, you must keep up with what’s going on
in the music scene.
In business terms, you must continue your market
research.
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Marketing Research
• Once you’ve started your business, your
marketing research is not over:
1. You now have another source of primary information –
your customers: Gather information from current and
former customers. Conduct surveys by mail, on the phone,
over the Internet, in personal interviews, and through
focus groups.
2. Secondary information is available through your
operation itself: Accounting records and sales receipts
include your expenses. They also show which products are
moving and which ones aren’t.
3. Collect information that affects your operation: Read
newspaper, magazine, Internet, and trade publications.
Clip articles that pertain to your business and make a file.
4. Make market research an ongoing priority: You can rely
on informal research for much of your information
gathering, but at some point you may want more
sophisticated methods. If so, consider hiring a professional
market researcher.
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Reviewing Your Marketing Mix
• Ever wonder why cereal boxes undergo face-lifts
every now and then?
• Market research provides information a business
needs to make such adjustments to the marketing
plan.
• By being aware of what’s happening in your market,
you can make changes in your marketing strategies
(the four P’s) as needed to meet your marketing
objectives.
• In this section, we will look at the kinds of changes
businesses often have to consider in their product
and place strategies.
• We will also overview price and promotion
considerations.
Entrepreneurship & Small Business
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Possible Product Changes
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Concerns about product strategy are the same for both
start-up and ongoing businesses; what goods or services
should you offer?
How will your products be different from your competitors’
products?
What can you do to make sure customers can identify your
products?
The only difference is that now you will be making decisions
about existing products rather than projected ones.
A change in any one of your products could affect your
other products.
A change might stimulate sales through increased traffic or
cause a loss of sales through negative consumer reaction.
For example, when Volkswagen reintroduced in the Beetle
in 1998, the increase in traffic benefited all Volkswagen
models in the showroom. In contrast, if a car model gets a
bad reputation, the entire image of a manufacturer can
suffer.
Entrepreneurship & Small Business
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Adding Products
• Before adding products to your line or adding
lines, ask yourself these questions:
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Is there sufficient demand to add the new product? A few
people may have expressed interest, but you’ve got to sell
enough to break even.
Is the product consistent with your current business? It may
be a good idea for somebody’s operation but not for yours.
Will it compete with your current products? It may sell
very well, but what if it takes away an equal amount in
current sales?
Is it the best use and application of your economic
resources? Can your money, labor, and facilities be better
used by putting your money, labor, and facilities be better
used by putting them to work in connection with another
product line or another part of your marketing mix?
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Eliminating Products
• One reason to eliminate a product is that it isn’t
selling.
• Sometimes business people are slow to take such
action, thinking they can make the item sell.
• Not cutting the product can lead to a build-up of
inventory and financial losses.
• By not cutting it, you may be misusing sales or
production efforts.
• Another reason for eliminating products is to
simplify your line of goods or services.
• This allows you to focus on the things you do
well.
Entrepreneurship & Small Business
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Changing Products
• Changing the style or design of your product, if
the changes are consistent with customer
demands, can give you a competitive edge.
• You may make changes to keep in step with
current fashions.
• You may also improve your products with the
latest technology.
• Changing your product may affect your prices and
distribution.
• Timing must be considered, too.
• Your offerings should be up-to-date, but not
ahead of the market.
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Changing Brands,
Packaging, or Labels
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If you manufacture products under a variety of brand names, you
may want to consolidate them all under one brand.
This could help to build a brand preference among customers.
If you carry other people’s brands for resale, you may be able to
sell more by offering your own private brand.
Larger supermarkets often offer a variety of products on their own
label.
You may want to change packaging and labels to enhance the
attractiveness, interest, and salability of your products.
You may also change your packaging for environmental reasons.
Budget Gourmet dinners are packaged in molded paper
containers. Because so many consumers are concerned about the
environment, these kinds of changes could make your product
more appealing.
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Revising Guarantees and
Service Policies
• To build customer confidence and
increase sales, a business can improve
or add service policies and guarantees.
• A guarantee is an assurance of the
quality of a product.
• Guarantees and policies can make the
difference in a sale, particularly with
big-ticket items.
• Of course, you must be able to provide
the additional guaranteed services.
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Possible Place Changes
• When you make changes in
your ongoing place strategy,
they will most likely be in the
areas of location, layout, and
availability.
• To some extent, you may also
make changes in your channels
of distribution.
Entrepreneurship & Small Business
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Improving Location
• As your business grows, you may look for ways to
improve your location.
• You could extend it by using kiosks, or stands, on
street corners or in malls.
• With some businesses, you could “take your
location to the customer” through mobile units.
• You might also want to consider more permanent
and substantial changes.
• You might add outlets or branch operations.
• You could change your base location to be more
accessible to customers.
• Because these are more permanent steps,
however, they would have to be coordinated with
your plans for growth.
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Rearranging Layout
• You may also want to rearrange the physical
layout of your operation.
• For retail and some service businesses, this
change can enhance sales.
• Adding or expanding parking or access to your
business can do the same.
• If you are a manufacturer, wholesaler, or
extractor, you might reorganize how your goods
are physically distributed.
• This could increase your capability to serve your
customers
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References
• Allen, K. & Meyer, E. (2000).
Entrepreneurship and Small
Business Management.
Retrieved August 25, 2012,
from Glenco McGraw-Hill.
Entrepreneurship & Small Business
Management