Transcript EIA_Chap 05

Chapter 5
Market Your Business
5.1 Develop the Marketing Plan
5.2 The Marketing Mix─Product
5.3 The Marketing Mix─Price
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
Ideas in Action
Turning Creative Fun Into Dollars
 The Schmelzer family turned a novel idea
for decorating Crocs into a simple in-home
business.
 After growing their business through
website based orders, the Schmelzers
utilized manufacturing capacity in China to
accommodate growth.
Chapter 5
Slide 2
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
 Six months after placing the first
manufacturing order in China, the
Schmelzers sold their business for $10
million.
Chapter 5
Slide 3
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
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.
Chapter 5
Slide 4
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
Terms





marketing
marketing concept
marketing mix
marketing strategy
marketing plan
Chapter 5
Slide 5
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
What is Marketing?
 marketing
 all of the processes used to determine and
satisfy the needs of customers and the
company





Chapter 5
Slide 6
planning
pricing
promoting
distributing
selling
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
 marketing concept
 Uses the needs of customers as the primary
focus of a product or service during the
stages of:




Chapter 5
Slide 7
planning
production
distribution
promotion
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
 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
Chapter 5
Slide 8
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
 marketing mix
 reaching the target market through a
blend of:




Chapter 5
Slide 9
product
price
distribution
promotion
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
Why is marketing important to a
business?
Chapter 5
Slide 10
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
The Marketing Strategy
 marketing strategy
 a plan that identifies how business goals
will be achieved by outlining:






Chapter 5
Slide 11
product introduction or innovation
pricing
distribution
promotion
projected profitability
sales or market share
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
 marketing goals should:
 be achievable with your available resources
 reflect short, medium and long-term goals
 be written following the SMART guidelines
from Chapter 1
Chapter 5
Slide 12
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
Short-Term Goals
 Achievements for the next year are the
focus of short-term goals.
 number of customers
 level of sales
 level of profits
Chapter 5
Slide 13
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
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.
Chapter 5
Slide 14
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
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.
Chapter 5
Slide 15
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
Why is goal setting important when
developing a marketing strategy?
Chapter 5
Slide 16
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
Write Your Marketing Plan
 A marketing plan will define:
 your market
 your customers and competitors
 a strategy for attracting and keeping
customers
 anticipated changes
Chapter 5
Slide 17
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
 The marketing plan should include the
following information:
1.
2.
3.
4.
5.
6.
7.
Chapter 5
Slide 18
Product or Service
Target Market
Competition
Marketing Budget
Business Location
Pricing Strategy
Promotional Strategy
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
 Marketing plans should include
performance standards that are
quantifiable.
 Actual results should be compared to
performance standards quarterly.
Chapter 5
Slide 19
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
Why is it important to put your
marketing plan in writing?
Chapter 5
Slide 20
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
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 features, branding, and
positioning.
Chapter 5
Slide 21
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
Terms




product mix
features
branding
positioning
Chapter 5
Slide 22
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
The Marketing Concept and the
Product
 The wants and needs of customers are
the most important consideration when
developing any product or marketing
effort.
 The U.S. market is consumer-driven.
Chapter 5
Slide 23
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
Product Mix
 product mix
 the different products and services a
business sells
 Entrepreneurs may carry some
products that are not profitable because
the products provide a convenience for
customers.
Chapter 5
Slide 24
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
 Often a small percentage of the product
selection makes up the majority of
sales revenue.
Chapter 5
Slide 25
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
How does the marketing concept
affect decisions made about the
product mix?
Chapter 5
Slide 26
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
Development of Features,
Branding, and Positioning
 There is more to a product than
consumers may realize.





features
branding
packaging
labeling
positioning
Chapter 5
Slide 27
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
Selecting Product Features
 features
 product characteristics that will satisfy
customer needs
 The target market should be considered
when selecting product features.
Chapter 5
Slide 28
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
Branding, Packaging, and
Labeling
 branding
 the name, symbol, or design used to
identify your product
 package
 the box, container, or wrapper in which the
product is placed
Chapter 5
Slide 29
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
 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.
Chapter 5
Slide 30
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
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
Chapter 5
Slide 31
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
Why are product features, branding,
and positioning important?
Chapter 5
Slide 32
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
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 techniques.
Chapter 5
Slide 33
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
Terms







return on investment
market share
demand-based pricing
cost-based pricing
competition-based pricing
psychological pricing
discount pricing
Chapter 5
Slide 34
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
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
Chapter 5
Slide 35
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
 Objectives for a pricing program should
be established prior to selecting a
pricing strategy.
 Objectives might include:





maximize sales
discourage competition
establish an image
increase profits
attract customers
Chapter 5
Slide 36
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
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
Chapter 5
Slide 37
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
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.
Chapter 5
Slide 38
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
 Market Share =
Amount of Sales ÷ Total Market Size
Chapter 5
Slide 39
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
 There are multiple ways to increase
market share including:
 lowering prices
 advertising and promotion
 networking with potential customers
Chapter 5
Slide 40
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
Why is it important to determine
pricing objectives before pricing
goods and services?
Chapter 5
Slide 41
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
Determine a Price for a
Product
 There is usually more than one price
that can be charged for a product.
Chapter 5
Slide 42
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
Demand-Based Pricing
 demand-based pricing
 pricing that is determined by how much
customers are willing to pay for a product or
service
 Survey 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.
Chapter 5
Slide 43
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
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
Chapter 5
Slide 44
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
 Markup amount =
Wholesale cost × Percentage markup
 Retail Price =
Wholesale cost + Markup amount
Chapter 5
Slide 45
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
 markdown price
 determined by subtracting a percentage
amount from the retail price
Chapter 5
Slide 46
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
 Markdown amount =
Retail price × Percentage markdown
 Markdown Price =
Retail Price - Markdown amount
Chapter 5
Slide 47
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
Competition-Based Pricing
 competition-based pricing
 pricing that is determined by considering
what competitors charge for the same
good or service
Chapter 5
Slide 48
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
List three methods for determining
the price to charge for a product.
Chapter 5
Slide 49
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
Price a Service
 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
Chapter 5
Slide 50
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
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
Chapter 5
Slide 51
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
Bundling
 bundled pricing
 when all services are combined under one
charge
Chapter 5
Slide 52
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
Which method would be the best for
a housepainter to use to price
services? Why?
Chapter 5
Slide 53
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
Pricing Techniques
 Pricing can make or break a business.
 Pricing techniques may change over
time.
Chapter 5
Slide 54
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
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
Chapter 5
Slide 55
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
Psychological Pricing
 psychological pricing
 certain prices have an impact on how
customers perceive a product
 used most commonly in retail
Chapter 5
Slide 56
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
 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
Chapter 5
Slide 57
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
 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
Chapter 5
Slide 58
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
Discount Pricing
 discount pricing
 offers customers a reduced price
 encourages purchases
Chapter 5
Slide 59
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
 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
Chapter 5
Slide 60
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
 trade discount
 when a manufacturer offers a discount to
wholesaler or buyer in the same trade
 seasonal discounts
 used to sell seasonal merchandise out of season
Chapter 5
Slide 61
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
Name two techniques used in
psychological pricing and provide
an example of each.
Chapter 5
Slide 62
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
PERFORMANCE INDICATORS
EVALUATED
 Demonstrate knowledge and understanding
of management and international business
concepts.
 Communicate research in a clear and
concise manner, both orally and in writing.
Chapter 5
Slide 63
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
 Demonstrate teamwork skills needed to
function in a global marketing environment.
 Demonstrate successful price selection
methods.
 Demonstrate effective persuasive and
informative communication and
presentation skills.
Chapter 5
Slide 64
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
THINK CRITICALLY
1. Why is the packaging so important for freshcut flowers?
2. Why is it important for the product to clear
customs?
3. Why must Flower Power understand customs
(cultural traditions) in other countries?
4. Why are the packaging costs important in this
case?
Chapter 5
Slide 65
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western