Ch 4 Outline

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Ch 4 Outline

1. Introduction
2. Identifying the Target Market
3. Communication With the Target Market
4. 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 ventures 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 ventures 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 ventures target
  market is to segment the overall market. The
  ventures 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 (cont.)

• Other criteria 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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An Unsegmented Market
Fig. 9.3
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A Multisegmentation Market Strategy
Fig. 9.4
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A Single-Segmentation Market Strategy
Fig. 9.5
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Communication With the Target Market

1. Direct Salespeople
2. Employees
3. Television Adv.
4. Radio Adv.
5. Print Publications
6. Telemarketing
7. Internet
8. Direct Mail

• i. 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 ventures products and services.
• Most new ventures find that the use of a direct
  sales force is not feasible from a cost
  perspective unless the ventures 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 ventureespecially
  those on the front line who have customer-facing
  jobs.
• Customer-facing employees are the ventures
  ambassadors.
• It is wise for entrepreneurs to make sure that
  people in these key roles are
• Well versed in the companys 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
  televisions limited reach.
• For ventures that dont 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-to-business 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 ventures 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 companys 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 (contd)

• 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 (contd)

• When to Use Sales Promotion
• For manufacturers
• To stimulate channel membersretailers and
  wholesalersto market a firms 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
  ventures 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 ventures
  offerings.