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Marketing Your Business Idea Marketing Your Business Idea Course Outline Market Analysis • Competitive Advantage • Competitive Matrix Market Strategies • Marketing Mix Pricing Promotional Mix Marketing Your Business Idea 2 Market Analysis: Competitive Advantage Competitive advantage is a company’s ability to perform in one or more ways that competitors cannot or will not match. P. Kotler, Marketing Management, 2008 Who are your major competitors? Marketing Your Business Idea 3 Market Analysis: Competitive Advantage S W O T Analysis Internal Factors Strengths Weaknesses Opportunities Threats External Factors Marketing Your Business Idea 4 Market Analysis: Competitive Advantage S W O T Analysis Strengths Weaknesses Technological skills Leading Brands Customer Loyalty/relationship Product quality Scale Management Absence of Important skills Weak brands Poor access to distribution Low customer retention Unreliable product/service Management Marketing Your Business Idea 5 Market Analysis: Competitive Advantage S W O T Analysis Opportunities Threats Changing customer tastes Liberalization of geographical markets Technological advances Changes in government politics Lower personal taxes Change in population age structure New distribution channels Changing customer tastes Closing of geographical markets Technological advances Changes in government politics Tax increases Change in population age structure New distribution channels Marketing Your Business Idea 6 Market Analysis: Competitive Matrix Competitors’ Names Competitive Indices Product Type Location 1 store – wants to add 3 additional Hours Service Price Delivery Mon – Sat 10 - 6 Sun 11 - 4 Excellent High End Yes; free with 10 miles Website Wind In Your Face Bicycle Store High End niche ABC Bicycle Store Chain Store, Focus on Low End 2 locations in Houghton; 7 in Michigan Mon – Sat 10 - 6 Good Lower Yes, free with a purchase of $ 150 Yes, user friendly, interactive Jim’s Store Independent - Main focus – Low End; some High End 1 store Mon – Sat 11 - 7 Good to Excellent Lower for most; competitive on High End No Under construction Marketing Company Chain Store – Low End 1 location in Houghton; Mon – Sun 10-6 Good Lower Yes Yes, too busy Mon - Fri 10 -6 Sat 9- 8 Sun 10 -5 Good Lower No No Etc. Yes, user friendly Offers online sales 9 in Michigan Paul’s Bike Shop Independent – Low End 1 store Marketing Your Business Idea 7 Marketing Strategies Marketing Your Business Idea 8 Marketing Strategies Marketing strategies are the decisions marketers (owners) make to ensure that products/services satisfy the needs of their target market products/services are sold at the price a customer is ready to pay and at the same time that will promote business growth the distribution channels are convenient to the customer the company communicates with the customers effectively Marketing Your Business Idea 9 Marketing Strategies Marketing Mix 4P’s 4C’s Product Price Place Promotion Customer solution Customer cost Convenience Communication Marketing Your Business Idea 10 Marketing Strategies Marketing Mix Customer Solution • Product variety • Quality • Design • Features • Brand name • Packaging • Sizes • Services • Warranties • Returns Convenience Customer Cost Communication • Channels • List price • Sales promotion • Discounts • Allowance • Payment period • Credit terms • Advertising • Sales force • Public relations • Direct marketing Marketing Your Business Idea • Coverage • Assortment • Locations • Inventory • Transportation 11 Pricing Pricing What is your strategy? First determine your market position • Match your positioning with pricing strategy Example: • Market Position: Offering high quality products and services • Pricing Strategy: Premium Pricing Marketing Your Business Idea 13 Pricing Identifying A Strategy Low High Economy Penetration High Price Low Quality of Product Skimming Marketing Your Business Idea Premium 14 Pricing Strategies Penetration Pricing • Pricing products and services at or below competitors • Used to gain market share, often times prices are increased once a customer base is established Premium Pricing • Pricing products and service above competitors • Used when substantive competitive advantage is present, creates an image of quality Marketing Your Business Idea 15 Pricing Strategies Economy Pricing • Pricing just above production and sales costs • Used to create an image of low cost Price Skimming • Charging a high price for new products to the market when competition is low, prices drop as competition enters the market with similar products Marketing Your Business Idea 16 Pricing Other Pricing Strategies Value Added Pricing • Pricing products and services to create an image of value added • Often times used in times of recession to generate continued consumer spending Total Cost Pricing • Looking at the “total cost” to produce and sell your products and services • Including costs in the front up price verses charging extra at later service dates - Example: Service Contract or Warrantee Marketing Your Business Idea 17 Pricing: 3 C’s of Pricing Cost Competition Customers Marketing Your Business Idea 18 Pricing: 3 C’s of Pricing Costs Cost of Production • Products: - Materials, Labor, Packaging and Shipping • Services: - Time and Salaries, travel Overhead Cost • What does it cost of run your business day in and day out? - Examples: Rent, Utilities, Taxes, Advertising, Loan Payments Marketing Your Business Idea 19 Pricing: 3 C’s of Pricing Competition Research, Research, Research • What does your competition charge for their products and services? • What is your competition’s market position and pricing strategy? • Do the market suppliers have control over mandating market pricing? Evaluate how this relates to your business • Example: If your competition is charging $20/hour for service calls, but your internal cost structure requires you to charge $25/hour, Penetration Pricing is not feasible. Marketing Your Business Idea 20 Pricing: 3 C’s of Pricing Customers Research, Research, Research • What are your customers willing to pay for your products or services? • What does industry research say consumers are spending on your products and services? And how often are they buying? Marketing Your Business Idea 21 Promotional Mix Marketing Your Business Idea 22 Promotional Mix Promotion is communicating with customers and giving them information that assists them in making a decision to purchase a product or service. The elements of the promotional mix are: • • • • • Personal Selling Sales Promotion Public Relations Advertising Trade Fairs and Exhibitions Marketing Your Business Idea 23 Promotional Mix Personal Selling Personal selling is one-to-one communication with potential buyers of a product or service with the intention of making a sale. Personal selling involves the use of a sales force to: • encourage customers to buy the product or service, • support retailers and provide after-sales service. Marketing Your Business Idea 24 Promotional Mix Sales Promotion Sales Promotions are incentives that are designed to encourage the purchase or sale of a product or service, usually in the short term Examples: Coupons, sweepstakes, contests, product samples, rebates, tie-ins, point of purchase displays, trade shows, trade-ins, and exhibitions Marketing Your Business Idea 25 Promotional Mix Public Relations Public relations (PR) is the practice of managing the flow of information between an organization and its publics. PR is a means of keeping in touch with the audience using topics of interest and items that do not require any payment. Example: speaking at conferences, working with the press, and employee communication. PR can be used to build a rapport with employees customers, investors or the general public. Marketing Your Business Idea 26 Promotional Mix Advertising Advertising is a persuasive message to potential customers to purchase or consume more of your product or service. Media used: Television, radio, cinema, magazines, newspapers, video games, the internet and billboards. Examples: Wall paintings, billboards, printed flyers, radio, cinema and television adverts, web banners, mobile telephone screens, shopping carts, web popups, skywriting, bus stop benches, magazines, newspapers, sides of buses, taxicab doors, roof mounts, subway platforms and trains, the opening section of streaming audio and video, posters, and the backs of event tickets and supermarket receipts. Marketing Your Business Idea 27 Promotional Mix Trade Fairs and Exhibitions Trade fairs or exhibitions help companies in a specific industry showcase their latest products and services, study activities of rivals, examine recent trends and opportunities, contact potential clients, enhance the company image, network, and get new ideas. Things to keep in mind when planning to attend trade fairs: location, what kind of people attend the fair, participation cost (participation fee, space rental, construction of advertising displays, travel, accommodations, promotional literature, giveaways), and staffing capabilities of the trade fair. Marketing Your Business Idea 28 Marketing to Businesses (B2B) As a Supplier: through agents, brochures/ catalogues, website, trade shows, telemarketing, direct mail. Media used: Newspapers, magazines, cinema, radio, television, internet, and public relations releases Third Parties: Family, friends, associates, acquaintances, customers, and competitors http://www.businessknowhow.com/marketing/marketingmix.htm Copyright © 1995, 1997, 1999, 2000, 2001, 2002 Alan J. Zell, Ambassador of Selling, Portland, OR. All rights reserved. Marketing Your Business Idea 29 Marketing to Consumers (B2C) Mass Media: Print, broadcast, internet, direct mail, telemarketing, fax & Email, public relations releases Display Presentations (as applicable): Location, building, signage, windows/counters/shelf display, printed materials, website, attire, business environment One-on-One: In person, letter, Email, fax, telephone Follow-up: In person, letter, Email, fax, telephone http://www.businessknowhow.com/marketing/marketingmix.htm Copyright © 1995, 1997, 1999, 2000, 2001, 2002 Alan J. Zell, Ambassador of Selling, Portland, OR. All rights reserved. Marketing Your Business Idea 30 Marketing Your Business Idea You have reviewed: Market Analysis • Competitive Advantage • Competitive Matrix Market Strategies • Marketing Mix Pricing Promotional Mix Marketing Your Business Idea 31 Marketing Your Business Idea 32 Operations and HR in Your Business 33