When starting a firm we should ask these questions.
A. Segmenting the Market
What groups of customers in my market are similar enough that the same product or service will appeal to all of them?
B. Selecting a Target Market
Which specific group of customers have I decided to target?
C. Crafting a Unique Market Position
What position will my firm occupy in the minds of my customers (and potential customers) that will differentiate it from all of my competitors?
Branding
A brand is the set of attributes—positive or negative—that people associate with a company. These attributes can be positive, such as trustworthy, innovative, dependable, or easy to deal with. Or they can be negative, such as cheap, unreliable, arrogant, or difficult to deal with.
Here are different ways of thinking about the meaning of a brand.
- A brand is a promise to serve stakeholders’ interests.
- A brand is a firm’s guarantee of a level of performance.
- A brand indicates the promises a firm makes to those it serves.
- A brand expresses a firm’s reputation.
- A brand presents a firm’s credentials.
- A brand is an indicator of trust and reduced risk.
- A brand describes a company’s nature.
- A brand serves as a handshake between a firm and its customers.
A firm must have meaning in its customers’ lives. It must create value.
Brands are built through a number of techniques, including advertising, public relations, sponsorships, support of social causes, social media, and good performance. A firm’s name, logo, website design, Facebook page, and even its letterhead are part of its brand. It’s important for start-ups, particularly if they plan to sell to other businesses, to have a polished image immediately so that they have credibility when they approach their potential customers.
Most experts warn against placing an overreliance on advertising to build a firm’s brand. A more affordable approach is to rely on word of mouth, the media, and ingenuity to create positive buzz about a company. Creating buzz means creating awareness and a sense of anticipation about a company and its offerings.
Brands are built through a number of techniques, including advertising, public relations, sponsorships, support of social causes, social media, and good performance. A firm’s name, logo, website design, Facebook page, and even its letterhead are part of its brand. It’s important for start-ups, particularly if they plan to sell to other businesses, to have a polished image immediately so that they have credibility when they approach their potential customers.
Most experts warn against placing an overreliance on advertising to build a firm’s brand. A more affordable approach is to rely on word of mouth, the media, and ingenuity to create positive buzz about a company. Creating buzz means creating awareness and a sense of anticipation about a company and its offerings.
The 4Ps of Marketing for New Ventures
Once a company decides on its target market, establishes a position within that market, and establishes a brand, it is ready to begin planning the details of its marketing mix. A firm’s marketing mix is the set of controllable, tactical marketing tools that it uses to produce the response it wants in the target market.
A. Product
A firm’s product, in the context of its marketing mix, is the good or service it offers to its target market. Technically, a product is something that takes on physical form, such as an Apple iPhone, a bicycle, or a solar panel.
A service is an activity or benefit that is intangible and does not take on a physical form, such as an airplane trip or advice from an attorney. But when discussing a firm’s marketing mix, both products and services are lumped together under the label “product.”
The number of money consumers pays to buy a product. It is the only element in the marketing mix that produces revenue; all other elements represent costs.
1. Cost-Based Pricing
The list price is determined by adding a markup percentage to a product’s cost. The markup percentage may be standard for the industry or maybe arbitrarily determined by the entrepreneur.
2. Value-Based Pricing
The list price is determined by estimating what consumers are willing to pay for a product and then backing off a bit to provide a cushion. What a customer is willing to pay is determined by the perceived value of the product and by the number of choices available in the marketplace.
C. Promotion
The activities the firm takes to communicate the merits of its product to its target market. The goal of these activities is to persuade people to buy the product.
1. Advertising
Making people aware of a product in hopes of persuading them to buy it. Advertising’s major goals are to:
- Raise customer awareness of a product
- Explain a product’s comparative features and benefits
- Create associations between a product and a certain lifestyle
However, advertising has some major weaknesses, including the following:
- Low credibility
- The possibility that a high percentage of the people who see the ad will not be interested
- Message clutter (meaning that after hearing or reading so many ads, people simply tune out)
- Relative costliness compared to other forms of promotions
- The perception that advertising is intrusive
6 steps in putting together an advertisement
Step 1: Identify the purpose of the ad
Step 2: Determine the target audience
Step 3: Select a medium
Step 4: Create the ad
Step 5: Select a place and time for the ad to appear
Step 6: Fulfill expectations
2. Public Relations
Public relations refers to efforts to establish and maintain a company’s image with the public. The major difference between public relations and advertising is that public relations are not paid for directly. The cost of public relations to a firm is the effort it takes to network with journalists, blog authors, and other people to try to interest them in saying or writing good things about the company and its products.
3. Social Media
The use of social media consists primarily of blogging and establishing a presence and connecting with customers and others through social networking sites such as Facebook or Twitter.
4. Other Promotion-Related Activities
A fairly new technique that has received quite a bit of attention is viral marketing, which facilitates and encourages people to pass along a marketing message about a particular product.
A technique related to both viral marketing and creating buzz is guerrilla marketing. Guerrilla marketing is a low-budget approach to marketing that relies on ingenuity, cleverness, and surprise rather than traditional techniques.
D. Place (or Distribution)
Place, or distribution, encompasses all the activities that move a firm’s product from its place of origin to the consumer. A distribution channel is a route a product takes from the place it is made to the customer who is the end-user.
1. Selling Direct
Being able to control the process of moving their products from their place of origin to the end-user instead of relying on third parties is a major advantage of direct selling.
The disadvantage of selling direct is that a firm has more of its capital tied up in fixed assets because it must own or rent retail outlets, must maintain a sales force, and/or must support an e-commerce website. It must also find its own buyers rather than have distributors that are constantly looking for new outlets for the firm’s products.
The advent of the Internet has changed how many companies sell their products. Many firms that once sold their products exclusively through retail stores are now also selling directly online. The process of eliminating layers of middlemen, such as distributors and wholesalers, to sell directly to customers is called disintermediation.
2. Selling Through Intermediaries
Firms selling through intermediaries typically pass off their products to wholesalers or distributors that place them in retail outlets to be sold. An advantage of this approach is that the firm does not need to own as much of the distribution channel.
The disadvantage of selling through intermediaries is that a firm loses a certain amount of control of its product.
Some firms enter into exclusive distribution arrangements with channel partners. Exclusive distribution arrangements give a retailer or other intermediary the exclusive rights to sell a company’s products.
The advantage of giving out an exclusive distribution agreement is to motivate a retailer or other intermediary to make a concerted effort to sell a firm’s products without having to worry about direct competitors.
Sales Process and Related Issues
A firm’s sales process depicts the steps it goes through to identify prospects and close sales.
7 steps in Sales Process and Related Issues
Step 1: Prospects for (or gather) sales leads
Step 2: Make the initial contact
Step 3: Qualify the lead
Step 4: Make the sales presentation
Step 5: Meet objections and concern
Step 6: Close the sale
Step 7: Follow up
Step 7: Follow up
