27
1 Ch 4 Outline 1. Introduction 2. Identifying the Target Market 3. Communication With the Target Market 4. Persuading the Target Market

1 Ch 4 Outline 1.Introduction 2.Identifying the Target Market 3.Communication With the Target Market 4.Persuading the Target Market

Embed Size (px)

Citation preview

Page 1: 1 Ch 4 Outline 1.Introduction 2.Identifying the Target Market 3.Communication With the Target Market 4.Persuading the Target Market

1

Ch 4 Outline

1. Introduction

2. Identifying the Target Market

3. Communication With the Target Market

4. Persuading the Target Market

Page 2: 1 Ch 4 Outline 1.Introduction 2.Identifying the Target Market 3.Communication With the Target Market 4.Persuading the Target Market

2

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 venture’s products and services.

– The creativity aspect of volume generation is often referred to as marketing.

Page 3: 1 Ch 4 Outline 1.Introduction 2.Identifying the Target Market 3.Communication With the Target Market 4.Persuading the Target Market

3

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 venture’s target market

• Communicate with the target market

• Persuade the target market to do business with the company rather than a competitor or substitute

Page 4: 1 Ch 4 Outline 1.Introduction 2.Identifying the Target Market 3.Communication With the Target Market 4.Persuading the Target Market

4

4-1 Introduction (cont.)• In standard marketing classes, students are

taught the so-called Four Ps: – Product– Price – Placement (aka Distribution)– Promotion

Page 5: 1 Ch 4 Outline 1.Introduction 2.Identifying the Target Market 3.Communication With the Target Market 4.Persuading the Target Market

5

4-2 Identifying the Target Market – First step in determining the venture’s target

market is to segment the overall market. The venture’s 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.

Page 6: 1 Ch 4 Outline 1.Introduction 2.Identifying the Target Market 3.Communication With the Target Market 4.Persuading the Target Market

6

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.

Page 7: 1 Ch 4 Outline 1.Introduction 2.Identifying the Target Market 3.Communication With the Target Market 4.Persuading the Target Market

7

Exhibit 4-1 Steps in Market Segmentation, Targeting, and

Positioning

Page 8: 1 Ch 4 Outline 1.Introduction 2.Identifying the Target Market 3.Communication With the Target Market 4.Persuading the Target Market

8

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

Page 9: 1 Ch 4 Outline 1.Introduction 2.Identifying the Target Market 3.Communication With the Target Market 4.Persuading the Target Market

9Fig. 9.3

Marketing Mix 1

Product: Lead Pencil

Price: $0.79

Promotion: Television

Distribution: Extensive

Small Business(Community Writing Company)

MarketAll Potential Users of a

Writing Instrument

An Unsegmente

d Market

Page 10: 1 Ch 4 Outline 1.Introduction 2.Identifying the Target Market 3.Communication With the Target Market 4.Persuading the Target Market

10Fig. 9.4

Marketing Mix 2Product: Felt-Tip Pen

Price: $1.00

Promotion: Professional Magazines

Distribution: Direct from Factory

Marketing Mix 3Product: Gold Fountain Pen

Price: $50.00

Promotion: Personal Selling

Distribution: Department Stores

Marketing Mix 1Product: Felt-Tip Pen

Price: $0.49

Promotion: Campus Newspapers

Distribution: Bookstores

Small Business(Community Writing Company)

MarketSegment A

Students

MarketSegment C

Executives

MarketSegment BProfessors

A Multisegmentation Market

Strategy

Page 11: 1 Ch 4 Outline 1.Introduction 2.Identifying the Target Market 3.Communication With the Target Market 4.Persuading the Target Market

11

Marketing Mix 1

Product: Felt-Tip Pen

Price: $0.49

Promotion: Campus Newspapers

Distribution: Bookstores

Small Business(Community Writing Company)

Market

Segment A

Students

Market

Segment C

Executives

Market

Segment B

Professors

Fig. 9.5

A Single-Segmentation

Market Strategy

Page 12: 1 Ch 4 Outline 1.Introduction 2.Identifying the Target Market 3.Communication With the Target Market 4.Persuading the Target Market

12

Communication With the Target Market

a. Direct Salespeople

b. Employees

c. Television Adv.

d. Radio Adv.

e. Print Publications

f. Telemarketing

g. Internet

h. Direct Mail

i. Marketing Collateral

j. Billboards

k. Location

l. Signage

m. Strategic Alliances

n. Trade Shows

o. Promotion

p. Credit

Page 13: 1 Ch 4 Outline 1.Introduction 2.Identifying the Target Market 3.Communication With the Target Market 4.Persuading the Target Market

13

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 venture’s products and services.

– Most new ventures find that the use of a direct sales force is not feasible from a cost perspective unless the venture’s offering is a big-ticket item or unless the initial sale generates a large repeat purchase series.

Page 14: 1 Ch 4 Outline 1.Introduction 2.Identifying the Target Market 3.Communication With the Target Market 4.Persuading the Target Market

14

4-3b Employees

• One often neglected yet very effective volume tool is the employees of the venture—especially those on the front line who have customer-facing jobs. – Customer-facing employees are the venture’s

ambassadors. – It is wise for entrepreneurs to make sure that

people in these key roles are: • Well versed in the company’s products

• Motivated to treat customers right

Page 15: 1 Ch 4 Outline 1.Introduction 2.Identifying the Target Market 3.Communication With the Target Market 4.Persuading the Target Market

15

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 television’s limited reach.

– For ventures that don’t 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.

Page 16: 1 Ch 4 Outline 1.Introduction 2.Identifying the Target Market 3.Communication With the Target Market 4.Persuading the Target Market

16

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).

Page 17: 1 Ch 4 Outline 1.Introduction 2.Identifying the Target Market 3.Communication With the Target Market 4.Persuading the Target Market

17

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.

Page 18: 1 Ch 4 Outline 1.Introduction 2.Identifying the Target Market 3.Communication With the Target Market 4.Persuading the Target Market

18

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.

Page 19: 1 Ch 4 Outline 1.Introduction 2.Identifying the Target Market 3.Communication With the Target Market 4.Persuading the Target Market

19

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.

Page 20: 1 Ch 4 Outline 1.Introduction 2.Identifying the Target Market 3.Communication With the Target Market 4.Persuading the Target Market

20

4-3g The Internet• The Internet as a tool of volume is still

developing.– Entrepreneurs must understand how the market

evaluates and purchases a venture’s 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.

Page 21: 1 Ch 4 Outline 1.Introduction 2.Identifying the Target Market 3.Communication With the Target Market 4.Persuading the Target Market

21

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.

Page 22: 1 Ch 4 Outline 1.Introduction 2.Identifying the Target Market 3.Communication With the Target Market 4.Persuading the Target Market

22

4-3i Marketing Collateral

• The term refers to a company’s communications material that can be physically distributed and left behind. – Includes such items as brochures, handbills,

and business cards

Page 23: 1 Ch 4 Outline 1.Introduction 2.Identifying the Target Market 3.Communication With the Target Market 4.Persuading the Target Market

23

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.

Page 24: 1 Ch 4 Outline 1.Introduction 2.Identifying the Target Market 3.Communication With the Target Market 4.Persuading the Target Market

24

Sales Promotion Tools (cont’d)

• 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

Page 25: 1 Ch 4 Outline 1.Introduction 2.Identifying the Target Market 3.Communication With the Target Market 4.Persuading the Target Market

25

Sales Promotion Tools (cont’d)

• When to Use Sales Promotion– For manufacturers

• To stimulate channel members—retailers and wholesalers—to market a firm’s products.

– For wholesalers• To induce retailers to buy inventories earlier than

they normally would.

– For retailers• To persuade customers to make a purchase.

Page 26: 1 Ch 4 Outline 1.Introduction 2.Identifying the Target Market 3.Communication With the Target Market 4.Persuading the Target Market

26

4-4 Persuading the Target Market• Persuading the target market to respond to the

venture’s 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.

Page 27: 1 Ch 4 Outline 1.Introduction 2.Identifying the Target Market 3.Communication With the Target Market 4.Persuading the Target Market

27

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 venture’s offerings.