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Chapter Eleven: Marketing
Table of Contents
Brief Chapter Outline...............................................................................................2
Chapter Outline and Lecture notes..........................................................................3
Key Terms.............................................................................................................. 11
Suggested Text
Responses…………………………………………………………………………..12
Class Activities and Sample Assignments.............................................................15
Discussion Questions for Online/Hybrid classes....................................................16
Lecture Links......................................................................................................... 19
Lecture Link 11.1: Customer Relationship Management for the Entrepreneur...19
Lecture Link 11.2: Clubs & Organizations Enhance Entrepreneurship................20
Lecture Link 11.3: Security, Privacy and the Entrepreneur................................21
Bonus Internet Exercises.......................................................................................22
Bonus Internet Exercise 11.1: Internet-Based Marketing & Entrepreneurship. . .22
Bonus Internet Exercise 11.2: The ZOHO CRM Experience................................23
Bonus Internet Exercise 11.3: The Small Business of the Year Award................24
Critical Thinking Exercises.....................................................................................25
Critical Thinking Exercise 11.1: Develop Marketing Plans for the Small Business
........................................................................................................................... 25
Critical Thinking Exercise 11.2: Promoting the New Small Business..................27
Critical Thinking Exercise 11.-3: Sales Management at the New Business.........29
Bonus Cases.......................................................................................................... 31
Bonus Case 11.1: Marketing Strategies and the New Small Business................31
Bonus Case 11.2: Marketing Trends at Small Businesses...................................33
Bonus Case 11.3: Promoting a Competitive Advantage at the New Small
Business............................................................................................................. 34
Endnotes............................................................................................................... 35
Brief Chapter Outline
IM 11-1
Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Chapter Eleven: Marketing
I. Learning Objectives (text page 204)
.
Discuss the basics of a marketing plan.
Explain how to develop a pricing model.
Differentiate between the various types of promotion available to a new
business.
Identify the methods for sales management.
II. Basics of Marketing Plan (text pages 206 through 210)
Learning Objective 11-1: Discuss the basics of a marketing plan.
III. How to Develop a Pricing Model (text pages 210 through 212)
Learning Objective 11-2: Explain how to develop a pricing model.
IV. The Various Types of Promotion Available to a New Business (text pages 212
through 215)
Learning Objective 11-3: Differentiate between the various types of promotion
available to a new business
V. The Methods for Sales Management (text pages 216 through 220)
Learning objective 11-4: Identify the methods for sales management
VI. For Review (text page 221)
Chapter Outline and Lecture notes
1. Learning Objectives (text page 204)
Discuss the basics of a marketing plan.
Explain how to develop a pricing model.
Differentiate between the various types of promotion available to a new
business.
Identify the methods for sales management.
2. Marketing Plan
Learning Objective 11-1: Discuss the basics of a marketing plan
A. Identify your market
IM 11-2
Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Chapter Eleven: Marketing
i. Define a marketing plan
1. The plan developed by the entrepreneurial business to
specify who the customers are and how they will be attracted
to the company
ii. Identify the company’s marketing efforts in the mission statement
1. Keep the firm focused on goals
iii. Determine the location of the company
1. Identify the target market in geographic region
2. Use the appropriate marketing tool to reach clients
3. Limit target market to one zip code
4. Estimate your available resources to market the firm
B. Target the firm’s customer
i. Define the specific segment of the market which the business is
trying to serve
1. New businesses have limited resources
ii. Develop an operational marketing plan to identify potential
customers
iii. Consider available resources for the marketing plan
1. Ask students to discuss how the marketing resources differ
between small and large businesses
C. Identify the firm’s target population by evaluating the following:
i. How many of the targeted individuals exist within the market area?
ii. What percentage of targeted individuals do you believe is
reasonable for you to attract as customers?
iii. What is the percentage of people in the general population who use
or visit a similar business?
iv. Do these numbers match your cash flow projections?
v. What do you need to change if they do not?
D. Internet firms are not limited by geographic limits.
E. The new small company needs to cut through clutter on the Internet so
that a target customer can locate the business.
3. Pricing (text pages 210 through 212)
Learning Objective 11-2: Explain how to develop a pricing model
A. Pricing floor
i. The break-even point or the lowest amount that can be charged for
a product or service while still making a minimal profit
ii. To calculate the cost of a product, include the estimated cost of
marketing and an administrative overhead allocation
IM 11-3
Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Chapter Eleven: Marketing
iii. Costs associated with administrative marketing should be expected
to change as the plan develops
B. Loss leader
i. A product or service that is sold at a non-operating loss (i.e., the
price only accounts for the actual cost of the product) to simply get
customers in the store
1. A loss leader becomes a burden if customers buy it without
buying other products and services
2. A new business owner should not use loss leaders until the
business is established.
C. Cost-plus pricing model
i. The cost of the product or service plus some amount of profit
ii. It is difficult to implement effectively
iii. Pricing is a critical consideration for a small business
iv. Value your products based on beliefs held by your market
v. Competitors will challenge the small business with pricing
strategies
vi. Cost –plus pricing helps calculate the pricing
D. Making detailed calculations for each product or service will be too difficult
for a new business owner
E. Using data systems that generate useful and manageable information
helps the new business owner
1. The entrepreneur initially determines cost structure and then
determines what profit margin is desired and then adds that to the
cost
2. The desired profit margin is associated with how competitors price
their products including the amount of overhead of the business
3. A comparison effect occurs when consumers evaluate different
firms’ products and make decisions based on an internal
cost/benefit calculation
4. A firm’s prices may be higher but consumers evaluate the service
received and may choose the pricier product based on that service
5. A businesses may charge premium prices to project an image that
they are valuable
6. Competitor pricing must be evaluated to determine pricing
strategies
7. Pricing service is complex
a. Products have a potential price floor based on costs
b. Services have time as their operational costs
c. Operational costs for education and experience are hard to
establish
IM 11-4
Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Chapter Eleven: Marketing
d. Pricing balances customer flow with the time the business
has available
e. Price-sensitive customers make decisions solely on price
I. As price decreases the customer base increases
ii. As the customer base increases price increases
8. As the business grows it may shift from a cost-plus pricing strategy
to a strategy that the market permits
9. Quantity discounts could be used if the business sells quantities are
tolerable if accepted in the market
4. Promotion (text pages 212 through 215)
Learning objective 11-3: Differentiate between the various types of promotion
available to a new business
A. Promotion
i. This is the means by which a business advances its product or
service
ii. Examples of promotion include advertising in newspapers, on the
Internet, on the radio, and on television
iii. Promotions are targeted to market to customer groups within a
given industry
B. Pure promotions
i. These are promotions that are strictly financial arrangement in
which outputs are paid for such as radio advertisements
ii. The majority of promotional efforts are pure promotions
iii. These include all advertising that a company implements to
promote its products or services
1. Signs
a. Should be simple but distinctive
2. Flyers
a. Delivered to a customer’s business or home
b. Frequently changed
c. Inexpensive to print
d. Delivered using low-cost labor
e. Having the smallest impact on potential customers
3. Web page and Internet promotions
a. Includes company information
b. Includes information about products and services
c. Has the ability for online purchasing
d. Has the level of sophistication dependent on the
company’s goals
IM 11-5
Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Chapter Eleven: Marketing
e. Requires acquiring a domain name
f. Requires purchasing
g. time on a server
h. Having a website designed the business
i. Utilizing banner ads, pop-up ads and promotional
placements
4. Newspapers
a. Uses a standard format
b. Requires two steps
i. Design the ad
ii. Place it in the newspaper
c. Can be done yourself with the newspaper’s help or by
hiring an advertising agency
d. Can be broad-based or a shotgun method promotion
5. Radio and Television
a. Can be designed and then aired by station
b. Can be developed and placed by an advertising
agency
c. Has increased difficulty of placement in major markets
d. Is a more expensive type of promotion
e. Designed to get the point across
f. Needs to be appropriate for all viewers or listeners
g. Must be creative to draw attention of potential
customers
6. Trade shows
a. Utilize booths to promote products or services
b. Can benefit from annual trade shows
c. Can be used by manufacturers to display products to
sell to retailers
d. Enable entrepreneurs to participate
e. Can be expensive
f. Is made more productive by pre-trade show
promotions
C. Mixed promotions/community support
i. These are promotions that cost something but also have an
element of community support
ii. They promote businesses and help the community
iii. They provide maximum exposure to the community
1. The sponsor supports activities in the community
2. Clubs and events in schools and churches can be supported
D. Virtually free promotions
IM 11-6
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written consent of McGraw-Hill Education.
Chapter Eleven: Marketing
i. These are promotions that have very limited financial cost, but have
time commitment requirements from individuals in the firm
ii. These are also known as bootstrap marketing
iii. These could be speaking engagements at schools, clubs, and
religious organizations
5. The Methods for Sales Management (text pages 216 through 220)
Learning Objective 11-4: Identify the methods for sales management.
A. Sales management
i. This involves the methods employed to manage individuals who
build and maintain relationships with customers
ii. Sales management requires certain considerations
1. The number of points of contact the business which has with
each customer
2. How the customer is greeted
3. The process for managing a customer once an order has
been placed
4. The appearance that the sales force presents
5. The controls in place to ensure the quality of the product
delivery
6. The amount of data collected about each customer
7. What the business does with the data collected
iii. Designing and maintaining a sales management system is part art
and part tedious coding
iv. A consistent approach and image that is designed around mission
statement should be used
v. The first step of the process is hiring the sales force
vi. The sales force develops relationships with customers
vii. Loyal customers must be recognized
viii. Customers frequent a business because their needs are
recognized and fulfilled
B. Forecasting sales
i. Sales estimation
1. Two methods to estimate sales
a. Market potential estimation
i. This is a macro approach to the market which
estimates potential sales based on the number
of potential consumers in the target area
IM 11-7
Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Chapter Eleven: Marketing
ii. The data is modified by a likely percentage of
the potential consumers who will be attracted
to the business
iii. This is estimated by looking at the direct
competitors in the area or looking at close
competitors in a similar area
iv. The percentage of the total market potential in
a given area is estimated
v. Industry data is estimated
b. Customer demand estimation
i. This a micro approach to view the market and
estimate how many customers the business
can handle with is current resources (staff and
location)
ii. How many individuals required to break even
or make a certain profit is estimated
C. Distribution Channels
i. Methods of distribution are important to the new small business
owner
ii. Using distribution channels does not require an extensive
understanding of the geographic location
iii. Methods of distribution include:
1. Independent sales agents
a. These are independent representatives for a variety
of products for a number of companies in a given
domain who try to sell those products
b. Prices are negotiated carefully with the sales
representatives
c. They promote their most profitable products and
services
d. The right representatives at the right price must be
secured because they are critical to the distribution
channel
2. Contract sales force
a. These are independent salespeople having a wide
variety of experiences and contacts, which are
provided by a company on a contract basis
b. This is an expensive method to jump-start sales
c. A contracted sales force can be the difference
between success and failure
3. Web Pages
IM 11-8
Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Chapter Eleven: Marketing
a. These are a rapidly growing distribution channel
b. Internet-based marketing is popular
c. Web page design is a critical part of the distribution
process
d. These are used to sell online or to supplement a
business’s fixed location
e. These reach beyond the firm’s physical boundaries
f. A basic web page should provide information and a
direct way for customer to call
4. Mail-order catalogs
a. These are a great source for a company that does not
have a fixed retail location.
b. These reach clients through the mail
c. Catalogues are mailed to homes and businesses
d. This is an easy method of delivery, unless it is the
Christmas season
e. Customer identification/target market is critical
f. This method of payment requires credit card
processing for sales and returns
g. Credit card fraud is an issue
h. Transaction fees may be excessive
6. For Review (text page 221)
IM 11-9
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written consent of McGraw-Hill Education.
