978-1259912191 Chapter 11 Lecture Notes

Unlock access to all the studying documents.

View Full Document

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

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

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

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

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

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

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

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

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

written consent of McGraw-Hill Education.