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Chapter Eleven: Marketing
Key Terms
Bootstrap marketing: Marketing efforts that require little capital. (LO 11-3)
Contract sales force: Independent salespeople with a wide variety of experiences and
contacts, provided by a company on a contract basis. (LO 11-4)
Cost-plus pricing: Pricing in which the entrepreneur initially determines the cost
structure and then determines what profit margin is desired and adds that to the cost.
(LO 11-2)
Independent representatives: Representatives for a variety of products for a number
of companies in a given domain who try to sell those products. (LO 11-4)
Loss leader: A product or service that is sold at a non-operating loss (that is, the price
only accounts for the actual cost of the product) to simply get customers in the store.
(LO 11-2)
Marketing plan: The plan developed by the entrepreneurial business to specify who the
customers are and how they will be attracted to the company (LO 11-1)
Mixed-model promotions: Promotions that cost something but also have an element
of community support. (LO 11-3)
Pricing floor: The break-even point, or the lowest amount that can be charged for a
product or service while still making a minimal profit. (LO 11-2)
Promotion: The means by which a business advances its product or service. (LO 11-3)
Pure promotions: Promotions that are strictly financial arrangements in which you pay
for some outputs, such as radio advertisements. (LO 11-3)
SaaS (software as a service): This business model is based on providing all or most
of the business value electronically and remotely. (LO 11-2)
Sales management: The methods employed to, and the individuals who build and
maintain relationships with customers. (LO 11-4)
Search Engine Optimization (SEO): A term for all the efforts made to increase the
visibility and placement of business information. (LO 11-3)
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
Opening Vignette – “Mike Radenbaugh – Red Power Bikes – p. 205
Student responses will vary.
Exercise 1 – p. 210
Student responses will vary.
Exercise 2 – p. 212
Student responses will vary.
Ethical Challenge – p. 214
Student responses will vary.
Exercise 3 – p. 15
Student responses will vary
Review Questions – p. 221
1. Describe the basics of a marketing plan. The marketing plan should identify the
2. What advice would you provide to a potential new business owner about
establishing a marketing plan? The new owner needs a specific plan realizing that
3. What elements are necessary for a target customer profile? The target customer
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
4. How is a target customer profile used in the operation of a new business? The
5. What are the means by which products or services may be priced? Products can
6. How can a new business leverage free promotions? The new business can use
7. What promotions might a new business use and why? A new business may use
8. In what context might independent sales agents be used? Independent sales
9. How is a contract sales force used in new businesses? Contract sales people
10. Explain how the Web is used by businesses for advertising. Having a web
1. In groups, ask students to create a hypothetical business and develop a simple
marketing strategy. Ask students to develop a mission statement for the business.
Next, ask student to incorporate the marketing efforts of their business into the
mission statement. As a group, present each mission statement and discuss how the
marketing strategy enhances organizational effectiveness. Focus on why the mission
should reveal marketing efforts of the business. (LO 11-1)
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
2. Define a marketing plan and discuss why marketing plans are critical to the new
small business owner. (LO 11-1)
3. In groups, ask students to decide on a new small business. Next, ask each group to
develop a marketing plan for that new business. Ask the students to include the
target customer, pricing strategy, and the promotion strategy for the new small
business. Ask students to present their plan to the class. (LO 11-1, 11-2, 11-.3, 11-4)
4. In groups, ask students to discuss sales information distribution channels. Explain
when each method of distribution is important to a new small business. List all
possible scenarios, then write on board or flip chart. Discuss each as a class. (LO
11-4)
5. Ask students to discuss the two groups of mixed-model promotions. Ask students to
explain how each group can help the new small business owner expand the
company’s target customer base. (LO 11-3)
6. In groups, have students discuss how they would implement a marketing plan for the
following new small businesses: (LO 11-1, 11-2, 11-3, 11-4)
a. A floral shop
b. A small government contracting firm
c. An e-business that sells web design services
d. A small day care center
7. Ask students to discuss pricing floor. Discuss a scenario when the price of the
estimated marketing expense might change. Discuss how this can impact the
marketing plan. (LO 11-2)
Discussion Questions for Online/Hybrid classes
1. Ask students to summarize the issues that need to be considered in the sales
management process. Specifically, list the seven steps and discuss why they are
important to consider. (LO 11-4)
2. What is a marketing plan? Who should develop it? How does it help the new small
business owner? (LO 11-1)
3. Discuss the four methods of selling that an entrepreneur evaluates for the new small
business. Summarize why each is beneficial and describe when they are appropriate
to use. (LO 11-4)
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
4. Summarize the cost-plus pricing method. Why is this method of pricing difficult to
implement? (LO 11-2)
5. In reference to cost-plus pricing, discuss the comparison effect. Why do consumers
use it? Provide an example. (LO 11-2)
6. Discuss pure promotion advertising. List the six categories and describe them. (LO
11-3)
7. What are the two groups of mixed promotions? Why are they beneficial to the new
small business owner? (LO 11-3)
8. Summarize the two methods used to estimate sales. What are the advantages and
disadvantages of each of these methods? (LO 11-4)
9. What is a contract sales force? Describe a situation when this distribution channel is
beneficial to a new small business owner. (LO 11-4)
10.Why do the marketing efforts of a firm need to be stated in the mission statement?
(LO 11-1)
Discussion Questions for Online/Hybrid Classes - Responses
1. Ask students to summarize the issues that need to be considered in the
sales management process. Specifically, list the seven steps and discuss
why they are important to consider. (LO 11-4) The seven steps are:
1. How many contact points will the business have with each customer?
2. How will each customer be greeted?
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
2. What is a marketing plan? Who should develop it? How does it help the
new small business owner? (LO 11-1) A marketing plan is developed by the
3. Discuss the four methods of distribution that an entrepreneur evaluates for
the new small business. Summarize why each is beneficial and describe
when they are appropriate to use. (LO 11-4) The four methods are
4. Summarize the cost-plus pricing method. Why is this method of pricing
difficult to implement? (LO 11-2) In the cost-plus pricing method the
5. In reference to cost-plus pricing, discuss the comparison effect. Why do
consumers use it? Provide an example. (LO 11-2) Many consumers will
6. Discuss pure promotion advertising. List the six categories and describe
them. (LO 11-3) Pure promotion is marketing that is paid for and includes signs,
7. What are the two groups of mixed promotions? Why are they beneficial to
the new small business owner? (LO 11-3) Mixed promotions promote the
8. Summarize the two methods used to estimate sales. What are the
advantages and disadvantages of each of these methods? (LO 11-4)The
IM 11-6
Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Chapter Eleven: Marketing
9. What is a contract sales force? Describe a situation when this distribution
channel is beneficial to a new small business owner. (LO 11-4) A contract
10.Why do the marketing efforts of a firm need to be stated in the mission
IM 11-7
Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
