Developing

Marketing
Strategies

Chapter Eight

Copyright © 2018 by McGraw-Hill Education. All rights reserved.

 Learning Objectives
1. Describe the marketing concept and explain
how it can be used by a small business.
2. Show how marketing research can be used to
implement the marketing concept.
3. Explain how to develop and implement a
marketing strategy.
4. Explain how the product life cycle affects
marketing strategies.

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 Learning Objectives (cont.)
5. Explain how packaging affects marketing.
6. Describe how prices are set and
administered.
7. Show how marketing services differs from
marketing goods.

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 Basic Strategies for
Successful Marketing
Moving quickly to satisfy customer needs.

Using pricing to differentiate the product/service.

Paying attention to packaging.

Building customer loyalty.

Offering samples and demonstrations.

Educating customers.

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 The Marketing Concept
Marketing concept
 Involves giving special consideration to the
needs, desires, and wishes of present and
prospective customers.
 Involves customer orientation and a goal
orientation.

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 Implementing the
Marketing Concept

Be conscious of image.

Practice consumerism.

Look for danger signals

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 Be Conscious of Image
 Show what is unique about your product—its
positive benefits.
 Find future stories and explain how your company
“fits.”
 Be helpful, offer your research.
 Be unique and to the point; present your expertise.
 Don’t be pushy.
 Speak with integrity, explain as if explaining for the
first time and use current examples.

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 Practice Consumerism

 Consumerism  Rights of Consumers:

 Involves prodding
businesses to 1. To buy safe products.
improve the quality 2. To be informed.
of their products and
to expand consumer 3. To be able to choose.
knowledge. 4. To be heard

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 Danger Signals Indicating
Marketing Problems
Table 8.1

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 Seeking a Competitive Edge
Competitive edge (competitive advantage)
 A particular characteristic that makes one firm
more attractive to customers than its
competitors.
 Quality, reliability, integrity, courtesy, service.

Better Cheaper Faster

Quality Cost Quick

differentiation leadership response

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 Seeking a Competitive Edge
E-commerce
 Technology-mediated exchanges between parties
as well as the electronically based intra- or inter-
organizational activities that facilitate such
exchanges.
 Social Media plays a major part. Ads appear
sponsoring a web page or as sidebars to your
personal account.

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 Using Marketing Research to
Implement the Marketing Concept
Market research
 The systematic gathering, recording, and
analyzing of data relating to the marketing of
goods and services.
Marketing research can help you decide:
1. Whether to develop new or different products.
2. Whether to expand the original location or open
additional locations.
3. When and where to change emphasis on activities sauch
as channels of distribution, and advertising strategy.

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 How Does Marketing Research
Aid Marketing?
Identifying customers for the firm’s products.
Determining their needs.
Evaluating sales potential for both the firm
and its industry.
Selecting the most appropriate channel of
distribution.
Evaluating advertising and promotional
effectiveness.

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 How to Do Marketing Research
1. Define the problem.
2. Gather and evaluate the information.
3. Check returned items to see if there is a
pattern.
4. Ask old customers why they have not
returned.
5. Study competitors’ ads.

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 Gathering and Evaluating
Information
Use Primary Data, first hand research, done
by you or your employees, verifying facts.
Use Secondary Data, existing data done by
others.
Use Specialized Research Techniques,
involving studies and so forth at a prime cost.
Use Test Marketing, simulates the conditions
under which the product will be sold.

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 Guidelines on Using the Internet
for Marketing Research
Figure 8.1

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 Using Computerized Databases
 Database marketing
 A marketing process for acquiring customers that involves
obtaining meaningful, individual-level, consumer
information; respecting consumers’ privacy; analyzing this
information to estimate consumer response to various
offers; and making marketing decisions based on this
expected response.
 Computer programs hooked to caller id can create a
database that can increase efficiency, enhance security
control inventory improve marketing, and simplify contact
with customers.

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 No Cashiers?
Figure 8.2

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Developing a Marketing Strategy

Setting objectives

Choosing target market(s)

Developing an effective marketing mix

8-19
 Setting Objectives
Example of an objective: an image of higher
quality than competitors with comparable
prices.
To attain those objectives target markets
should be identified

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 Choosing Target Markets

 Target market  Market segmentation

 The part of the total  Identifying and
market toward which evaluating various
promotional efforts layers of a market.
are concentrated.  Identify customer
 Should be the demographics.(Mature
business customers vs. Young )
most likely to buy or  Determine size and
use its products. buying power.
 Align your marketing
effort. 8-21
 Selling to Older Consumers
Figure 8.3

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 Developing an Effective
Marketing Mix
Marketing mix
 The proper blending of the basic elements of
product, price, promotion, and place into an
integrated marketing program.
 The Four Ps of Marketing:
1. The right Product for the market.
2. Place refers to distribution channels.
3. Promotion refers to method to target market.
4. The right Price to attract customers and profit.

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 Sales and Profits during the
Product Life Cycle
Figure 8.5

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 Product Life Cycle
Introduction stage
 Prices are usually high, sales are low, and profits
are negative because of high development,
promotion, and distribution costs.
Growth stage
 Sales rise rapidly and profits peak.
 Marketing strategy typically encourages strong
brand loyalty.

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 Product Life Cycle
 Maturity stage
 Declining prices and profits. Promotion costs
climb; competitors cut prices to attract business;
new firms enter.
 Decline stage
 Sales fall rapidly.
 Promotion efforts may be cut and plans may be
made to phase out the product.

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Four C’s of Pricing

Customer Company

Competition Constraints

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Pricing can make the difference between
success and failure especially to small
businesses:
1. The price must be such that customers are
willing and able to pay
2. You must set your price to maintain and to
expand your market share
3. The price should be sufficiently higher than
the cost in order to achieve profit
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 Effect of Product Life Cycle
Skimming price
 One set relatively high initially in order to rapidly
skim off the “cream” of profits.
Penetration price
 One set relatively low to secure market
acceptance.

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 Potential Pricing Policies
for a Small Business
Table 8.2

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 Potential Pricing Policies
for a Small Business
Table 8.2

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 Markup
Markup
 The amount added to the product’s cost to
determine the selling price.

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 Discounts and Allowances Provided
by Small Businesses
Table 8.3

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 Discounts and Allowances

 Discount  Allowances
 A reduction from the  Given to customers
list price given to for accepting quality
customers as an or quantity reduction.
inducement to buy
more of a product.

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 How Prices Are Set by Small
Businesses
 Customary Price is what customers expect to pay
because of custom, tradition, or social habits.
 Unit Pricing is listing the product’s price in terms of
some unit, as a pound or yard.
 Loss Leader is an item priced at or below cost to
attract customers into the store to buy more
profitable items.
 Cost-plus Pricing is basing the price on its costs, plus
a makeup for profit.

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 Nature of Service Businesses

 Personal services
 Performed by a
business for
consumers.
 Business services
 Provided to another
business or
professional.

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 Nature of Service Businesses

 Personal services  Business services may

include activities such include some of
as financial services, these, plus others
transportation, that are strictly
health and beauty, business oriented,
lodging, advising and such as advertising
counseling, agencies, market
amusement, research firms,
plumbing, maid economic counselors,
services, real estate, and certified public
and insurance accountants (CPAs). 8-37 8-37
 Opportunities in the Service
Businesses
 There are many opportunities in personal service
industries because the demand for services is expected
to grow faster than for most other types of businesses.
Some reasons for increased spending on services
include rising discretionary income, services as status
symbols, more women working outside the home (and
earning more), and a shorter workweek and more
leisure time.
On the other hand, service businesses have severe
competition, not only from other firms, but also from
potential customers who perform the services
themselves and from manufacturers of do-it-yourself
products. 8-38
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