Chapter 4 Developing the Right Marketing Mix Entrepreneurship Chapter 4 Developing the Right Marketing Mix Mariotti: Entrepreneurship

Marketing Mix = the 4 Ps Product Price Place Promotion Goal: Bring the right product to the right place at the right price with the right promotion. Marriotti: Entrepreneurship

What Does the Price Tell Consumers About Your Product/Service? Strategies: Cost plus: cost plus profit margin Penetration: low price early in PLC to gain market share Skimming: high price early in PLC before competitors enter market Meet or beat the competition Marriotti: Entrepreneurship

Place Who are your customers? Where do they shop? Goal: Find location affordable for you yet also convenient for customers. Marriotti: Entrepreneurship

Promotion Using advertising + publicity to get your market message to your customers Advertising (purchased): billboards, TV ads, magazine ads Publicity (free): mentions in media such as articles, stories on TV, etc. Marriotti: Entrepreneurship

Promotional Ideas Banner ads Billboards Brochures Business cards Direct mail Catalogs Discount coupons Flyers Gifts Clothing bearing logo Samples/demos Special events Team sponsorships 800 numbers Marriotti: Entrepreneurship

Logos and Trademarks Logo: identifying symbol for product/service or business. Trademark: logo registered with U.S. Patent Office; may not be infringed upon Infringement: illegal use of someone’s intellectual property Marriotti: Entrepreneurship

Intellectual Property Logos—protected by trademarking Inventions—protected by patents Art—protected by copyrights Online intellectual property—protected by electronic rights (1998 Digital Millennium Copyright Act) Marriotti: Entrepreneurship

Marketing Materials Examples: brochures, posters, order forms, business cards, invoices Should reinforce competitive advantage Serve 3 functions Help you organize your thinking Enable you to teach others in company about the business Enable you to sell product/service Marriotti: Entrepreneurship

Media Print + Television + Radio = Media Use media to generate publicity Mail/fax pitch letter and press release Pitch letter “pitches” the story of your business Press release provides facts to answer: who, what, when,where, why, how? Follow up with phone call Marriotti: Entrepreneurship

Philanthropy Giving money, time, advice, skills to help solve social or environmental problems Foundations: nonprofits that collect donations for charities that help people, animals, environment. Ex: Habitat for Humanity Many philanthropic foundations were started by entrepreneurs. Ex: Bill and Melinda Gates Foundation Philanthropy creates goodwill: reputation, name recognition, positive customer relations Marriotti: Entrepreneurship

Cause-Related Marketing Inspired by commitment to a cause Simple way to work philanthropy into your business Examples: Donate fixed % of revenue to charity Donate product/service Encourage employees to volunteer Marriotti: Entrepreneurship

Nonprofit Organizations Businesses whose mission is to contribute to greater good of society Classified by IRS as 501 (c ) (3) corporations Tax exempt—do not pay federal or state taxes; profits must be used for mission Marriotti: Entrepreneurship

Relationship Marketing Focus on establishing long-term relationships with customers. Making the sale is just the beginning of the relationship with the customer. More profitable strategy than transaction-oriented marketing (which focuses on making the sale). Marriotti: Entrepreneurship

Fixed Costs Marketing is a fixed costs, meaning it does not fluctuate (change) with sales. Fixed costs (USAIIRD): Utilities Salaries Advertising Insurance Interest Rent Depreciation Marriotti: Entrepreneurship

Breakeven Analysis Q: Can you afford your marketing plan? A: Calculate breakeven point. Breakeven point: business is selling enough units to cover fixed costs. If business is not breaking even, you can’t afford your marketing plan. Marriotti: Entrepreneurship

Calculating Breakeven Units Breakeven units = Fixed Costs (per month or per year)/Gross profit per unit $180 fixed costs (per month)/$6 gross profit per unit = 30 units. This business must sell 30 units per month to cover its fixed costs. Marriotti: Entrepreneurship