1. Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 66-1 chapter Pricing and Promoting Your Product or Service 6 6 Prepared by Ron Knowles Algonquin College

2. Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 66-2 Business Plan Building Block Chapter 6 will help you:  Price your product or service.  Connect with the customer  Develop and refine your marketing strategy.  Refine your product features and benefits.  Develop a cost-effective promotional strategy. chapter 6 6

3. Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 66-3 Learning Opportunities  Understand how to price your product or service.  Develop a pricing strategy.  Understand how to communicate with target customers using both conventional and guerrilla marketing techniques.  Get free publicity.

4. Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 66-4 Learning Opportunities  Maximize economy in advertising and promotion.  Understand the value of personal selling.  Use creative techniques to arrive at the right promotional mix.  Develop a customer list.  Promote through networking and build your own network.  Attach price tags to your promotional strategies.

5. Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 66-5 The marketing mix is a blend of  P roduct offering  P ricing  P romotion  P lace (location) Some refer to this mix as the 4“Ps” of marketing The Marketing Mix

6. Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 66-6 Product  Product, Service, or Combination Focus on  Quality  Customer Service

7. Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 66-7 Customer Service and Quality Some Market Facts If you provide quality service, you can: Charge up to 10 percent more for your product or service  Increase sales growth  Reduce costs  Gain new customers  Make word-of-mouth advertising work for youAND Increase Profits!Increase Profits!

8. Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 66-8 Service and Quality Tips  Set a new standard for your industry  Don’t make customers pay for your mistakes  Measure the service you provide  Provide speedy service  Relieve your customer’s stress  Use feedback to stay in touch with your customer’s needs  Use feedback to stay in touch with your customer’s needs  Surround your product with customer benefits Source: Adapted from Rick Spence, Secrets of Success from Canada’s Fastest-Growing Companies (Toronto: Wiley & Sons Canada, Ltd., 1997), pp. 143-144.

9. Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 66-9 Your Pricing Strategy The price you charge must be acceptable to you, the seller, your customer and the market Your price depends on a number of factors including cost of production, the market, competitive forces, and so on Begin with a ceiling price strategy Follow up to ensure your price covers costs and leads to a profit

10. Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 66-10 Promotion  The art or science of moving the image of your business into the forefront of a prospective customer’s mind. Promotional plan  Your promotional plan must be consistent with your image, your target market and your business mission.

11. Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 66-11 Promotional Mix Promotional mix The key to connecting with customer is your promotional mix—all the elements that you blend to maximize communication with your customer.

12. Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 66-12 Direct Mail Discount Coupons Promotion in Cyberspace Branding Yourself Promotional Mix Catalogues Paid media advertising Paid media advertising Point-of- purchase displays Working visibly Direct Mail Free Ink and Free Air Trade Shows Industry Literature Personal Selling Promotional Mix Money-Back Guarantees Business Cards

13. Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 66-13 Promotional Strategy Two Important Considerations Select sales reps carefully Interview potential buyers Ask sales reps about their customers, geographic area, and so on. Provide encouragement and support to your reps. Insist on sales call reports. Write monthly sales letters. Encourage feedback. Use courtesy as promotion Impress upon your employees the importance of customer courtesy. Reward employees for exceptional courtesy.

14. Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 66-14 Guerrilla Marketing An important part of your promotional mix will be your “guerrilla marketing” promotional strategies—unconventional methods of getting the customer’s attention at minimal cost.

15. Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 66-15 Networking—Another Source of Promotional Power Networking Communicating through person-to- person channels in an attempt to sell or gain information. Talking to people with the purpose of doing business.

16. Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 66-16 Networking—Another Source of Promotional Power Research Shows Successful entrepreneurs spend more than 50 percent of their time maintaining their personal networks. Personal entrepreneurial networks outlast individual business ventures. Managing a personal entrepreneurial network requires initiative. Build Your Own Network Complete Action Step 33 p. 142

17. Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 66-17 Nine Rules for Networking 6. Identify and communicate with your gatekeepers 6. Identify and communicate with your gatekeepers 5. Use your network regularly 4. Get close to your natural contacts 3. Assess your network in terms of specific types of ventures that you peruse 3. Assess your network in terms of specific types of ventures that you peruse 2. Be systematic 9. Find a balance between your know-who and know how 9. Find a balance between your know-who and know how 8. Contribute regularly to your personal network 8. Contribute regularly to your personal network 7. Assess your network in terms of entrepreneurial functions 7. Assess your network in terms of entrepreneurial functions 1. Recognize that entrepreneurial know-who is just as important as know-how 1. Recognize that entrepreneurial know-who is just as important as know-how

18. Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 66-18 Promotion and Market Research Develop your core benefit proposition:  A statement about the benefits of your product or service to your target market Do primary research. Ask your customers questions:  find out how customers perceive your business.  listen to the answers and value the information.

19. Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 66-19 Your Promotional Plan Attach a Price Tag

20. Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 66-20 Plotting Your Future Checklist qWhat is your marketing strategy? qWhat prices will you charge? qWhat are your promotional mix, goals and objectives? qWhat stimulates your target market to buy or use your product or service? qWhat has your primary and secondary research told you about promoting your business?

21. Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 66-21 Plotting Your Future Checklist qDevelop a promotional strategy for your business. qHow will you cost out your promotional budget? qDoes your business have a unique twist for a possible publicity story? qWhy did you select the business name you are using?