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MGT602 - Entrepreneurship - Lecture Handout 26

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THE MARKETING MIX

The actual short-term marketing decisions in the marketing plan will consist of four important marketing variables, called the marketing mix:

  1. Product or service.
  2. Pricing.
  3. Distribution.
  4. Promotion. Each variable should be described in detail in the strategy section of the marketing plan.

STEPS IN PREPARING THE MARKETING PLAN

Step 1: Defining the Business Situation

The situation analysis is a review of where the company has been and considers many of the environmental factors. The entrepreneur should provide a review of past performance of the product and the company. Industry analysis should include information on market size, growth rate, suppliers, new entries, and economic conditions.

Step 2: Defining Target Market/Opportunities and Threats

The entrepreneur should have a good idea of who the customer or target market will be. The defined target market will usually represent one or more segments of the entire market. Market segmentation is the process of dividing the market into smaller homogeneous groups.. The process of segmenting is:

  1. Decide what general market or industry you wish to pursue.
  2. Divide the market into smaller groups based on characteristics of the customer.
  3. Select segment or segments to target.
  4. Develop marketing plan integrating the parts of the marketing mix.

Step 3: Considering Strengths and Weaknesses

It is important for the entrepreneur to consider its strengths and weaknesses.

Step 4: Establishing Goals and Objectives

Before strategy decisions can be outlined, the entrepreneur must establish realistic marketing goals and objectives. These answer the question "Where do we want to go?” These goals should specify such things as market share, profit, sales, market penetration, pricing policy, and advertising support. Not all goals and objectives must be quantified. It is a good idea to limit the number of goals to between six and eight.

Step 5: Defining Marketing Strategy and Action Programs

Strategy and action decisions respond to the question "How do we get there?" It incorporates:

1. Product or Service

This includes a description of the product and may include more than the physical characteristics. It involves packaging, brand name, price, warranty, image, service, features, and style.

2. Customer Service

  • Meeting customer needs and creating loyalty involves a number of low-cost steps:
  • In writing develop a statement of customer service principles. Train those employees who have direct contact with customers.
  • Establish a process for evaluating customer service.
  • Reward employees who are most effective in providing quality customer service.
  • Make regular contact with customers.
  • Invest in quality telephone equipment.
  • Meet customer expectations.
  • Customer service is especially important for e-businesses.

3. Pricing.

One of the difficult decisions is determining the appropriate price for the product. Factors such as costs, discounts, freight, and markups must be considered. Marketing research can help determine a reasonable price that consumers are willing to pay.

4.Distribution.

This factor provides utility or makes the product convenient to purchase when it is needed. This variable must be consistent with other marketing mix variables. Type of channel, number of intermediaries and location of members should be described. Regardless of the type of business, it is usually necessary for the new venture to have a website. The Internet will become an increasingly important medium for information and distribution. Direct mail or telemarketing may be considered. Direct mail marketing is one of the simplest and lowest in entry costs. But the direct-marketing or Internet
strategies are not a guarantee for success. The entrepreneur should evaluate all possible options for distribution.

5.Promotion.

The entrepreneur needs to inform customers as to the product’s availability using advertising media such as print, radio, or television. Usually television is too expensive unless cable television is a viable option. Larger markets can be reached using direct mail, trade magazines, or newspapers. A website may also create awareness and promote the product and services of the venture. It is possible to make use of publicity as a means of introduction. It is important that the marketing strategy and action programs be specific and detailed enough to guide the entrepreneur through the first year.

Step 6: Coordination of the Planning Process

The management team must coordinate the planning process. The entrepreneur may be the only person involved but may lack experience in preparing the plan. Assistance is available from many sources, such as the SBA.

.Step 7: Designing Responsibility for Implementation

The plan must be implemented effectively to meet all of the desired goals and objectives. Someone must take the responsibility for implementing each decision made in the marketing plan.

Step 8: Budgeting the Marketing Strategy

Planning decisions must also consider the costs involved in the implementation of these decisions. This budgeting will be useful in preparing the financial plan.

Step 9: Implementation of the Marketing Plan

The marketing plan is meant to be a commitment to a specific strategy. A commitment to make adjustments as needed by market conditions is also valuable.

Step 10: Monitoring Progress of Marketing Actions

Monitoring of the plan involves tracking specific results of the marketing effort. What is monitored is dependent on the specific goals and objectives outlined.

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