Technical Articles

Mgt602
Theme 10
The marketing and legal aspects of an entrepreneurial venture

Now we will be discussing marketing and different aspects of marketing. First we will start with
the definition of marketing given by Philip Kotler. According to Kotler and Armstrong,
Marketing is “the process by which companies create value for customers and build strong
customer relationships in order to capture value from customers in return”. This definition has
some components that are process, value for customer, customer relationship, goodwill and
profit.

Moving on we will be talking about need. We have earlier talked about NABC (Need approach
benefit and competition). Whenever you discuss or talk about a business idea, the first thing that
is considered with the business idea is the need. So, need is identified at the first place whenever
you are designing any product or service. So what is need?

Need is a state of felt deprivation. (Kotler and Armstrong) Anything that you feel is lacking in
you is called need. Let’s see when this need is converted into want. According to Philip Kotler
and Armstrong, want is “The form human needs take as they are shaped by culture and
individual personality”. Your need becomes your want based on the culture, weather and belief
system of the area you are living in. This want finally takes the shape of demand. What is
demand?

Demand is “Human wants that are backed by buying power”. (Kotler and Armstrong)

How this need, want or demand is fulfilled? It is fulfilled through market offering.
For fulfilling need, want and demand of customers, businesses make market offerings. Kotler
and Armstrong define Market offerings as “some combination of products, services,
information, or experiences offered to a market to satisfy a need or want”.

In marketing, you would have heard about 4 P’s or 7 P’s. This is an important and main
framework of marketing which explains which aspect to keep in mind during the marketing
process. What are 4 P’s of Marketing?

 Product: what are the design, quality and attribute of the product?
 Price: what will be the price of the product?
 Place: what will be your market place?
 Promotion: how will you inform your customer about your product service or
experience?

In case you are offering a service, there mostly 7 P’s of service marketing are considered. Along
with the 4 Ps three more Ps are added making it product, price, place, promotion, process, people
and physical evidence.
Now coming towards market, it says that Market is “the set of all actual and potential buyers of
a product or service” (Kotler and Armstrong).

There can be many types of markets like business markets, customer markets and online markets.

Business markets: when selling to the business

Customer markets: when selling to customer
Online markets: when selling through digital media and not through physical markets

Marketing Strategy will be briefly discussed here and detail will be given in later modules.
While designing a marketing strategy, following steps are involved.

1. Identify the customer need

2. Choose your value proposition
3. Design a consistent brand and message
4. Select your target audience
5. Select the marketing/social channel for your startup
6. Build your referral network
7. Assemble smart marketing team
8. Become your product’s loyal user
9. Be vigilant to customer’s feedback
10. Relationship marketing

Coming to the next topic, we will be discussing customer relationship management. You will
have to develop a relationship between your customer and your business.
Customer Relationship Management (CRM)

“The overall process of building and maintaining profitable customer relationships by delivering
superior customer value and satisfaction” (Kotler and Armstrong)

The building blocks of CRM include deliver customer value and delight your customer.
Customer value is very important. While purchasing a product, whatever benefit or value I attach
to your product, I will be comparing it to alternate products by the competitors. If the value or
promise you are offering is better as compared to the competitors, then I will be buying your
product.

There to understand Customer-perceived value, let’s have a look at its definition,

“The customer’s evaluation of the difference between all the benefits and all the costs of a
marketing offer relative to those of competing offers.” (Kotler and Armstrong)

Delighting customer relates to satisfying the customer. So, how to delight the customer?
Customer will be delighted if you exceed his or her expectations and how will you do it? You
can do it by exceeding his or her expectations through customer experience, customization and
personalize communication, feedback mechanism, relationship marketing and build/join
communities.
A very important framework is available to select the kind of customer that you are interested to
maintain your relationship with. Philip Kotler has given a framework for customer classification
on two bases; one is potential profitability and second is projected loyalty. Based on which there
are following classifications of customers.
 Strangers
 Butterflies
 True friends
 Barnacles

Strangers
These have low potential profitability and little projected loyalty. They have just once purchased
your product and might not purchase in future again.
There is little fit between the company’s offerings and their needs. So the strategy for such
customers should be not to invest anything in them.

Butterflies
They are potentially profitable but not loyal. They need the product and might buy your product
and then again when the need arises they might buy the product of some other brands. They will
not wait for your brand to offer discount, they will avail the discounts of any brand to fulfill the
needs.

There is good fit between the company’s offerings and their needs. Therefore, the strategy
should be to capture as much of their business as possible in the short time during.

True friends
They are profitable as well as loyal. They are your true friends. They need your product and they
have strong fit between their needs and the company’s offerings. Strategy for them should be to
build continuous relationship and investments should be made to delight these customers and
nurture, retain, and grow.

Barnacles
They are highly loyal but not very profitable. They will show interest in your product but will
eventually not buy your product. They have limited fit between their needs and the company’s
offerings. They are very problematic also. They might be demanding a lot from your product.
You may be providing them customized service to fulfill their demands but they will later on tell
that they are not interested in your product. So for them strategy is to fire them

Moving on we will discuss different marketing tactics used by businesses to gain customer
attention like buzz marketing and guerrilla marketing. Firstly let’s see what buzz marketing is.
“Creating a word of mouth or talk around product service or experience that consumers view as
authentic”

Buzz marketing is done by using any entertaining way or news to draw people’s attention
towards the brand instantaneously. Which means you read a news or saw a Facebook teaser that
got your attention instantly and started talking about it. That is buzz marketing. What companies
do in buzz marketing is that they hire celebrities, opinion leaders and influencers (like you
tubers) who start talking about the product and show that they are using this newly launched
product or they talk about a product about to be launched. This is how buzz marketing is done.
Viral marketing, undercover marketing, diffusion marketing and product seeding are certain
other names for Buzz marketing. Buzz marketing is used under various situations:
Buzz marketing can be used under following circumstances:
When you have to enter the market, you need to sensitize your market and your customer at that
time you can use it.

 When you are launching a new product, service or any experience, you may be using
buzz marketing.
 When you are opening a new outlet. You might have seen in big malls that on certain
shops it is written Coming Soon.
 While expanding business.
 When you are entering a new market segment.

Buzz marketing can be used as a promotional campaign. In today’s era of digital marketing, the
widely used technique is buzz marketing. After buzz marketing, check out another tactic that is

Guerrilla marketing.

Guerrilla marketing is the strategy that involves unconventional and low cost marketing tactics
that produce maximum results.

It has two main features; its low cost and it brings maximum customer engagement. It may
involve any unconventional design or unconventional event in a market place that grabs your
attention and you are involved in it and enjoys it, its guerilla marketing.

Jay Conrad levinson coined the term guerilla marketing in his book named guerrilla marketing in
1984. This word was inspired from guerrilla warfare. In this warfare different small tactics are
used to surprise the enemy like ambush, sabotage, raid and surprise. So the basic purpose of
guerrilla marketing is to surprise the customer to such an extent that the customer enjoys the
experience. Now we will see when guerrilla marketing can be used. In Pakistan the use of
guerilla marketing is very limited as compared to other parts of the world. What you do in this
marketing, you engage the customers and customer starts enjoying your aesthetics sense. This
kind of marketing was basically for small firm but large companies use this marketing to a wider
extent. There are different types of guerrilla marketing.

 Outdoor guerrilla marketing

 Indoor guerrilla marketing
 Event ambush guerrilla marketing
 Experiential guerrilla marketing

Targeting your customers is a critical part of marketing function. There are certain Market
targeting strategies. First thing to do is to see how to choose the right customers to serve? After
dividing the market into various segments of distinct customers which may be based on
psychology, age, income. Then the next step is targeting the market. Targeting means once you
have divided the market into various segments now you will be choosing one or multiple
segments to offer your product or service. So, in short targeting it that segment/segments that
you are going to serve. Before targeting the segment we have to evaluate the segments. There are
two options for this evaluation. Philip Kotler has given two yard sticks for evaluation first being
segment’s attractiveness and second is firm’s objective and resources.
Segment’s attractiveness:

For evaluating the segments attractiveness, once you have divided the market into segments
based on any element like income age, psychographics etc, you must have the important
information about size and growth, profitability, economies of scale are available and
competition. By measuring these you can know how attractive the segment is that you plan to
target.

After this you will check what the objectives of your firm are and what are the resources of your
business and determine that will these be enough and fit to fulfill the needs of the segment you
are selecting.

How to target the market. There are multiple strategies:

For young and upcoming entrepreneurs the one leading area of weakness is Marketing
Research and marketing intelligence. Information and knowledge is an important resource in
this era. For information market research is critical. So let’s see what market research is.
Marketing research is systematic design, collection, analysis, and reporting of data and findings
relevant to specific marketing situation faced by a company (Philip Kotler).

Now let’s have a look at the situations where information is required. It could be a Business
opportunity for which information is required. It may be market growth for which information is
gathered. It may be competition about which data is collected. Moving on let’s see why
Marketing Research is required. Marketing research is needed for the following reasons. It is
conducted for any of the following situations arise to identify problem, to evaluate segment
attractiveness, to evaluate a business opportunity, market survey for customers’ preference,
product preference test, sales forecasting, integrated marketing communication strategies
evaluation, evaluation competition, product and/or market expansion and price change.

Now let’s study the Marketing Research Process. This process is very simple:

Step1: Define the problem/opportunity

Step2: Define the objectives of marketing research
Step3: Develop a complete research plan
Step4: Identify data sources
Step5: Selecting of sampling method and data collection
Step6: Analyze the collected data
Step7: Present the findings
Step8: Make an informed decision
Marketing Intelligence is a great success factor for entrepreneur. According to business
dictionary marketing intelligence is:

“Primarily external data collected and analyzed by a business about markets that it anticipates
participating in with the intention of using it in making decisions”.
([Link]

Considering the importance of Marketing Intelligence big firms develop Marketing Intelligence
System. Philip Kotler defines it as:

“A set of procedures and sources used by the management to obtain everyday information about
development in the marketing environment”. (Philip Kotler)

Moving on we will be discussing design your market offering(s) or how your product or service
is designed. Let’s see how Philips Kotler defined product and service.

“Product is anything that can be offered to market for attention, acquisition, use or consumption
that might satisfy a need or want”. (Kotler and Armstrong) and secondly what service is;
“Service is anything or benefit that one party can offer to another that is essentially intangible
and does not result in any ownership of anything”.

There are certain levels of product and services which include core benefit, actual product and
augmented product. Mostly firm stay at the core level while designing the product or service but
many of them add certain additional flavors to their product like brand name, level of quality and
packaging etc. If you want to reach augmented level then according to Kotler you may offer
delivery at the door step, credit facility cash on delivery, installation, after sales service etc.
Deciding about all these levels is important because it will have impact on the pricing of the final
product.

When we talk about product and Service Classification, we see that whatever business is going
on it can broadly be divided into two categories i.e. consumer products and industrial product.
Consumer products are offered to end consumer including convenience, shopping and specialty
product while industrial products are offered to firms for further processing or for use in
conducting the business. There are certain attributes of product and services. Product and
service comprises of product Quality, Product Features, product style and design. Along with all
these another important aspect is Unique Selling Proposition (USP). [Link]
defines it as:

“The factors or consideration presented by a seller as the reason that one product or service is
different from better than that of the competitors”.
([Link]

Product design and product quality are other significant areas to be discussed. Product quality
seems to be a simple concept yet it is very deep and complex. Let’s have a very simple definition
of Product quality. Product quality is defined as zero defect product or service. The American
Society for Quality defines “quality as characteristics of product or service that bear on its ability
to satisfy stated or implied customer needs”. Product quality is:
 The leading positioning tool
 Directly related to performance of product or service
 Directly linked with value for customer
 Directly related to customer satisfaction
 Ensure long term relationship with customer

Dimensions of product quality include level of quality and consistency and commitment with
quality.

What does it means by quality? Quality revolves around these eight dimensions.
Design of product and service is also important and is a little more complex and detailed than
style. It is directly linked with customer value and satisfaction, ensure long term relationship
with customers .

While designing the product or service, its specifications are considered crucial at this stage. So
an entrepreneur must write these specifications. Consider yourself as a customer now. Whenever
you go to buy an expensive product, you check all its specifications before making the purchase
decision. The business [Link] defines product specifications as:
“Written statement of an item's required characteristics documented in a manner that facilitate its
procurement or production and acceptance”.
[Link]

Another definition given by Kotler says that product specification is:

“The stage of the business buying process in which the buying organization decides on and
specifies the best technical product characteristics for a needed item”.
In business buying, if your written specifications for the product, you may be involved in three
different business buying situations ; straight rebuy, modified rebuy and new task rebuy. Now
looking at each concept one by one. Kotler has defined these three concepts in his book
Principles of Marketing.

“A business buying situation in which the buyer routinely reorders something without any
modifications called straight rebuy”.( Kotler and Armstrong)

“Business buying situation in which the buyer wants to modify product specifications, prices,
terms, or suppliers called modified rebuy”. (Kotler and Armstrong)

“A business buying situation in which the buyer purchases a product or service for the first time
called new task”. (Kotler and Armstrong)

Packaging and labeling defines your product. It is very important because it involves cost and
grabs the customer’s attention. Packaging helps to keep the product safe. Your packaging should
be convenient and safe for the customer and customer should be happy to carry the product
without hassle. Labeling is also very important in certain products because legal issues may be
involved like medicine.

What is packaging? Lets’ have a look at two different definitions of packaging.

“The wrapping material around a consumer item that serves to contain, identify, describe,
protect, display, promote and otherwise make the product marketable and keep it clean.”
([Link]

“Packaging involves designing and producing the container or wrapper for a product.”
(Kotler and Armstrong)

While designing a product, it might have multiple layers of packaging. It may involve primary
package, secondary package and shipping or third package. Packaging is known as the product's
face. So, there are certain packaging concerns as given below:

 Product container
 Packaging design and functionality
 Packaging color and quality
 Packaging size
 Packaging durability
 Packaging cost

Packaging also attracts the attention. For example the Candy packaging ideas grabs the attention
of the kids. Therefore, packaging is important because it results in influencing consumer,
assurance of the product quality, brand recognition and brand reinforcement.

Labeling is very critical for certain industries especially where regulatory authority is monitoring
it. Lets’ see a simple definition of labeling:

“Display of information about a product on its container, packaging or the product itself”
[Link] also gives a very good definition of labeling as:

“For several types of consumer and industrial products, the type and extent of information that
must be imparted by a label is governed by the relevant safety and labeling is a part of the
packaging. Labeling ranges from shipping laws.” You may further explore it on
[Link]

Labeling is has broad meaning it includes simple tags to complex graphics.

After packaging and labeling let’s move on towards placement of product and/or [Link], for
an entrepreneur an important question is where to sell the product? What will be your market,
customers and how to access them? Placement is related to accessing the customer. You may be
selling the business product or consumer products but how will your customer access your
product is important. Therefore, placement is the distribution options available to you to access
your customer to deliver the customer value. It may be online, physical outlet or door to door
selling. Given below is the simple definition of Place/Access.
“What new distribution options are there for customers to experience our product e.g. online, in-
store, mobile etc.”

Placement includes all the matters related to supply chain management, geographical locations,
distribution channels and display of the product.
For placement, it matters a lot in which market are your dealing. Is it consumer markets,
industrial markets, government markets, global markets or virtual market?
There are some important questions related to display like:
How to get dominating shelf space? Where to display the product e.g. own display center or
shopping mart, departmental store or convenience shop? What are shelf plan to maintain the
inventory? What is the shelf life of the product?

After place, next P that is going to be discussed is price. Price is a really sensitive area whether
you are planning to start the business; you are designing the product or already doing business
which you want to expand. Price is the only p that is source of revenue while remaining P’s
involve / incur cost.

A general definition of Price is: “The amount of money which is required and given in payment
for buying something including product, service or experience”. Another definition by
[Link] is:

“A value that will purchase a finite quantity, weight, or other measure of a good or service”.
([Link]

Consumer psychology and pricing are linked to each other as pricing may be the first factor a
price conscious consumer is considering while making a purchase decision. While checking the
pricing, the consumer may be considering and comparing all the following areas like consumers
process the price information, previous purchases (last paid price), market survey, formal
communication, informal communication, online sources, competitors’ price, expected future
price and price sensitive customers.

Before studying the pricing strategies, first we will see what pricing objective is because pricing
strategies are designed based on your pricing objectives. So, there could be different objectives
on which pricing is based like survival, maximum current profit, maximum market share (market
penetration), new product pricing, product quality leadership and partial cost recovery.
Price strategies usually depends on what product, service or experience you are offering to the
customer, what is your competitors’ price of similar and alternate products and whoyou’re your
customers/ what is your target market?

While selecting any of the price strategies, it depends upon business life cycle stage your
business is in. You may choose any pricing strategies from new product pricing strategies,
psychological pricing and product-line pricing strategies. Let’s see one by one what these pricing
strategies are.

1. New Product Pricing Strategies

 When a company is bringing in new product into the market, it usually charges market-
skimming pricing which means they charge high price in the start and then with the passage
of time lowers the price. Another option is market-penetration pricing. In this pricing
strategy, you want that when your new product is being launched, it sells in bulk as compare
to your competitors so you offer a price which is competitively low and at the same time
offering some additional features in comparison to your competitors.

2. Psychological Pricing
It is based on the psyche of the customer and it may include reference pricing, bundle
pricing, multiple unit pricing and everyday low pricing.

3. Product-Line Pricing Strategies

This strategy is important for those entrepreneurs who are on the growth stage and wants to
increase their product line. It is based on product line for which two different pricing are used
named as captive and premium.

Captive pricing is for products that must be used along with the main product. Main product in a
product line priced at low while related product and/or line of product price higher. For example,
shaver with replaceable blades which is the main product is priced low but the replaceable blades
are priced a little higher. You may charge Premium pricing which is pricing different model at
different prices depending on their quality and features.

Price is the factor that brings revenue. While discussing price, one thing that is very important is
price change and price wars. Being an entrepreneur, if you have decided to change the price of
your product then you have to consider how your competitor will respond to it. There could be
multiple reasons for price change like cost inflation, over/less demand, price competition, nature
of product and product life and promotional campaign.

When prices are changed, there are certain reactions to price change. Both customer and
competitors will respond to change in price.

 Reaction by customers: He will be happy if price decreases while he will be annoyed if

prices increase.
 Reaction by competitors: They will also react towards your change in price for that they
may respond in any of the following ways:

1. Maintain the price

2. Maintain the price with some value addition
3. Reduce the price
4. Increase the price and improve the quality
5. Launch a low price line

Price war is a very critical moment and entrepreneur should be able to survive the war.
Investopedia defines price war as:
“A price war is a competitive exchange among rival companies who lower the price points on
their products, in a strategic attempt to undercut one another and capture greater market share. A
price war may be used to increase revenue in the short term, or it may be employed as a longer-
term strategy.” ([Link]

While [Link] defines it as:

“Market situation in which (usually two) powerful competitors try to suppress each other's
market share by progressively reducing prices until one of them retreats, at least temporarily”.
([Link]

After seeing price, price changes and price war, marketing communication mix is going to be
discussed. Communication mix is significant because if you are launching a product in the
market then you have to communicate with your customers to inform them about your product.
The way you inform them is called communication strateiges or marketing communication
strategies or mix.

Kotler defines Marketing Communications Mix as:

“The specific blend of promotion tools that the company uses to persuasively communicate
customer value and build customer relationships” (Kotler and Armstrong)
Marketing Communications Mix includes advertising, sales promotion, personal selling, public
relations, direct marketing and digital marketing. Looking at their definition one by one, as given
by Philips Kotler, are:

Advertising: Any paid form of non-personal presentation and promotion of ideas, goods, or
services by an identified sponsor Source: (Kotler and Armstrong)

Sales promotion: “Short-term incentives to encourage the purchase or sale of a product or

service” (Kotler and Armstrong)

Personal selling: “Personal presentation by the firm’s sales force for the purpose of making sales
and building customer relationships.” (Kotler and Armstrong)

Public relations (PR): “Building good relations with the company’s various publics by obtaining
favorable publicity, building up a good corporate image, and handling or heading off unfavorable
rumors, stories, and events.” (Kotler and Armstrong)

Direct Marketing: “Direct connections with carefully targeted individual consumers to both
obtain an immediate response and cultivate lasting customer relationships” (Kotler and
Armstrong)

Therefore, all these tools are available to communicate with the customers, you may use any of
these tools individually or in combination. When you are using multiple tools, it is called
integrated marketing communication. Integrated marketing communications (IMC) as defined
by Kotler is:
“Sensibly integrating and coordinating the company’s multiple communications channels to
communicate a clear, reliable, and convincing and persuasive message about the product, service
and/or organization”. (Kotler and Armstrong)

In integrated marketing communications, there are different strategies like social media, SMS
marketing, blogs and influencers, news channels, vlogs, website and website banners, search
engine optimization and local cable advertising. It is the decision of the entrepreneur to pick and
choose any of these communication tools either individually or in combination. But the essence
of using these tools is to inform the customer about their offerings.
Another important concept of marketing is brand. Brand is your business identity. Pakistani
entrepreneurs are lacking the brand development skills. Therefore, this area needs special
attention of the entrepreneurs. There are various definitions of brand. One discussed below if
taken from [Link]:

“A brand is an identifying symbol, mark, logo, name, word and/or sentence that companies use
to distinguish their product from others”. ([Link]

While brand building, it is important to get legal protection for your brand so that no one else can
use or copy your brand name. Such kind of protection is called trademark. [Link]
defines trademark as:
“Legal protection given to a brand name is called a trademark”.
([Link]
While discussing brand, another important concept is brand identity. Let’s see how
[Link] defines it.
“Brand identity is the visible elements of a brand, such as color, design, and logo, that identify
and distinguish the brand in consumers' minds.”([Link]
[Link])

Branding is important for the business and there are numerous reasons for its importance as it
provides business Identity, helps in building recognition and customer relationship, being an
implicit quality promise, leads to customer loyalty, generates new customers, wins customer and
market place trust and provides edge on competitors.

Brand development is a complex process. There are some brand development strategies but these
are critical for those businesses that are planning to expand. For these strategies, there are two
things: either you are dealing with existing or new product category or you are using existing or
new brand name. Therefore, ultimately it generates four strategies to select from.
Kolter defines these strategies in the following way.

Line extension
“Extending an existing brand name to new forms, colors, sizes, ingredients, or flavors of an
existing product category” (Kotler and Armstrong)

Multi brand
“Multi Brand Companies often market many different brands in a given product category”
(Kotler and Armstrong)
Brand extension
“Companies extend a current brand name to new or modified products in a new category.”
(Kotler and Armstrong)

New Brands
“If the power of existing brand name is fading, a new brand name is needed.” (Kotler and
Armstrong)
It is up to the entrepreneur that which brand development strategies he will use but brand
building is very crucial in today’s era. At the end, it is again emphasized that Pakistani
entrepreneurs should make utmost efforts towards brand development to reap maximum benefits
of their business struggle.

Note:
Please watch the video lectures uploaded on VULMS for the topics related to explicit and
implicit promises of brands and businesses and brand building.
Video lecture 135: Explicit and implicit promises of brands and businesses
Video lecture 145: Brand building

Written by
Sara Hussain