Chap
ter 4
ENTERPRISE
MARKETING
By: Assefa M. 1
Chapter Outlines
◦ Marketing and Sales strategy
◦ Branding
◦ Promotion strategy
◦ Pricing Strategies
◦ Product strategies
◦ Enterprise growth strategies
◦ Franchising
◦ Mergers and Acquisitions
◦ Legal forms of Business Ownership
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What is Small Business Marketing?
Marketing:
◦ all the activities involved in the transfer of goods from the
producer to the consumer
Small business marketing consists of those business
activities that relate directly to:
◦ Analyzing marketing opportunities
◦ Selecting target markets
◦ Developing the marketing mix
◦ Managing the marketing effort
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Market Segmentation
For a new venture, it's very essential to define clearly the specific group
of potential customers whose needs the enterprise aims to fulfill.
Segmentation Variables
◦ Demographic
◦ Geographic
◦ Psychographic
◦ Behavioral
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Marketing Strategy
Marketing strategy is defined by David Aaker as
"a process that can allow an organization to concentrate its resources
on the optimal opportunities with the goals of increasing sales and
achieving a sustainable competitive advantage.“
Marketing strategy includes all basic and long-term activities in the
field of marketing that deal with the analysis of the strategic initial
situation of a company.
Focus of Marketing Strategy
o Indentify new markets that you can successfully target
o Making sure that your products and services meet customers
needs and developing long-term and profitable relationships
with those customers.
o Communicate the benefits of your business offerings to your
target market
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Strategy options
Customer benefits
Customers benefits determine which Generally applicable
extend to: competitive strategy to:
is pursued:
1. Cost leadership e.g. larger companies in
* Price / costs strategy consumer goods sector
Niche strategy
* Design
* Quality e.g. small / medium-
2. Differentiation sized companies in
* Service all industries, e.g.
strategy Mould making
3.
*
* Availability * Mechanical
engineering
* Safety
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Marketing mix (the 4 P’s)
Definition
According to W. J. Stanton, "Marketing mix is the term used to describe the combination of
the four inputs which constitute the core of a company's marketing system:
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Product PRICING
METHOD 1: The “thumb suck” approach
Some SMEs use the following formula:
2 x cost of raw materials = PRICE
Example:
THUMB SUCK = Raw material cost=ETB 450 per dress x 2= ETB 900
But if it will be sold with price of ETB700 per dress
(resulting in a profit of 200 Birr, at a price that might be too high to attract orders)
The danger in using this approach is that the price could be too high
or too low when compared to your competitors and / or what the
customer is willing to pay for your product.
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METHOD 2: The “cost driven” approach
Other SMEs use the following formula:
PRICE = Cost + Profit
Again the price could be too high or
too low when compared to your
competitors and / or what the customer
is willing to pay for your product.
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METHOD 3: the “demand driven” approach
The demand driven approach recognizes
that customers don’t know or care about
your costs or how much profit or loss you
make.
WHAT IS IMPORTANT TO YOU? WHAT IS IMPORTANT TO THE
CUSTOMER?
◦ What it costs you Value for money
Perceived quality – how good it
is?
Price
How much they can afford
Branding, image, etc.
Price is set on the basis of what the customer is
willing to pay to get his needs fulfilled in a
satisfying way 10
Which approach is best?
the best approach is a suitable combination of
the cost- and the demand driven approaches.
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Promotion strategy
How companies inform, educate, persuade and remind
consumers of their product benefits.
Approaches
Conventional media
o print, radio
o online,
o television
Very specific & Focused on target customer
o sales promotions
o public relations
o personal selling
o direct marketing
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Most business
promotion
i. Advertising
ii. Personal Selling
iii. Sales Promotion
iv. Public Relations
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i. Advertising
Advertising aims to:
Make business and product name familiar to the public
Create goodwill and build a favorable image
Educate and inform the public
Offer specific products or services
Attract customers to find out more about your product or service
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Cont…
Rules to consider when planning any advertising activity
Aim - What is the primary purpose of the advertisement?
Target - Who is the target? For example, is it male, female, adult, teenager,
child, mother, father etc.
Media – Bearing the aim and target in mind, which are of the media available
is the most suitable – i.e. TV, radio, press or Internet?
Competitors – What are the competitors doing? Which media channel do they
use? Are they successful? Can you improve on their approach and beat them
in competition?
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ii. Personal selling
It means selling products personally.
Thus a salesperson plays three different roles
◦ Be persuasive
◦ A service provider
◦ Be informative
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iii. Sales promotion
Sales promotion relates to short–term incentives or activities that encourage the
purchase or sale of a product or service.
The major sales promotion activities
Consumer promotions
◦ Point of purchase display material
◦ In-store demonstrations, samplings and celebrity appearances
◦ Competitions, coupons and games
◦ On-pack offers, multi-packs and bonuses
◦ Loyalty reward programs
Business promotions
◦ Seminars and workshops
◦ Conference presentations
◦ Trade show displays
◦ Telemarketing and direct mail campaigns
◦ Newsletters
◦ Event sponsorship
◦ Capability documents
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Cont… Sales promotion
Trade promotions
◦ Reward incentives linked to purchases or sales
◦ Reseller staff incentives
◦ Competitions
◦ Corporate entertainment
◦ Bonus stock
Sales force promotions
◦ Commissions
◦ Sales competitions with prizes or awards
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iv. Public relations
It is the deliberate, planned and sustained effort to establish and maintain mutual
understanding between an organization (or individual) and its (or their) public.
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Products/Service
The product element of the marketing mix is essentially
concerned with the customers’ perceptions and expectations of
the goods or services.
Describe in detail your product or service
Describe products or service features
Explain the core benefits
Clarify your point of difference
Unique Selling Proposition (USP)
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Brand
A brand is a design, name, symbol, term or word that distinguishes
and identifies a company and/or products or services
A “sum total” of all of the experiences, impressions, and knowledge
customers have about your product, service, or organization
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Brand
Elements
Brand
names URLs
Slogans Brand
Elements Logos
Characters Symbols
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Qualities of a good brand
Memorable
Meaningful
Likeability
Transferable
Adaptable
Protectable
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Place
Concerned with making products available when and
where customers want them
Includes physical distribution of goods.
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ALTERNATIVE MARKETING CHANNELS
Manufacturers / producers
Agents / brokers
Wholesalers /distributors
Retailers Retailers
Consumers and organizational end-users
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Enterprise growth
strategies
Franchising
Franchising is as "an arrangement whereby the manufacturer or sole
distributor of a trademarked product or service gives exclusive rights
of local distribution to independent retailers in return for their
payment of royalties and conformance to standardized operating
procedures".
The person offering the franchise is known as the franchisor.
The franchisee is the person who purchases the franchise and is given
the opportunity to enter a new business with a better chance to
success than if he or she were to start a new business from scratch.
Foundation of this relationship is the Franchise Agreement.
◦ A franchise agreement is the legal document that binds the franchisor and franchisee together.
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Advantages of franchising
One of the most important advantages of buying a franchise is
that the entrepreneur does not have to incur all the risks
associated with creating a new business.
Advantages to the franchisee
◦ Product acceptance
◦ Management expertise
◦ Capital requirements
◦ Knowledge of the market
◦ Operating and structural controls
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Disadvantages of franchising to
the franchisee
Right and the only way of doing things
Continuing cost implication
Risk of franchisor getting bought
Inability to provide services
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Mergers and Acquisitions
Mergers and Acquisitions is a potential strategy for ensuring the
accelerated growth of a business instead of expanding internally
because the company already exists in place
This saves a lot of time and investment for the growing company
Merger is a combination of two companies into one larger
company.
Acquisition is known as a takeover, which is the buying of one
company (the target) by another.
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Legal forms of Business
Ownership
A. Sole proprietorship
This is the business owned by one individual. The individual is the business,
and the business is the individual. The two are inseparable.
A sole trader is the simplest form of business to start – all that is needed is the
first customer. It faces fewer regulations than a limited company
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B. Partnerships
Partnerships are just groups of sole traders who come together, formally or
informally, to do business.
As such it allows them to pool their resources, some to contribute capital,
other their skills.
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C. Limited Companies (Private limited and Share Company)
A company registered in accordance with the provisions of the companies
acts is a separate legal entity distinct from its owners or shareholders, and its
directors or managers.
It can enter into contracts and sue or be sued in its own right.
It is taxed separately through Corporation Tax
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Comparison of the three forms of Business Ownership
Sole trade Partnership Limited company
Advantage Easy to form Easy to form Limited liability
s Minimum of Minimum of Easier to borrow money
Regulation regulation Can raise capital through
additional Shareholders
Disadvant Unlimited Unlimited Pays Corporation Tax
ages personal liability personal liability must comply with
More difficult to for debts of whole Companies Acts
borrow money partnership Greater regulation
Pay personal tax More difficult to Greater disclosure
borrow
Cease trading’
whenever
Pay personal tax
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