Chapter 4

Enterprise Marketing
Outlines

– Introduction
– Marketing and Sales strategy
– Enterprise growth strategies

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 Introduction

• 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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The Marketing Process

3
Cont…

Key Elements • The strategic planning

and business portfolio
analysis processes help to
Analyzing marketing identify and evaluate
opportunities marketing opportunities.
Selecting target markets • The purpose of the
Developing the marketing marketing process is to
mix help the firm plan how to
capitalize on these
Managing the marketing
opportunities.
effort
Cont…

Key Elements • The segmentation process

divides the total market
Analyzing marketing into market segments.
opportunities
Selecting target • Target marketing chooses
markets which segment(s) are
Developing the
marketing mix pursued.
Managing the marketing • Market positioning for the
effort
product is then determined.
 Market Segmentation
• Market Segmentation is the process of dividing the total market for a good or service into
several smaller, internally similar (or homogeneous) groups.

• All members in a group have similar factors that influence their demand for the particular

product.

• Segmentation Variables

– Demographic: The distribution of a population’s age, sex, income, stage

in family cycle and ethnic background.

– Geographic: The city size, urban/ suburban/ rural population distribution

and climate.

– Psychographic: Personalities, lifestyles, social class including activities,

interests and opinions (AIO).
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Cont…

Key Elements • Competitor analysis guides

competitive marketing
strategy development.
Analyzing marketing • Strategy leads to tactics via
opportunities the marketing mix:
• According to W. J. Stanton,
Selecting target markets market mix
Developing the – The “Four Ps” – product,
marketing mix price, place, promotion
Managing the marketing (seller viewpoint)
effort – The “Four Cs” – customer
solution, cost,
convenience, and
communication (customer
viewpoint)
The Marketing Mix
Cont…
• Marketing analysis
– Provides information
Key Elements helpful in planning,
implementation, and
control
Analyzing marketing • Marketing planning
opportunities – Strategies and tactics
Selecting target markets • Marketing implementation
Developing the – Turns plans into action
marketing mix • Marketing control
Managing the – Operating control
marketing effort – Strategic control
 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.”
The selection of a course of action from among several
alternatives that involves specific customer groups,
communication methods, distribution channels, and pricing
structures.
It is a combination of target markets and marketing mixes. 10
 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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 Pricing Strategies
Price is what a buyer must give up to obtain a product. It is the most flexible
element in marketing mix. Price always change. Price is an important
competitive weapon.
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?
 Value for money
– What it costs you
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 15
• 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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A firm uses different tools for its promotional
activities which are as follows :

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

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 ii. Personal selling

• It means selling products personally. It means a

direct presentation of the product to the
consumers or prospective buyers.
• 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 tool include contests, games, gifts, trade shows, discounts, etc.

Sales promotional activities are often carried out at retail levels.

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
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– Conference presentations
 Cont… Sales promotion
– Trade show displays
– Telemarketing and direct mail campaigns
– Newsletters
– Event sponsorship
– Capability documents
• Trade promotions
– Reward incentives linked to purchases or sales
– Reseller staff incentives
– Competitions
– Corporate entertainment
– Bonus stock
• Sales force promotions
– Commissions
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– Sales competitions with prizes or awards
 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.
• The tools of publicity include press conference,
newspapers , publication and news in the electronic
media etc about an organization, its products and
policies.

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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
Channels provide the means by which the firm moves the goods
and services it produces to ultimate moves the goods and services
it produces to ultimate users

Manufacturers / producers

Agents / brokers

Wholesalers /distributors

Retailers Retailers

Consumers and organizational end-users 30

 Enterprise growth strategies
Franchising

• Arrangement where one party (franchisor) grants another party (franchisee) the
right to use its trade mark or trade name as well as certain business name and
processes, to produce and market a good or service according to certain
specifications.

• franchising using as a method of distribution for their products and services.

• Franchising may be a good choice because of the ability to grow a business

quickly and the satisfaction they feel from working as mentors to other
entrepreneurs.

• Franchising is not a “form” of business, but a method of system where

companies (franchisee) are granted the right to operate a business according to a
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 Cont…
• 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 33

 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

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company (the target) by another.
 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 risk capital
Through additional
Shareholders
 Can be sold-on
 Pays Corporation Tax
 must comply with
Companies Acts
 Greater regulation
 Greater disclosure
Disadvant  Unlimited  Unlimited
ages personal liability personal liability
 More difficult to for debts of whole
borrow money partnership
 Pay personal tax  More difficult to
 Limited access to borrow
capital.  Cease trading’
whenever
 Pay personal tax
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