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Small Business

Marketing:
Product and
Pricing Strategies

Chapter 9

Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education
Learning Objectives (1 of 2)

LO 9-1 Recognize the steps of the marketing


process.
LO 9-2 Use customer roles and profiles to help
define the target market.
LO 9-3 Recognize the major methods for conducting
marketing research.
LO 9-4 Develop your value proposition.
LO 9-5 Understand how to organize marketing
plans.

9-2
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Learning Objectives (2 of 2)

LO 9-6 Recognize the characteristics of goods


and services.
LO 9-7 Define the total product.
LO 9-8 Differentiate the stages of new product
development.
LO 9-9 Consider the impact of the product life
cycle.

9-3
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4 Ps of Marketing

4 Ps of Marketing
 The four major components of a marketing
effort—product, price, promotion, and
placement.
 Also called the marketing mix

9-4
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The Marketing Process (1 of 2)

9-5
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The Marketing Process (2 of 2)

Product development process


 The procedure to organize and pursue the
creation of new goods or services.
Customer development process
 The procedure to organize and pursue the
finding, obtaining and keeping of new customers.

9-6
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Understanding the Customer (1 of 3)

End user
 A customer role that describes the person who
eventually makes actual use of a product or
service in his or her personal or work life.
Purchaser
 A customer role that describes an individual or
institution that pays for or obtains a product or
service.

9-7
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Understanding the Customer (2 of 3)

 Decision maker
 A customer role that describes a person in an
organization who is responsible for choosing which
product or service will be obtained.
 Influencer
 A customer role describing a person or group who
can make credible or recognized suggestions
or recommendations to others regarding purchase
choices.

9-8
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Understanding the Customer (3 of 3)

Purchasing process
 The sequence of steps an individual or
organization goes through in making a decision
to buy a product or service.
Budget cycle
 A term applied to the schedule and the process
for setting the schedule for making purchases by
an individual or an organization

9-9
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Initial Customer Profiles (1 of 3)

Customer profile
 A detailed description of an archetypical or
hypothetical potential customer for a product or
service, also called a customer persona.

9-10
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Initial Customer Profiles (2 of 3)

Customer job
 The term given to what a potential customer is
trying to do—perform or complete some sort of
task, solve some problem, or try to achieve some
outcome.
 The target of the job is often the key to what a
proposed product or service is intended to help.

9-11
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Initial Customer Profiles (3 of 3)

Pivot
 Typically, a term describing a change of direction
in the thinking of an entrepreneur or a firm,
often based on new data or other findings.

9-12
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Target Market (1 of 2)

Total available market (TAM)


 A marketing term that refers to all of the people
or organizations (in one nation, region, or the
world) who might consider a product or service
being offered.
Serviceable available market (SAM)
 A marketing term that refers to the customers
within the geographic reach of a firm.

9-13
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Target Market (2 of 2)

 Serviceable obtainable market (SOM)


 A marketing term (also called the target market) that
represents the customers that a firm expects to be
interested in its particular product or service, and
able to be serviced by the firm.
 Penetrated market (PM)
 A marketing term that describes the actual number
of customers of an operating firm, divided by the size
of the target market, which gives a percentage of the
market the firm (or product/service) has attained so
far.

9-14
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Nested Types of Markets

9-15
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The Target Customer

Benefit matching
Long-term value
Influencer impact

9-16
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The Perfect Customer

Outstanding customer service


 The idea of “going all out” for the customer or
providing over-the-top service, not just the basic
help, professionalism, and friendliness we all
expect in any business transaction; an employee
or manager who is trying to make sure the
customer walks away with an exceptional
experience.

9-17
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Marketing Research (1 of 4)

Marketing research
 Systematic collection and interpretation of data
to support future marketing decisions.

9-18
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Marketing Research (2 of 4)

 Primary research  Secondary research


 An approach to  An approach to
researching based on researching based on
the gathering of new the use of existing
information, using information, often
techniques such as from government,
interviewing, commercial, or
surveying, and academic databases
observation. and research efforts.

9-19
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Marketing Research (3 of 4)

Ethnographic research
 Data gathered by simple observation—seeing
what consumers do, rather than asking them

9-20
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Marketing Research (4 of 4)

Focus group
 A form of data gathering from a small group led
by a moderator.
Survey
 A data-collection method using a
questionnaire—in person, on phone, on paper,
or on the Internet.

9-21
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Survey (1 of 2)

Scalar question
 Question that is answered by some sort of scale;
for example, “On a scale of 1 to 5, how do you
like this book?”
Dichotomous question
 Question that has only two possible choices; for
example, “Have you shopped here before?”

9-22
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Survey (2 of 2)

Categorical question
 Question that is answered by selecting the
proper category; for example, “What is your
ethnicity?
White, African American, Hispanic, Asian,
American Indian, Other.”
Open-ended question
 Question that allows respondents to express
themselves as they choose; for example, “What
do you like about this book?”

9-23
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Secondary Research

 Secondary research
 refers to using existing data or databases to gather
information on the topic of interest to you.
 often free and quick
 data may not be timely and you don’t always know
why the data were gathered and whether they were
gathered correctly

9-24
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The Basics: Crafting Your
Value Proposition
Value proposition
 Small business owners’ unique selling points
(also known as benefits) that customers can
expect from your goods or services, including
benefits that differentiate your offering from
those of the competition.

9-25
Planning for Marketing

 Don’t underestimate the power of marketing


plans.
 For start-ups, they help define how the firm will
build its brand and relationship with customers.
 For established businesses, the marketing plan
becomes a key step in imagining how a firm
might reposition itself and maintain its most
important relationship, the one it has with
customers.
9-26
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Goods-Services Mix

9-27
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Product (1 of 3)

Product
 anything that is offered to the market to satisfy
consumer wants, needs, and demands
 goods, services, people, ideas

9-28
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Product (2 of 3)

 Tangibility  Perishability
 An item’s capability  service exhibits
of being touched, perishability in that
seen, tasted, or felt if it is not used when
offered, it cannot be
saved for later use.

9-29
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Product (3 of 3)

 Inseparability  Heterogeneity
 A quality of a service  A quality of a service
in which the service in which each time it
being done cannot is provided it will be
be disconnected slightly different
from the provider of from the previous
the service. time.

9-30
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The Total Product Approach (1 of 3)

Total product
 The entire bundle of products, services, and
meanings of your offering; includes extras like
service, warranty, or delivery, as well as what the
product means to the customer.

9-31
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The Total Product Approach (2 of 3)

Augmented product
 core product plus features that tend to
differentiate it from the competition
 brand names, quality levels, packaging
Core product
 basic description of what a product is

9-32
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The Total Product Approach (3 of 3)

Your product means more to the consumer


than just the core component
Can help you get inside your customers’
heads and figure out the most cost-effective
“bundle” of value and cost benefits
Knowing what your product “means” to
consumers will help you set an appropriate
price

9-33
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New Product Development Process

Me-too products
 Products essentially similar to something already
on the mark

9-34
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Stages of New Product Development
Figure 9.6

9-35
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Idea Evaluation

Idea evaluation
 exhaustive process of specifying the details of
each idea’s technological feasibility, its cost, how
it can be marketed, and its market potential
Basic evaluation tool is the feasibility analysis

9-36
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Product Development

 Prototype
 The name given to the first model of a product or service.
 Some may be functioning, but built in a way that no
consumer would buy it (e.g., with exposed wires and
sharp edges) but shows the product can do what is
promised.
 Some look like the final product, but might not be
functional.
 made to prove aspects of the idea and are seen as the
first stop along the path of product/service creation.

9-37
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Commercialization

Commercialization
 The process of making the new products ready
for use by consumers by achieving standards
of durability and performance suitable for the
market and comparable to (if not better than)
the competition.

9-38
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The Product Life Cycle

9-39
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Service Life Cycle

9-40
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