Entrepreneurship Unit 3 Notes: Segment, Target & Positioning

BDI3U – Grade 11 – Entrepreneurship – Unit 3 Notes Entrepreneurship Notes Segment, Target & Positioning Segmenting: Breaking down a diverse market of people into smaller, similar groups Should be: ––– Can – ––––– Measurable Sizeable Reachable be segmented based on: Demographics Geography Psychographics Socioeconomics Consumption Patterns Behaviour Patterns Targeting: ● – Second stage of the STP process ● – After the market has been separated into its segments, the marketer will select a segment or series of segments and target it/them ● – Resources and effort will be targeted at the segment Positioning: – Is all about perception – What you perceive as quality, value for money, etc. is different to others’ perception. However, there will be similarities ● – Most useful tool for marketers ● – After segmenting a market and then targeting a consumer, you would proceed to position a product within that market ● – The term positioning refers to the consumer’s perception of a product or service in relation to its competitors Position Maps: ● – Products or services are ‘mapped’ together on a ‘positioning map’ ● – Allows them to be compared and contrasted in relation to each other – Marketers decide upon a competitive position which enables them to distinguish their own products from the offerings of their competition (hence the term positioning strategy) 6 P’s of Entrepreneurship: – Production – Productivity – People – Price – Promotion – Profit Production- mobilization of resources to yield a product or service that consumers want or need Production per worker is the standard unit of measurement for productivity. People are the team members required to operate a firm effectively. The most common method used by business owners to inform consumers about their goods or services is promotion, which includes advertising, personal selling, publicity, and sales promotion. Price- the price that a venture receives for its goods or services Profit- primary incentive for mobilizing resources, taking risks and starting ventures How do you determine a price for your product or service? ● ● ● ● ● ● ● ● – Follow the competitors – Go lower than the competitors – Price higher than the competitors – Based on your manufacturing costs (costs to make your product or service) – If a new invention, any price that you think consumers would pay for it Price, Profit & Revenue Price: – Small ventures set the prices by following the existing prices in the market – By differentiating his or her product or service from the competition, and offering something unique – When there is no competition, an entrepreneur can use several pricing strategies Revenue: Formula: price of each unit X quantity Profit: – The money you keep from your revenue Formula: (price of each unit X quantity) – costs Profit= Revenue – Costs 4 Ways of Promotion The sponsored, impersonal mass communication about items made by a specific sponsor in an effort to persuade or influence behavior is known as advertising. It is the widespread, faceless dissemination of knowledge. Takes place: ● – Familiar types of media: TV, radio, newspapers & magazines ● – Alternative types of media: direct mail, billboards, transit, telephone directory of the Yellow Pages When is it used? ● – To move customers through the AIDA formula- Attention, Interest, Desire & Action ● – To differentiate products from their competitors ● – Introduce a new product ● – To communicate product information ● – To support personal selling ● – Expand the use of a product (ex. Arm & Hammer did with Baking Soda) ● – To remind people about the company’s products Advantages: ● – Can reach many people simultaneously (at the same time) ● – High frequency (ex. Customers see the message often) ● – Can use a number of different mediums (ex. TV, radio, print, etc.) ● – Advertising helps consumers make choices Disadvantages: ● – Difficult to evaluate how well the campaign is doing ● – Can be expensive ● – Need to have access to creative people to develop ads ● – Consumers are tempted to purchase goods and services which they do not really need ● – Advertising promotes overconsumption, which can hurt the environment Personal Selling: the direct presentation of a product to a prospective customer by a representative of the organization selling it Takes place: ○ – Face to face ○ – Over the phone When is it used? ● – Small geographic market (ex. Toronto only, not all of Canada) ● – Relatively small number of customers ● – Product is very technical and/or requires a demonstration (ex. Vacuum salesman in the 1960s) ● – Product must be filled to individual needs (ex. Security or landscaping) ● – The sale involves a trade-in (ex. Used cars) ● – The product is in the “introductory stage” of the product life cycle Advantages: ● – More flexible than other forms of promotion. Sales people can see the reaction of their customers and instantly change their presentations ● – Reduces wasted effort by pinpointing likely customers ● – Goal: to actually make a sale Disadvantages: ● – High cost ● – Difficult to attract quality salespeople Interesting fact: More money is spent on personal selling than any other form or promotion Publicity: a special form of public relations that involves new stories about an organization or its products that are not paid for by the organization. It is the mass, impersonal communication of information not usually controlled by the organization Takes place: ● – In all forms of media: print, television, radio, etc. When is it used? ● – To announce a new product ● – Publicize new politics ● – Recognize employees ● – Describe research breakthroughs ● – Report financial performance ● – Used only if information is viewed as newsworthy by people Advantages: ● – The credibility of publicity is higher than advertising ● – Lower cost than advertising or personal selling ● – Increased readership- many people ignore traditional advertising and since this form is viewed as editorial material or news, more people read it ● – More information continued than in an ad ● – Timeliness- a company can put out a news release very quickly Disadvantages: ● – Loss of control over the message- it may not appear in the media and when it does, it may be altered ● – Limited exposure- may only be used when a “slow news day” ● – Publicity is not free- expenses of staffing to prepare the material ● – There is also bad publicity Sales Promotion: demand-stimulating designed to supplement advertising and facilitate personal selling. It is paid for by the sponsor and frequently involves a temporary incentive to encourage ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● a purchase Takes place: – Contests, trade shows, in-store displays, rebates, samples, premiums, discounts and coupons When is it used? – Often used with personal selling and advertising – To gain trial of a new or improved product – To disrupt existing buying habits – To attract new customers – To encourage greater use by existing customers – To combat competitors promotional activity – To increase impulse buying Advantages: – Provides short-term results- using coupons produces fast & measurable results – Stimulates household demand for a product – Has definite starting and ending points – Provides a low-risk situation for customers to try your product Disadvantages: – Competitive pressure to conduct sales promotion – Buyers get used to purchase incentives and begin to expect them – Low quality of retail selling- ex. People at Walmart are not well trained to sell a company’s products Interesting Fact: There are 2 types of sales promotion: Trade promotion- aimed at members of the distribution channel Consumer promotion- aimed at consumers Three different forms of logos: Abstract Symbols: shapes that carry a visual message but are not representative of identifiable objects. They convey a vague product association, such as “high tech” or “flowing” Visual Symbols: typically line drawings of individuals, animals, or objects. Before a customer even tries it, a powerful visual emblem and a wisely chosen brand name can convey a lot about a good or service. Monogrammatic Logo: consists of the stylized writing of the company’s or product’s initials, or a combination of initials and numbers Logo & Slogan: Logo: the accepted generic term for all of the symbolic ways to create a brand. These include trademarks, trade names, brand marks, logotypes, and corporate symbols Slogan: a short, catchy phrase that is always attached to the company’s name and logo. Make it enticing, sellable, believable, memorable, interesting, desirable and exclusive. Do it in maybe seven words or less Advertising The purpose is to move customers through the AIDA formula AIDA A- Attention When companies use this formula, they design an advertising campaign, which will at first be successful in attracting consumers’ attention I- Interest Once they have attracted this attention, then they have to ensure that they hold the prospect’s interest in their product D- Desire While a company is busy holding the interest of people, they simultaneously (at the same time) need to be building a desire for the product A- Action Finally, when the time is right, the company will push the prospect towards action, by asking prospects to purchase the product Supply Expenses: repetitive expenses to help keep things running Ex. chips, drinks, gas, pens, paper Capital Expenses: fixed, one time expenses Ex. c ar, house, building, computer, TV Monthly Expenses: expenses that have to be paid every month Ex. rent, vehicle insurance, mortgage & bank fees