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Positioning
After selecting a target market, the firms next step is to
establish a position within the market that differentiates
it from its competitors.
In a sense, a position is the part of a market or of a segment of
the market the firm is claiming as its own.
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Positioning (continued)
Firms often develop a tagline to reinforce the position
they have staked out in their market, or a phrase that is
used consistently in a companys literature and thus
becomes associated with the company.
An example is Nikes familiar tagline, Just do it.
The beauty of this simple three-word expression is that it applies
equally to a 21-year-old triathlete and a 65-year-old mall walker.
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Taglines
Match the Company to Its Tagline
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Selling Benefits
Conclusion
Illustration
Our cell phones are equipped with sufficient memory to
store 100 phone numbers.
Our cell phones lets you store up to 100 phone numbers,
giving you the phone numbers of your family and your
friends at your fingertips.
While features are nice, they typically dont entice someone to buy a
product. The first statement tells a prospect how many phone
numbers the cell phone will hold, but doesnt tell the prospect why
thats important. The second statement tells a prospect why having
sufficient memory to store 100 phone number is important, and how
buying the product will enhance his or her life.
11-9
Establishing a Brand
(1 of 4)
Establishing a Brand
A brand is the set of attributespositive or negativethat
people associate with a company.
These attributes can be positive, such as trustworthy, dependable,
or easy to deal with.
Or they can be negative, such as cheap, unreliable, or difficult to
deal with.
Brand Management
Some companies monitor the integrity of their brands
through a program called brand management.
2008 Prentice Hall
11-10
Establishing a Brand
(2 of 4)
Whats a Brand? Different Ways of Thinking About the
Meaning of a Brand
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Establishing a Brand
(3 of 4)
Establishing a Brand
So how does a firm establish a brand?
On a philosophical level, a firm must have meaning in its
customers lives. It must create valuesomething for which
customers are willing to pay.
On a more practical level, brands are built through a number of
techniques, including advertising, public relations, sponsorships,
support of social causes, and good performance.
A firms name, logo, Web site design, and even its letterhead are
part of its brand.
Its important for start-ups to have a polished image immediately so
that they have creditability when they approach potential
customers.
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Establishing a Brand
(4 of 4)
Cobranding
One technique that companies use to strengthen their
brands is to enter into cobranding arrangements with other
firms.
Cobranding refers to a relationship between two or more
firms where the firms brands promote each another.
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Price
Marketing Mix
Promotion
Place
(or distribution)
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Product
Product
A firms product, in the context of the marketing mix, is the
good or service it offers to its target market.
The initial rollout is one of the most critical times in the
marketing of a new product.
All new firms face the challenge that they are unknown and that it
takes a leap of faith for their first customers to buy their products.
Some start-ups meet this challenge by using reference accounts.
A reference account is an early user of a firms product or service
who is willing to give a testimonial regarding his or her experience
with the product or service.
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Price
Price
Price is the amount of money consumers pay to buy a
product.
It is the only element of the marketing mix that produces revenue;
all other elements represent a cost.
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Approaches to Pricing
Two Approaches to Pricing
Approach to
Pricing
Cost-Based
Pricing
Value-Based
Pricing
Description
In cost-based pricing, the list price is determined by adding a
markup percentage to a products cost. The advantage of this
method is that it is straightforward, and it is relatively easy to
justify the price of a good or service. The disadvantage is that it is
not always easy to estimate what the cost of a product will be.
In value-based pricing, the list price is determined by estimating
what consumers are willing to pay for a product and then backing
off a bit to provide a cushion. What a consumer is willing to pay is
determined by his or her perceived value of the product and by the
number of choices available in the marketplace. Most experts
recommend value-based pricing because it hinges on the
consumers perception of what a product or service is worth.
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Promotion
(1 of 2)
Promotion
Refers to the activities the firm takes to communicate the
merits of its product to its target market.
There are several common activities that entrepreneurs use
to promote their products and services.
Advertising
Advertising is making people aware of a product or service
in hopes of persuading them to buy it.
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Promotion
(2 of 2)
Advertising (continued)
Advertisings major goals are to do the following:
Raise customer awareness of a product.
Explain a products comparative benefits.
Create associations between a product and a certain lifestyle.
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AdWords
Allows advertisers to buy keywords on the Google Home
Page.
Triggers text-based ads to the side (and sometimes above)
search results when the keyword is used.
The program includes local, national, and international
distribution.
Advertisers pay a certain amount per click.
Advertisers benefit because they are able to place their ads
in front of people who are already searching for
information about their product.
2008 Prentice Hall
11-22
AdSense
Allows advertisers to buy ads that will be shown on other
Web sites instead of Googles Home Page.
Google selects sites of interest to the advertisers
customers.
Advertisers are charged on a pay-per-click or a perthousand impression basis.
Advertisers benefit because the content of the ad is often
relevant to the Web site.
Web site owners benefit by using the service to monetize
their Web site.
2008 Prentice Hall
11-23
Public Relations
Public Relations
One of the most cost-effective ways to increase the
awareness of the products of a company is through public
relations.
Public relations refers to efforts to establish and maintain a
companys image with the public.
The major difference between public relations and
advertising is that public relations is not paid fordirectly.
The cost of public relations to a firm is the effort it makes to
network with journalists and other people to try to interest them in
saying or writing good things about the company and its products.
2008 Prentice Hall
11-24
Media coverage
Articles in industry
press and periodicals
Blogging
Monthly newsletter
News conference
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Approaches to Distribution
Selling direct versus selling through intermediaries
Approach to
Distribution
Selling Direct
Selling
Through
Intermediaries
Description
Many firms sell direct to customers. Being able to control the
process of moving their products from their place of origin to the
end user instead of relying on third parties is a major advantage of
selling direct. The disadvantage of selling direct is that a firm has
more of its capital tied up because it must own or rent retail
outlets and must field a sales force.
Firms who sell through intermediaries pass off their products to
wholesalers who place them in retail outlets to be sold. An
advantage of this approach is that the firm does not need to own
as much of the distribution channel. The disadvantage of selling
through intermediaries is that a firm loses control of its product.
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