fedex & japi itc worskhop lecture

7/29/2019 FedEx & JAPI ITC Worskhop Lecture

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S Entrepreneurial ConceptModule

130 minutes

Terms to Remember

1. BUSINESS it is an organization that provides goods and services to others who want orneed them.

2. BUSINESS PLAN it is a plan that works for a business to look ahead, allocate resources,focus on key points, and prepare for problems and opportunities.

3. ENTREPRENEURSHIP is the process of creating of something new with the value bydevoting the necessary time and effort, assuming the accompanying financial, psychic,

and social risks, and receiving the resulting rewards of monetary and personal satisfaction

and independence.

CONCEPT OF BUSINESS1

A business can be defined as an organization that provides goods and services to others who

want or need them. When many people think of business careers, they often think of jobs in large

wealthy corporations. Many business-related careers, however, exist in small businesses, non-

profit businesses, government agencies, and educational settings. Furthermore, you don't need a

degree in business to obtain many of these positions. In short, every sector of our economy needs

people with strong overall skills that can be applied to business-type careers.

(Source: http://www.class.umn.edu/business_and_cla_degrees/what_is_business.html) 1

WHY PEOPLE GO INTO BUSINESS?

Being entrepreneurial means being able to identify, start, and maintain a practical and profitable

business, particularly a small enterprise. That is why, having a business have a tremendous

rewards but be sure to weigh prospective returns against risks and losses.
http://www.class.umn.edu/business_and_cla_degrees/what_is_business.htmlhttp://www.class.umn.edu/business_and_cla_degrees/what_is_business.html


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REWARDS:

- Having unlimited opportunity tomake money

- Being your own boss- Tapping your creativity- Overcoming challenges and

finding fulfilment

- Helping others and Building anentrepreneurial legacy

RISKS:

- Possibility of failure- Unpredictable business

conditions

- Long hours of work- Unwanted responsibilities

(Source: Excerpt from the book of Hisrich, Peters, and Shepherds Copyright, 2008 - Entrepreneurship 7th Edition)

CONCEPT OF ENTREPRENEURSHIP

The concept of an entrepreneur is further refined when principle and terms from a business,

managerial, and personal perspective are considered. In particular, the concept of

entrepreneurship from personal perspective has been thoroughly explores in this century. The

exploration is reflected in the following three definitions of an entrepreneur.

In almost all of the definitions of entrepreneurship, there is agreement that we are talking about a

kind of behaviour that includes:

Initiative talking The organizing and reorganizing of social and economic mechanisms to

turn resources and situation to practical account

The acceptance of risk or failure

To an economist, an entrepreneur is one who brings resources, labor materials, and other assets

into combinations that make their value greater than before, and also one who introduces

charges, innovations, and a new order.

To a psychologist, such a person is typically driven to a certain forcesneeded to obtain or

attain something, to experiment, to accomplish, or perhaps to escape the authority of others.


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To one businessman, an entrepreneur appears as a threat, an aggressive competitor, whereas to

another businessman the same entrepreneur may be an ally, a source of supply, a customer, or

someone who creates wealth for others, as well as finds better ways to utilize resources, reduces

waste, and produce jobs others are glad to get.

Entrepreneurship is the dynamic process of creating incremental wealth. The wealth is created by

individuals who assume the major risks in terms of equity, time, and/or career commitment or

provide value for some product or service. The product or service may or may not be new or

unique, but value must somehow be infused by the entrepreneur by receiving and locating the

necessary skills and resources.

Although each of these definitions views the entrepreneur form a slightly different perspective,

they all contain similar notions, such as newness, organizing, creating, wealth and risk taking.

Yet each definition is somewhat restrictive, since entrepreneurs are found in all professions

education, medicine, research, law, architecture, engineering, social work, distribution, and the

government. To include all types of entrepreneurial behaviour, the following definition of

entrepreneurship will be foundation of this book.

Entrepreneurship is the process of creating of something new with the value by devoting the

necessary time and effort, assuming the accompanying financial, psychic, and social risks, and

receiving the resulting rewards of monetary and personal satisfaction and independence.

This definition stresses three basic aspects of being entrepreneur:

1. Entrepreneurship involves the creation process creating something new of value.The creation has to have value to the entrepreneur and value to the audience for which it

is developed. This audience can be:

The market of organizational buyers for business innovations, The hospitals administration for new admitting procedure and software, Prospective students for a new course or even college of entrepreneurship; or The constituency for a new service provided by a non-profit agency.


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2. Entrepreneurship requires the devotion of the necessary time and effortOnly to those going through the entrepreneurial process appreciate the significant amount

of time and effort it takes to create something new and make it operational. As one

entrepreneur so briefly, While I may have worked as many hours in the office while I

was in industry, as an entrepreneur I never stopper thinking about the business.

3. It involves the rewards of being an entrepreneur.The most important of these rewards is independence, followed by personal satisfaction.

For profit entrepreneurs, the monetary reward also comes into play. For some profit

entrepreneurs, money becomes the indicator of the degree of success achieved. Assuming

the necessary risks is the final aspect of entrepreneurship. Because action takes place

over, and the future is unknowable, an action is inherently uncertain. This uncertainty isfurther enhances by the novelty intrinsic to entrepreneurial actions, Such as the creation

of a new product, new services, new ventures, and so on.

Entrepreneurs must decide to act even in the face of uncertainty over the outcome of that action.

Therefore, entrepreneurs respond to, and create, change through their entrepreneurial actions,

where entrepreneurial action refers to behaviour in response to a judgemental decision under

uncertainty about a possible opportunity for profit.

ENTREPRENEURS VERSUS INVENTORS

There is great deal of confusion about the nature of entrepreneur versus an inventor. An inventor

is an individual who creates something for the first time, is a highly driven individual motivated

by his or her own work and personal ideas. Besides being a highly creative, an inventor tends to

be:

well educated, with college, or most often, post-graduate degrees; has family, education, and occupational experiences that contribute to creative

development and free thinking;

is problem-solver able to reduce complex problems to simple ones; has a very highly level of self-confidence; is willing to take risks; and has the ability to tolerate ambiguity and uncertainty.


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A typical inventor places a high premium on being an achiever and measures achievement by the

number of inventions developed and the number of patents granted. An inventor is not likely to

view monetary benefits as measure of success.

As indicated in this profile, an inventor differs considerably from an entrepreneur. Whereas as

entrepreneur falls in love with the organization (the new venture) and will do almost anything to

ensure its survival and growth, an inventor falls in love with the invention and will only

reluctantly modify the invention to make it more commercially feasible. The development of a

new venture based on an inventors work often requires the expertise of an and a team approach,

as many inventors are unable to focus on just one invention long enough to commercialize it.

Inventors really enjoy the process of inventing, not implementing.

ENTREPRENEURIAL PROCESS

The process of pursuing a new venture is embodied in the entrepreneurial process, which

involves more than just problem solving in a typical management position. An entrepreneur must

find, evaluate, and develop an opportunity by overcoming the forces that resist the creation of

something new.

The process has four distinct phases:

1. identification and evaluation of opportunity;2. development of business plan;3. determination of the required resources, and4. management of the resulting enterprise

Although these phases proceed progressively, no one stage is dealt with in isolation or its totally

completed before work on other phases occurs. For example, to successfully identify and

evaluate an opportunity, an entrepreneur must have in mind the type of business desired.

IDENTIFY AND EVALUATE THE OPPRTUNITY

Opportunity identification and evaluation is a very difficult task most good business

opportunities do not suddenly appear, but rather result an entrepreneurs alertness to possibilities

or, in some cases the establishment of mechanisms that identify potential possibilities. For


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example, one entrepreneur asks at every cocktail party whether anyone is using a product that

does not adequately fulfil its intended purpose. This person is constantly looking for a need and

an opportunity to create a better product. Another entrepreneur always monitors the play habits

and toys of her nieces and nephews. This is her way of looking for any unique toy product niche

for a new venture.

DEVELOP A BUSINESS PLAN

A good business plan must have developed in order to exploit the defined opportunity; this is

very time-consuming phase of the entrepreneurial process. An entrepreneur usually has not

prepared a business plan before and does not have the resources available to a good job. It is

important to understand the basic issues involves as well as the three major sections of the plan.A good business plan is essential to developing the opportunity and determining the resources

requires, obtaining those resources, and successfully managing the resulting venture.

DETERMINE THE RESOURCE REQUIRED

The entrepreneur must determine the resources needed for addressing the opportunity. This

process starts with an appraisal of the entrepreneurs present resources. Any resources that are

critical need to be differentiated from those that are just helpful. Care must be taken not to

underestimate the amount and variety of resource needed. The entrepreneur should also assess

the downsize risks associated with insufficient or inappropriate resources.

The next step in the entrepreneurial process is acquiring the needed resources in a timely manner

while giving up as little control as possible. An entrepreneur should strive to maintain as large an

ownership position as possible, particularly in the start-up stage. As the business develops, more

funds will probably be needed to finance the growth of the venture, requiring more ownership to

be relinquished. The entrepreneur also needs to identify alternative suppliers or these resources,

along with their needs and desires. By understanding resource supplier needs, the entrepreneur

can structure a deal that enables the resources to be acquired at the lowest possible cost and with

the least loss of control.


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MANAGE THE ENTERPRISE

After the resources are acquired, the entrepreneur must use them to implements the business

plan. The operational problems of the growing enterprise must also be examined. This involves

implementing a management style and structure, as well as determining the key variables for

success. A control system must be established, so that any problem areas be quickly identified

and resolved. Some entrepreneurs have difficulty managing and growing venture they created.


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What to Produce?Module

2 Product Concept30 minutesTerms to Remember

1. ADVANTAGES- these are what these features can do.2. BENEFITS- these are the advantages that meet the explicit needs and wants of the

customers.

3. CUSTOMER VALUE it is the difference between the values the customer gains fromowing and using the product and the costs of obtaining the product.

4. FEATURES these are the product attributes offered by a company. They are proof of abenefit.

5. NEED it is a state of felt deprivation; basic reason or minimum requirement consumerslook for in a product or service; they are called the qualifying gatekeeper dimensions in

a purchase.

6. PRODUCT anything that can be offered to a market for attention, acquisition, use, orconsumption that might satisfy a want or need. It includes physical objects, services,

people, places, organizations and ideas.

7. WANTS it is the form taken by a human need as shaped by culture and individualpersonality; determining dimensions among many choices.

8. MARKETING is process of continuously and profitably satisfying the needs, wants andexpectations of the target market superior than competition.

9. CORE PRODUCTit isthe core benefit that a buyer gets from purchasing the product.10.ACTUAL PRODUCT it is the actual product refers to the products brand name, quality

level, packaging, design and features.

11.BRAND it is a name, term, sign, symbol, design, or combination of theses, intended toidentify the goods and services of one seller or group of sellers and to differentiate them

form those competitors.

12.PACKAGING the activities of designing and producing the container or wrapper for aproduct.


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13.AUGMENTED PRODUCT it is the additional consumer services and benefits. Theseinclude post-sales services, warranties, repair services and toll-free number to call in case

of problems.

(Source: Excerpt from the book of Suplico, Garcia & Esguerra, Copyright, 2008- International Marketing)

THE PRODUCT

CORE PRODUCT

Kotler et al. (2005) define core product, in reality, as the core benefit that a buyer gets from

purchasing the product. Thus, the core benefit answers the question What the buyer is really

buying? In designing a product, it is important to know the core benefit that the consumer is

looking for. Thus, a consumer purchasing a suitable and good-quality face powder is not really

buying cosmetic but hope of becoming beautiful.

ACTUAL PRODUCT

According to Kotler et al. (2005), the actual product refers to the products brand name, quality

level, packaging, design and features.

1. BrandProfit can be gained form branding. If a consumer is impressed by a product, it will

easier for him/her top purchase it because of a simple name he/she cab associate the

product with. It is less likely for him/her be swayed by an alternative.

Brand is a name, term, sign, symbol, design, or combination of theses, intended to

identify the goods and services of one seller or group of sellers and to differentiate

them form those competitors.

2. Quality levelEfforts should always be made to give the customer the best quality at any given

price.

3. PackagingPackaging plays two roles to protect the product and to promote the product.

Packaging is very vital in establishing perceived quality. It is crucial in building the


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image of the product. Moreover, the package protects their product from hazards

along its journey to the final customer.

4. Design and FeaturesThe product must be developed or improved continuously to suit the customers need.

Its design and features must be used to create competitive advantage.

AUGMENTED PRODUCT

Kotler et al. (2005) define augmented product as the additional consumer services and benefits.

These include post-sales services, warranties, repair services and toll-free number to call in case

of problems.

(Source: Excerpt from the book of Josiah Go Copyright, 1992 - Marketing Mix: Strategy in the Philippine Setting)

IMPORTANCE OF KNOWING THE NEEDS & WANTS OF THE PEOPLE INPRODUCING A PRODUCT

Marketing is no longer the satisfaction of needs only. Since needs are only basic requirements,

they are non-motivating reasons for consumers to purchase. The challenge is in the satisfaction

of wants and expectations which are motivating factors for consumers to purchase. This becomes

more relevant when wants become merely the basic minimum requirements of product or serviceover time.

Remote control for coloured television for instance, was a want when it was newly introduced in

the market. It is now a basic need or a minimum requirement in buying coloured television

among the class AB households.

Some entrepreneurs would even go beyond satisfying customers. They would aim to delight and

surprise customers with services they never expected.

TYPES OF PRODUCTS

1. Goods 5. Events2. Services 6. Persons3. Places 7. Properties4. Ideas


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WHAT PRODUCT SHOULD HAVE?

1. FEATURE, ADVANTAGES & BENEFITSEntrepreneurs must convert consumer needs and wants into

product or service feature that will provide benefits sought

by their consumers.

Features are product attributes offered by a company. They

are proof of a benefit. Advertising agencies call these

reasons why. Advantages are what these features can do.

Benefits are advantages that meet the explicit needs and

wants of the customers. They are what the customers will

get when they use the product or service. Benefits thereforeprovide a favourable result in the future when the customer

uses the product or service. Benefits answer the question:

Whats in it for me?

n important

f nasal congestion, thus, removing distraction from your work

enefit) while you are abroad.

ed. Benefits must be emphasized more than the features, especially when the prices are

igher.

es the customer gains from owing and using the product and

e costs of obtaining the product.

A businessman suffering from colds and nasal congestion while about to leave for a

foreign trip may be served by a saleslady of a nearby Mercury Drug outlet this way:

Vicks Inhaler is a pocket-size inhalation device with soothing vapours (features/ which provide

immediate relief (advantage) o

(b

Benefits differ to different customers. Benefits not desired by a customer are of doubtful value.

Entrepreneurs must understand his customers needs and wants so that the proper benefits can

be offer

h

2. CUSTOMER VALUEIt is the difference between the valu

th


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For example, FedEx customers gain a number of benefits. The most obvious are fast and reliable

package delivery. However, when using FedEx, customers also may receive some status and

image values. Using FedEx usually makes both the package sender and the receiver feel more

important. When deciding whether to send a package via FedEx, customers will weigh these and

other values against the money, effort and psychic costs of using the service. Moreover, they will

ompare the value of using FedEx against the value of other shippers DHL, etc. and select

e one that give them the greatest delivered value.

c

th


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phone unit as shown in

figure 1.0.

Di

.2 x 46.1 x 15.9 mm

c

Display and User Interface

(QVGA) 16 million colours

Colours

Blue

o LimeRaw Aluminium

Pe

gtones

id, AAC, eAAC, eAAC+, WMA

o pre-installed themeso changeable colour themes

Concept Check

1. Identify the product features, advantage andbenefits of Nokia Cell

mensions

Form: slide Dimensions: 95 Weight (with battery): 110 g Volume: 52 c

Figure 1.0 Size: 2.2" Resolution: 320 x 240 pixels Ambient light sensor (ALS)

Available colours:o Petrolo Purpleo Pinko Redo

rsonalisation

Customisable profiles Video rin Ringtones: mp3, .m Themes

o wallpaperso screensaverso ringtones


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Messaging

1. Faster data connections mean you can quickly transfer files, enjoy chat, and update yourstatus and stay in constant touch with your friends.

e

ted, such as SMTP, IMAP4 and POP3.

vi

tly from your

phone.

_____________________________________________________________________________

_____________________________________________________________

2. Sync your existing email and access it from your phone the most common protocols arsuppor

3. Use Nokia Messaging to set up your own email account, or get a free account from OMail.

4. You can also access other 3rd party email services, like Hotmail, direc

5. Send instant messages and chat with your friends with Ovi Contacts.______________________________________________________________________________

______________________________________________________________________________

______________________________________________________________________________

______________________________________________________________________________

______________________________________________________________________________

____________________________________________________________________________________________________________________________________________________________

______________________________________________________________________________

______________________________________________________________________________

_

_________________


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Who is my Market?The Concept of Market

gmentation and Targeting

is more

NTATION dividing a market into smaller groups of buyers with

lecting one or more segments to enter.

ATION dividing the market into groups based ondemographic variables such as age, sex, family life-cycle, income, occupation, education,

religion, race, and nationality.

Module

3Se 30 minutes

Terms to Remember

1. DIFFERENTIATION SEGMENT segment of the market which requires superiorproduct or service.

2. LOW-COST SEGMENT segment of the market which has lesser needs andparticular to price.

3. MARKET it is the set of all actual and potential buyers of a product or service.4. MARKET POSITIONING it is the arranging for a product to occupy a clear, distinctive,

and desirable place relative to competing products in the minds of the target consumers.

5. MARKET SEGMEdistinct needs, characteristic, or behaviours who might require separate products or

marketing mixes.

6. MARKET TARGETING it is the process of evaluating each market segmentsattractiveness and se

7. PRIMARY TARGET MARKET (PTM) it is a segment of the market which is the logicalvolume customers.

8. TARGET MARKET- it is a set of buyers sharing common needs or characteristics that thecompany decides to serve.

9. DEMOGRAPHIC SEGMENT


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(Source: Excerpt from the book of Armstrong and Kotler Copyright, 2003 - Introduction to Marketing, 6th Edition)

r competitors, each company must identify

arket that can be served best and most profitably.

s tailored to each. Instead of scattering their marketing efforts, businesses are

ho have greater interest in the values they create best.

dividing a market into smaller groups of buyers with distinct

r behaviours who might require separate products or marketing

place relative to competing products in the minds of the target consumers.

REASON FOR SEGMENTING THE MARKET

Businesses today recognize that they cannot appeal

to all buyers in the marketplace or at least not all the

buyers in the same way. Buyers are too numerous,

too widely scattered, and too varied in their needs

and buying practices. Moreover, the businesses

themselves vary widely in their abilities to serve

different segments of the market. Rather than trying

to compete in an entire market, sometimes against

superio

the parts of the m

Thus, businesses are being more choosy about the customers with whom they wish to connect.

Most have moved away from mass marketing toward market segmentation and targeting

identifying market segments, selecting one or more of them, and developing products and

marketing program

focusing on the buyers w

There are three major steps in target marketing:

1. Market Segmentation needs, characteristic, o

mixes.

2. Market Targeting the process of evaluating each market segments attractiveness andselecting one or more segments to enter.

3. Market Positioning arranging for a product to occupy a clear, distinctive, and desirable


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(Source: Excerpt from the book of Josiah Go, Copyright, June 1997 Marketing Plan: Building the Profitable Preferred Brand)

potting and

ficiency rate to their prospects relative to some of the jack-of-all-trades

k segment and launched three new ice

individual 202 sized cans, consumption can take place even outside of the homes like

WHAT IS A VALID MARKET SEGMENT?

Market segmentation is partitioning of a market into a smaller parts. By identifying different

groups of people with similar needs, a firm can try to satisfy their customers better and more

profitably thru assembling a marketing mix effort for arch market segment. Since 1972, regular

worldwide studies by Profit Impact on Market Strategies (PIMS) of the Strategic Planning

Institute of the US have proven that the higher level of market shares held by a firm (given a

profit maximizing marketing mix). This is because both the executive time and resources are

better allocated to a focus group in the marketplace. The secret therefore, is in s

promptly acting on consumer needs as well as differences in consumer needs.

Philippine Life, in the life insurance arm of the Metrobank group, attained the number 1 in first

year premiums position in group insurance in 1995 after focusing for three years on that segment

providing employee benefit. Johnson and Johnson chose the toiletry segment instead of the

cosmetic segment for their face powder. Instead of coming with many powder shades as in

cosmetics, they came up with basic natural colour powder that can be used daily. Mansmith and

Fielders, Inc. have always focused on the marketing executives as their target segment and have

resisted offering non-marketing training courses. This enables them to have almost ten timesbetter direct mail ef

competition.

Nestle has identified two segments of the ice cream market as Bulk (or those traditionally in the

one gallon as well as half gallon containers consumed at home which accounts for about 80 % of

the market), and Impulse (or the frozen delights consumed at the point of purchase accounting

for the 20 % balance). In 1995, magnolia, revitalized with their tie-up with Nestle, re-launched

with four new flavours in the bultheir Best Seller line

cream bars in the fast growing impulse segment.

Del Monte, in launching the Del Monte 202 lines in 1993, was targeting a market segment

different from their traditional in-home users to their large cans. With the introduction of


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restaurants, picnics, etc., thereby enabling them to serve the same segment as the soft drink

consumers, who are, this time, looking for a healthier alternative. Instead of the housewives, the

202 targets yuppies and teenagers and with these changes in target customers, the whole

ersonality also changes to younger, upbeat type.

caters to the price sensitive shoppers with their 50 % discounts

ffered every 8:45 pm daily.

be further refined into preschool, child, teenager, family, or adult home

ntertainment market.

4. y Behaviouristic (example: San Miguel Grande for heavy drinkers or for groups)

p

Colgate, on the other hand, while dominant in the therapeutic segment Colgate Mint rinse, a

semi-cosmetic brand to eat up some shares of Close-Up, specially known that the cosmetic

segment is growing segment of the toothpaste market. French Baker has upscale consumers as

their prime segment but also

o

Before a market can be segmentized, it is important to strike a meaningful balance between a

broad market definition and manageable market definition (McDonald, 1995). For instance, the

television broadcasting companies are in the entertainment market, which also consists of

theatres, cinemas and the theme parks. This is a fairly broad definition. A mere manageable

definition for the television broadcasters is to define their market being the home entertainment

market. This could then

e

There are four ways to segmentize a consumer market:

1. By Needs or Benefits (example: Close-Up gives fresh breath)2. By Demographics (example: Promil as follow-on formula for infants)3. By Psychographics (example: Benetton are clothes worn by the socially conscious)

B

There is one way to segmentize a market so entrepreneurs need to segmentize according to all

methods of segmentation. It is possible that there is no relevance in segmenting some products

according to, say lifestyle. As an example, a basic product like hotdogs generally does not

address a certain lifestyle. Markets should only be segmentized if it is relevant. Profitability and

ROI, not sales, is the strong basis of market segmentation. It can be noted that while many

segments can give much higher sales volume, especially in the heavy users category, the


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profitability of these segments are always not as good as other segments given more competitive

activities and consumer choices. Medium-size banks like Asiatrust, for instance, would have

their own suki business loan clients where they can charge a little higher interest rates

ompared to blue chip businesses targeted by all major banks.

ariables for

entation are presented in Exhibit 1 for your detailed study and analysis.

s desired

b.

Demographics

tus

ssion

e

ty

limate

Region Example, Asia Pacific

d. Psycho

ens right

Sex

terest

Shopping

e. Behaviquency

s

c

Industrial or Business-to-Business markets are segmentized differently. The various v

market segm

Exhibit 1:

I. Consumera. Needs Benefit

Age

Gender

Civil sta

Income

Education

Profe

Location

Family siz

Religion

Nationali

C

c. Geographic

Country

graphics

Social Issues

Religion

Politics

Work drugs

Wom

Personal In

Family

Home

Food

Health

Friends

oural

Purchase fre

User statu


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User rate

Loyalty status

Readiness

II. Industrial or Business-to-Business

Purchasing Approaches

Personal Characteristics

a

roduct exists to satisfy customers needs and wants. Two common alternatives are available:

t or that segment of the market which requires superior

or that segment of the market which has lesser needs and is more

articular to price.

ent that accounts for only 20%, on the other

hand, is growing at a significant 40% annually.

the bigger babies. Profile of the market

then defined to guide the firm in its marketing efforts.

Demographics

Operating Variables

Situation factors

Common market segmentation by customers needs, utilizes product type as basis since

p

1. Differentiation segmenproduct or service, and;

2. Low-Cost segmentp

After market segments are identifies, target markets must be chosen as its possible firm may not

want to compete in all segments as most starting businesses would normally do before they

expand. Firms must take into consideration the market trend within each segment as a segment

with existing big market may have declining sales while a market with a small r medium size

sales may have an increasing demand trends and may be considered as a future, gold mine .

For instance, while bulk ice cream accounts for about 80% of the market in the Philippines, it is

growing at a modest 6% annually. The Impulse segm

While trends need to be taken into consideration, the underlying assumptions must also be noted

as it is possible that a firm can be able to create new life into the product similar to Johnson and

Johnson refocusing their baby powder market to include

is


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CONCEPT OF TARGET MARKET

The Primary Target Market (PTM) is a segment of the market which is the logical volume

customers. By choosing the PTM, a firm has also chosen who to compete with to win the same

customers. Gilette, for instance, sell Ruby to the masa pushing Sensor to the yuppies.

Pernexin used to position as multivitamins for all but has now focused on the sedentary patients

who are old, weak and convalescing. Au Bon Pain targets business people and their support staff

looking for a healthier sandwich alternative. The increasing popularity of generic drugs has made

pharmaceutical businesses redefine their target market priority from doctors to consumers given

the wide choice consumers have at correctly identify their target customers, less their resourced

not be optimized. Pacific Sun natural iced tea by Nugget Food targets the 18 to 24 years old as

eir PTM while Seasons iced tea by Dole prefers the old segment. What is the right segment?

target market and changing

eir mindset from a support group to an independent profit centre.

exhibit 2 and 3.

Exhibit 2: Logical PTM of Pampers Uni diapers

Profession with similar jobs who

during daytime.

orking mothers, outgoing, quality-conscious

th

While market trend must be carefully analyzed, choosing existing target market in lieu of

potential targets must be constantly challenged. SEARCA in Los Baos, which has meeting and

room facilities for small to medium groups, used to rely on their existing training participants

based on scholarship grants. With the de3cline in grants expected, they have consciously

refocused their attention to large and other training businesses as a

th

Some examples of target marketing are presented in

Demographics of buyers

Age 30-38

Sex Female

Income AB

Civil Status Married

Education College-up

Supervisorial / Managerial and others

cannot afford to rest

Location Urban

Psychographics W


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Exhibit 3: Logical PTM of Close-Up

lassmen) / College

tgoing, playful, active, hygienic

Benefits Desired: Fresh Breath

Demographics of buyers

Age 16-21

Sex Male / Female

Income C+ / C

Civil Status Single

Education High School (upperc

Profession Student

Location Urban, Rural

Psychographics Free spirit, ou


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Exhibit 4: Example Market Segment of Baby oil Market: Socio Economics Class (SEC)by Oil Mark

ase = Total of 100 Interviewed Mothers from Each SEC Segm

Identifier SEC Variable

Based Segmentation on the Ba(B

etent)

Percent of Each Segments Relevant Base with Profiler

UpperClass

UpperMiddle

LowerMiddle

Characteristics

Selected UAI Profiler Variables99 83 681. % of total using baby oil on babies

2. % of category using/buying75 ml. Bottle 14 18 29125 ml. Bottle 42 39 35200-300 ml. Bottle 38 37 27

3. % of category users currently usingJohnsons 86 82 71

Zwitsal 8 13 6Mamas Love 2 1 18

4. % of category using from buying from:Supermarket 81 77 72Drugstore 12 14 17Neighbourhood store 7 9 11

5. % of c er as very important that babyoil:

ategory who consid

Readily cleanses babys skin 79 82 80Prevents cuffing 72 75 73Is reasonably/affordably priced 63 74 77

Selected Socio Variables-Demo Profiler1. ge group:% of category users in a

Less than 20 years old 14 22 1920-29 years old 41 39 4430-39 ears old 33 36 23

2. % of category users with:One child 17 25 25Two children 46 31 28Three or more children 37 44 47

3. % of category users who read newspapers:Everyday 67 61 492-6 times a week 20 22 33Once a week 6 7 14

4. % of category users who usually watch TV in the:17 25 25Mornings and noon times

Source: User-Friendly Marketing Research by Net Roberto

Afternoons 46 31 28Evenings 37 44 47


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24

A most common question asked is that Should businesses target and compete in the segment

with the largest sales potential? Remember that firms must compete based on their relative

strengths. They choose to compete in the segment that can maximize their profit and return on

their investment, not on sales volume. Therefore, marketers must first identify as many potential

rget markets within the market segment before making the final choice. Since target market

nd not sales potential, the following criteria can be

istics?sily?

5. urchase Authority Are they the decision makers or key influencers?6.

ary. For instance, for the first criterion growth trend,

entrepreneurs can use the following loyalty level, it could be 3 high retention, 2 average

roduct category is brand new and growing rapidly, a new product will not attract

many non-users to the category, typically limited to between 5 to 10% of sales volume. An

ample locally is when a popular drive-in-hotel chain tries to add party package to expand users

ta

must be evaluated based on profit a

considered.

1. Growth trend Is it increasing?2. Market Niche Size Is it sufficiently large enough for you?3.

Homogeneity Are the consumer needs clearly identified with common character

4. Responsiveness - Can the consumers be influenced eaP

Awareness Creation Cost Are consumers reachable in a cost-efficient manner?

7. Loyalty Level Can we have a high retention level?

Firms can use a 3-points scale to evaluate each criterion for every potential segment. The

interpretation for each criterion would v

retention, 1 low retention. A minimum score (example 14 out of 21 maximum) should be

adapted to shortlist potential segments.

A word of caution about choosing your target market. Some firms, in an attempt to increase

sales, would convince non-users to try their product or services. Researchers have shown that

unless the p

ex

and usage.


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25

How Much to Sell my Product?

prices (or price

response to a given

UP it is where a standard percentage based on cost is adopted.

ervice.

thing or

Pricing Strategy

Terms to Remember

Module

440 minutes

1. PRICING STRATEGY it is a reasoned choice from a set of alternativeschedules) that aim at maximization within a planning period in

scenario.

2. MARK-3. PRICE it is the amount of money charged for a product or s4.

TARGET PROFIT it is where prices are set towards attaining a satisfactory rate onreturn.

5. FIXED-PRICE POLICIES setting one price for all buyers.6. COST is the amount of expenditures incurred on, or attributable to a specified

activity. It is the pesos that must be paid for goods and services.

7. MARGINAL COST is the change in total cost that arises when the quantity producedchanges by one unit. That is, it is the cost of producing one more unit of a good.

8. VARIABLE COSTare expenses that change in proportion to the activity of a business.In other words, variable cost is the sum of marginal costs. It can also be considered

normal costs. Along with fixed costs, variable costs make up the two components of total

cost. Direct Costs, however, are costs that can easily be associated with a particular cost

object. Not all variable costs are direct costs, however; for example, variable

manufacturing overhead costs are variable costs that are not a direct costs, but costs.

Variable costs are sometimes called unit-level costs as they vary with the number of units

roduced.

9. FIXED COST are business expensesp

that are not dependent on the activities of the

business. They tend to be time-related, such as salaries or rents being paid per month.
http://en.wikipedia.org/wiki/Marginal_costhttp://en.wikipedia.org/wiki/Fixed_costhttp://en.wikipedia.org/wiki/Total_costhttp://en.wikipedia.org/wiki/Cost_objecthttp://en.wikipedia.org/wiki/Cost_objecthttp://en.wikipedia.org/wiki/Overhead_%28business%29http://en.wikipedia.org/wiki/Overhead_%28business%29http://en.wikipedia.org/wiki/Expenseshttp://en.wikipedia.org/wiki/Expenseshttp://en.wikipedia.org/wiki/Overhead_%28business%29http://en.wikipedia.org/wiki/Overhead_%28business%29http://en.wikipedia.org/wiki/Cost_objecthttp://en.wikipedia.org/wiki/Cost_objecthttp://en.wikipedia.org/wiki/Total_costhttp://en.wikipedia.org/wiki/Fixed_costhttp://en.wikipedia.org/wiki/Marginal_cost


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(Source: Excerpt from the book of Suplico, Garcia and Esguerra, Copyright, 2008 - International Marketing)

Setting the price of a product is one of the critical decisions that you have to make in the export

arena. More often, if your price is too high, your buyers get turned off, and thus, seek other

products. O

up working hard for nothing.

n the other hand, if your price is too low, customers may grab your offer and you end

plication of techniques and strategies, will be the

at the businessperson is willing to charge. The

sociated with price are:

n the market

icing decision, and the cost information should only be used to

ine whether that market could be satisfied at a profit.

At this point, you may ask, What is the right price for an item? This question is difficult to

answer because as many factors, bothy internal and external, are involved in setting the right

price. The analysis of these factors, including ap

core of discussion in this sub-section.

DEFINITION AND SIGNIFICANCE OF PRICE

What is price? From the businessmans point of view, it is the monetary figure for which he/she

sells his/her product to his/her customers. Price provides for the recovery of costs of the elements

of the marketing mix. In addition, it generates revenue for the business. Price as the value placed

by consumers for the amount they pay for goods and services must be considered. It is, after all,

what the customer is willing to pay and not wh

definition suggests that the two basic concepts as Profit maximization for the business Satisfaction for the customers

Pricing is not purely mathematical formula and cost calculation because, if this so, it may give

rise to an extremely limited view of the concept. The market and the potential io

should be the starting point for pr

determ

(Source: Excerpt from the book of Armstrong and Kotler Copyright, 2003- Introduction to Marketing 6th Edition)

All profit businesses and many non-profit businesses must set prices on their products or

services. In the narrowest sense,priceis the amount of money charged for a product or service.

More broadly, price is the sum of all the values that consumers exchange for the benefits of


27/52


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28

Exhibit 1: The Role of Price in Sales Revenue

Sales Revenues = Sales Volume x Selling Prices

Pricing has the dual marketing function of making products affordable to its target market and at

the same time, reflecting the value of the product. The price charged for a product or service,

therefore, should be no more than the sum of the values of the benefits it provides to customers.

Take coffee as a common example. A cup of coffee in a canteen may only cost P5.00 but may

ost ten items as much if ordered in a 5-star hotel as it reflects the value of the product given the

l

ctors, you have the business cost as well as the business objectives. On the other hand, market

e will only discuss the three factors of setting price.

st, the role of target market and the competition.

onsider in Pricing

2. Target Market

anticipation of cost structure may require a disastrous price

increase which may unduly affect profit and market shares gained during the pre-expansion

c

ambience of the hotel.

Pricing strategy can be defined as a reasoned choice from a set of alternative prices (or price

schedules) that aim at maximization within a planning period in response to a given scenario(Tellis, 1986). Both internal and external factors must be considered in pricing. In interna

fa

demand and competition are external factors that will influence pricing of products or services.

For the purpose simplicity of this lecture, w

These are product co

Exhibit 2: Factors to C

1. Product cost

3. Competition

Factor 1: PRODUCT COST

Product cost must be broken down to fixed and variable cost as most businesses sell more than

one item and the fixed cost must be allocated to different products in a sensible way. Anticipated

product cost must also be taken into consideration as the new cost may be much more than the

existing level once inflation is imputed or when expansion is inevitable and new machineries and

equipments are purchased. This non-

period.


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29

ion must be done in using cost-based pricing. It may be wise to

consider this as a gatekeeper policy and consider other types of pricing techniques before

ed

capital of two millions and having a cost base of $20 a unit with forecasted sales volume

cific price level. Exhibit 3 provides the formula.

ent

Most cost-based pricing are used when there is relatively little, if any, direct competition (which

is rare) or when buyers are not price-sensitive. It is commonly used when there is an absolute

necessity as when there are just too many items involved, such as in supermarket or when it has

become an industry practise, such as the standard 15% professional service fee charged by

advertising agencies. Caut

arriving at the final price.

Under cost-based pricing strategy, there are two common types of setting prices:

a. Mark-up, where a standard percentage based on cost is adopted. For example, a retailprice of $1, 000 having a standard 10% mark-up on sales will have cost of $900.

b. Target Profit, where prices are set towards attaining a satisfactory rate on return. Amanufacturer who wishes to make a 35% return on investment (ROI) on an invest

of 100,000 units may compute for spe

Exhibit 3: Target Profit Pricing Formula

Target Profit = Unit Cost + Target ROI x InvestmUnit Sales

= $20 + 35% x $2, 000,000Pricing

is

ort of target. The unit product cost after all is a combination of both unit variable cost and unit

xed cost, with the latter spread over a projected sales volume. Exhibit 4 provides the formula.

100,000= $27

There is however the big disadvantage of too much dependence on projected sales in target profit

pricing. Both the unit costs and the target selling price will be inaccurate when sales volume

sh

fi


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30

Exhibit 4: How to compute for the Unit Cost?

tUnit Cost = Variable Cost* + Fixed CosPricing

= $10

Expected Unit Sales

+ $1, 000,000

= $20

me of the big businesses, small businesses generally have

igger fixed expense, if expressed as a percentage of total sales while big businesses have a

s.

ce and sugar, any

pending increase of price may result to decrease in consumptions or market may look for

ur own product.

ge Commission

nts of corporations which can be obtained for

nalysi petition

100,000= $10 + 10

* Note: Variable Costs - Include raw materials, labor, and factory overhead/expenses

While small businesses have a lower amount of fixed expenses versus big businesses, the reality

is that because of the bigger sales volu

b

lower fixed percentage of total sale

Factor 2: TARGET MARKET

In pricing product, an entrepreneur should always look into the perception and nature of its target

market. There is type of market that any adjustments in price may result to decrease in market

demand. Consider the Class D&E market for our local commodities like ri

im

substitute product that may also affect the marketability of yo

Factor 3: COMPETITION: Cost Vs. Expense Structure

Your main competitor has just lowered his price. Should you also lower your price or will it risk

an expensive price war? Entrepreneurs should always analyse whether the price reduction is a

result of competitors own deficiencies, product deficiencies, or an indicator that overall prices in

the industry are too high for customer demand. They should also consider the different productcost and corporate expense structure of competition. The Securities and Exchan

has public records, including financial stateme

a s. You Com

Selling Price = =

- 2%Total Expense + 2%


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31

Application Exercise

ABC store is planning to sell a ready to wear (RTW) dress. Using the following

inform pute the right price of the new product of ABC store.

e Cost

ation, com

Variabl CostFabric $ 15/RTW

buttons $2/RTW

Labour $5/RTW

Total Variable Cost $22/RTW

Fixed Cost

Rent Expense $ 2,000

office Salary $5,000

Total Fixed Cost $ 7,000

Expected Sales/year 3,000 RTW

Investment $8,000

Target Return on Investment (ROI) 25%

Your answer:


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32

Where to Distribute the Product?Place Strategy

N CHANNEL a setof independent organizations involved in the process

nership closer to the final buyer.

3. DIRECT MARKETING CHANNEL has no intermediary levels. It consists of a business

Module

530 minutes

Terms to Remember

1. DISTRIBUTIOof making product or service available for use or consumption by the consumer or

business user.

2. CHANNEL LEVEL each layer of marketing intermediaries that performs some work inbringing the product and its ow

selling directly to consumers.

(Source: Excerpt from the book of Armstrong and Kotler, Copyright, 2003 - Introduction to Marketing 6th Edition)

Marketing channel decisions are among the most important decisions that management faces. A

business channel decisions are linked with every other marketing decision. The business

pricing depends on whether it uses mass merchandisers or high-quality specialty stores. Thefirms sales force and advertising decisions depend on how much persuasion, training,

otivation and support the dealers need. Whether a company develops or acquires certain new

industry by selling personal

m

products may depend on how well those products fit the capabilities of its channel members.

Businesses often pay too little attention to their distribution channels, however, sometimes with

damaging results. In contrast, many businesses have used imaginative distribution systems to

gain a competitive advantage. FedExs creative and imposing distribution system made it the

leader in the small-package delivery industry. General Electric gained a strong advantage in

selling its major appliances by supporting it dealers with a sophisticated computerized order-

processing and delivery system. Dell Computer revolutionized its

computers directly to consumers rather than through retail stores. And Charles Schwab &

Company pioneered the delivery of financial services via internet.


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33

Distribution channel decisions often involve long-term commitments to other businesses. For

example, companies such as Ford, IBM, or McDonalds can easily change their advertising,

pricing, or promotion programs. They can scrap old products and introduce new ones as market a

taste demands. But when they set up distribution channels through contacts with franchisees

independent dealers, or large retailers, they cannot readily replace these channels with company-

wned stores or Web sites if conditions change. Therefore, management must design its channels

careful

esigning and managing channels?

What role do physical distribution and supply chain management play in

o forge a

istribution channel a set of independent organizations involved in the process of making

n making goods available to target markets. Through their

ontacts, experience, specialization, and scale of operation, intermediaries usually offer firm

r,

o

ly, with an eye on tomorrows likely selling environment as well as todays.

This topic examines four major questions concerning distribution channels:

What is the nature of distribution channels?

How do channel firms interact and organize to do the work of channels? What problems do businesses face in d

attracting and satisfying customers?

Most producers use intermediaries to bring their products to market. Then try t

d

product or service available for use or consumption by the consumer or business user.

Why do producers give some of the selling job to intermediaries? After all, doing so means

giving up some control over how and to whom, the products are sold. The use of intermediaries

results from their greater efficiency i

c

more than it can achieve on its own.

Figure 1 shows how using intermediaries can provide economies. Figure 1A shows three

manufacturers, each are using direct marketing to reach customers. This system requires nine

different contacts. Figure 1B shows the three manufacturers working through one distributo

which contacts the three customers. This system requires only six contacts. In this way,

intermediaries reduce the amount of work that must be done by both producers and consumers.


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34

From the economic systems point of view, the role of marketing intermediaries is to transform

the assortments of products made by producers into the assortments wanted by consumers.

Producers make narrow assortments or products in large quantities, but consumers want broad

assortments of products in small quantities. In the distribution channels, intermediaries buy large

uantities from many producers and break them down into the smaller quantities and broader

mediaries play an important role in matching

pply and demand.

l moves goods and services from producers to consumers. It overcomes

ns:

ation

for planning and aiding

xchange.

Promotion: Developing and spreading persuasive communications about an offer. ontact: inding and communicating with prospective buyers.

A. Nx C = 3 x 3 = 9 M + C = 3 + 3 = 6

q

assortments wanted by consumers. Thus, inter

su

DISTRIBUTION CHANNEL FUNCTIONS

The distribution channethe major time, place, and possession gaps that separate goods and services from those who

would use them. Members of the marketing channel perform many key functions. Some help to

complete transactio

Information: Gathering and distributing marketing research and intelligence informabout actors and forces in the marketing environment needed

e

C F

umber utor

41 1

2

3

524

5

6

6

of contacts without a distributor B. Number of contacts with a distrib

7

8

3

9

M


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35

= r = Distributor

ansactions

e buyers needs, including activities such as

anufacturing, grading, assembling, and packaging.

price and other terms of the offer so that

hysical distribution: Transporting and storing goods.

ust charge

ore to cover the costs of their work. In dividing the work of the channel, the various functions

yer is channel level. Because the producer and the final consumer both

erform some work, they are part of every channel. We use the number of intermediary levels to

Manufactu er = Customer

Figure 1: How a distributor reduces the

number of channel tr

Matching: Shaping and fitting the offer to thm

Negotiation: Reaching an agreement onownership or possession can be transferred.

Other help to fulfil the completed transactions:

P

Financing: Acquiring and using funds to cover the costs of the channel work. Risk taking: Assuming the risks of carrying out the channel work.

The question is not whether these functions need to be performed they must be but rather

who will perform them. To the extent that the manufacturer performs these functions, its cost

goes up and its prices have to be higher. When some of these functions are shifted to

intermediaries, the producers costs and prices may be lower, but the intermediaries m

m

should be assigned to the channel members who can perform them most efficiently and

effectively to provide satisfactory assortments of goods to target consumers.

Distribution channels can be described by the number of channel levels involves. Each layer of

marketing intermediaries that performs some work in bringing the product and its ownership

closer to the final bu

p

indicate the length of a channel. Figure 2, part A, shows several consumer distribution channels

of different lengths.


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36

Channel 1, called a direct marketing channel, has no intermediary levels. It consists of a

business selling directly to consumers. For example, Avon, Amyway, and Tupperware sell their

roducts door to door or through home and offices sales parties. Singer sells its sewing machines

y level. In consumer markets, this level is typically a retailer.

or example, the makers of televisions, cameras, tires, furniture, major appliances, and many

s and sell to smaller retailers who generally are not served by larger

holesalers. Distribution channels with even more levels are sometimes found, but not less

mers. It can sell through manufacturers

presentatives or its own sales branched to business customers, or it can use these

presentatives and branches to sell through industrial distributors. Thus, business markets

ommonly include multilevel distribution channels.

p

through its own stores; and Dell sells computers direct through telephone selling and its Web

site. The remaining channels in Figure 2A are indirect marketing channels.

Channel 2 contains one intermediar

F

other products sell their goods directly to large retailers such as Wal-Mart and Sears, which then

sell the goods to final consumers.

Channel 3 contains two intermediary levels, a wholesaler and a retailer. This channel is often

used by small manufactures of food, drugs, hardware, and other products.

Channel 4 contains three intermediary levels. In the meatpacking industry, for example, jobbers

buy from wholesaler

w

often. From the producers point of view, a greater number of levels mean less control greater

channel complexity.

Figure 2, part B, shows some common business distribution channels. The business marketer can

use its own sales force to sell directly to business consumers. It can also sell to industrial

distributors, who in turn sell to business custo

re

re

c


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37

All the institutions in the channel are connected by several types of flows. These flows can make

few levels very complex. These are the following:

roducts,

ow of ownership, information flow, and

Channel 1

Channel 2

Channel 3

Channel 4

A. Customer Marketing Channels

Channel 1

Channel 2

Channel 3

Channel 4

s

Figure 2: Consumer and business marketing channels

even channels with only one or

physical flow of pfl

payment flow,

promotion flow

B. Customer Marketing Channel

Manufacturer

Manufacturer

Manufacturer

Manufacturer

Customer

CustomerRetailer

Customer

CustomerRetailerJobber

Retailer

Wholesaler

Wholesaler

Manufacturer

Manufacturer

Manufacturer

BusinessCustomerManufacturer

BusinessBusiness

distributo Customerr

M representatsales branch

anufacturers ives ofBusinessCustomer

Manufacturersrepresentatives of

sales branch

Business BusinessCustomerdistributor


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38

Where to Promote?

Promotion Strategy

al and oral messages that aim to inform and

de

d clients on

ul project bid, to introduce your campaign.

be highly economical and profitable.

s of products offered as well as the company profile. They are usually givento prospective customers.

rochure, much

Terms to Remember

1.ADVERTISING this consists of visu

Module

6 30 minutes

persuade consumers to buy products or services.

2.PUBLIC RELATIONS simply called PR, this planned program of policies andconduct aimed at building public confidence in an organization, and creating public

understanding of what it is trying to do.

3.SALES PROMOTIONS this is the most widely used method of promoting products forexport. It takes varied forms and includes many activities all aimed at influencing tra

buyers to stock up and carry your product, and thus, persuading end-consumers to buy it.

4.DIRECT MAIL this will allow you to build a base of potential buyers anwhom you can direct your companys message. It includes news about your company,

such as a new product/service or a successf

5.MEDIA it is a good way to establish public awareness of your companys profile andcredibility. Using the media wisely can

6.PERSONAL VISIT it is a personal contact with the potential clients is perhaps the bestmean of promotion.

7.TRADE MISSIONS/TRADE SHOWS it allows you to check out the competition andconduct market research.

8.BROCHURES it is an effective means of communication both for small and medium-sized businesses, as these are considered relatively cheap. They contain detailed

specification

9.MAILSHOTS /LEAFLETS these are considered the simplest forms of bshorter and used to explore new markets and to refine your target list of potential

customers.


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39

(Source: Excerpt from the book of Suplico, Garcia and Esguerra, Copyright, 2008- International Marketing)

Many Filipino entrepreneurs indulge in promotional activities as a means of making their

otion which for them outweigh the cost to be incurred.

portance of product promotion. It aims to discuss the various

otional methods and to outline the strategies most appropriate and cost-effective in the

The International Trade Centre

Task of the Business Managem

methods in attracting foreign buyers.

1. SINGThis consists of visual and oral m ers to

eans categorized as

ng either the end-consume

rtising Tools for Rea

nterprise Management D g

les inquiries: A task of the business management s

Consumer MagazinesPosters

Programmes (sports, theatre,etc.)

product and companies known and, consequently, accepted in the market. Gone are the days

when they would not even consider product promotion since it is perceived to be very expensive

especially at the global level. At present, most exporters are conscious of the importance and

benefits of product prom

This sub-section underlines the im

prom

international market.

PROMOTIONAL METHODS

s Handbook on Prompting and Responding for Sales Inquiries: A

ent System (2005) lists the following as effective promotional

ADVERTIessages that aim to inform and persuade consum

buy products or services. Advertising comes in various forms and m

suitable for reachi rs or trade buyers.

Adve ching Consumers

(Source: International Trade Centres E evelopment Series (2005). Handbook on promptin

ystem. Switzerland.)and responding to sa

Television Radio Daily Newspapers

Outdoor billboards Road and railway

transportations


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40

It is imp

must be

advertis

2.Simply called PR, this planned program of policies and conduct aimed at building

rganization, and creating public understanding of what it is

3. ROMOTIONSes varied

o stock up and

uy it. The types of sales

ostly by Filipin export entrepreneurs come in different forms

as:

l materials like brochures, leaflets, catalogs, price lists, etc.;

4. IRECT MAILd direct mail campaign can also be very effective. Research and experiences in

5. MEDIA

ay to establish public awareness of your companys profile and

credibility. Using the media wisely can be highly economical and profitable. Prepare a

ortant to bear in mind that advertising is totally useless unless it is targeted properly. One

sure of the market segment he/she is aiming at. Consequently, a seller must place

ement media through which this market segment can be reached.

PUBLIC RELATIONS

public confidence in an o

trying to do. This is for more different from product publicity because PR is used to

build the image of a company, although certain aspects of it are used to promote

products and services.

SALES P

This is the most widely used method of promoting products for export. It tak

forms and includes many activities all aimed at influencing trade buyers t

carry your product, and thus, persuading end-consumers to b

promotion undertaken m

such

promotiona visual merchandising like showrooms, store and window displays; and special events like trade fairs, selling missions, etc.; product samples

D

A targete

your target market will allow you to build a base of potential buyers and clients ton

whom you can direct your companys message. Include news about your company, such

as a new product/service or a successful project bid, to introduce your campaign.

Publicity is a good w


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41

media kit that introduces your company, new products/services or newsworthy activities,

and include copies of any articles published about your company.

6.

is perhaps the best mean of promotion. Many

7.Attending or participating in international trade shows is an excellent way to promote

s you to check out the competition and conduct market

romotional materials refer to printed materials that describe goods or services provided by

to the sales or promotion of the products or services

gned promotional materials are effective means of creating strong

profitable businesses.

Leaflets/mailshots

d demonstration kits

PERSONAL VISIT

Personal contact with the potential clients

cultures value personal contact in their business relationships and attention to cultural

issues often impresses foreign business contacts.

TRADE MISSIONS/TRADE SHOWS

your product or service. It allowresearch. If it is difficult for your company to take part in trade event, consider teaming

up with other companies or joining a group delegation or exhibit.

PROMOTIONAL MATERIALS

P

your company. It is specifically geared

you offer. Well-desi

product identity and

Such materials include the following:

BrochuresCatalogs

Visual aids like slide kits anDrawings and other specificationsPrice lists

These promotional materials aim to:

Obtain buyer reaction to your product rangePromote existing sales of your product in the market


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42

Obtain ordersrs

ain objective which to present you product in an

formative, interesting and professional manner leading to its acceptance and sales in the

market. Of course, the type of produc e and the size of your company willdictate th e leaflet

ensive full-colo

SUGGESTED

Product t you offer?

arket?

y your product?

roduct? If not, how can

Target potential customers and other foreign buyeIntroduce additional product range to buyersHelp your agents/salespeople introduce your products to the market.

PREPARATION OF PROMOTIONAL MATERIALS

Production of promotional materials is not an easy task. It requires a detailed understanding

of your company, your product and other task at hand. The tabulated data are critical in

attaining the promotional materials m

in

t you produce kind of promotional material you will need whether a simple one-pag

or an exp ur brochure.

TABLE 1.1

INFORMATION IN PROMOTIONAL MATERIALS

Is it the main produc

Is it the right product fort your selected target m

Why should customers bu

Are you happy with your present mix of p

you offer this mix?

Market

e?

Is your market local, national or international?

How big is your market?

How can you broaden your market bas

Company How do others see you?

What are your best known for? Any specialization?

?Is your image staid or progressive and reliable

Does your image accord with reality?

Companys strengths at? Weak at?

ote?

Are your products acceptable in the market?

What are your strong

Do you have the right products to prom


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43

Do you have the financial and human resources to continuously

Do you have the technical expertise?

supply the market?

TYPES O

Pr

1.

detailed

pecifications of products offered as well as the company profile. They are usually

mplex. These various

can come in ordinary bond paper size or customized

ize.

an be made of paper or card I the following formats: 4-

2. AILSHOTS /LEAFLETS

uch

f the information printed in the full brochure but in a more condensed form.

pecifications and actual product samples.

F PROMOTIONAL MATERIALS

omotional materials may include the following:

BROCHURES

They are an effective means of communication both for small and medium-seized

businesses, as these are considered relatively cheap. They contain

sgiven to prospective customers.

Brochures can come in different forms ranging from simple to co

formats allow flexibility for altering or updating the text and other contents.

Brochures can be designed as:

Loose-leaf inserts either spiral-bound or glued systems Folders with pockets

s

Fold-out brochures cpage landscape, 6-page concertina, or 6-page landscape.

Stapled/Booklet type

M

These are considered the simplest forms of brochure, much shorter and used to explore

new markets and to refine your target lists of potential customers. They contain m

o

Other promotional materials include CDs, catalogues, photo offers, price lists, sales

literature, drawings, s


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Whatever type of promotional materials you choose, here are few pointers:

1. The promotional material should describe your business and product in a clean and

th it.

4. you plan an illustrated material, use high standard and quality photos to showyour product as i grapher. Do not

a you are happy t

antage.

NFOR

S INFORMATION CT INFORMATION

concise manner.

2. It should be printed in the language of the country where you plan to sell.3. The paper used should be of high quality because the image of your business will

be associated wi

If

ts very best. If possible, hire a professional photo

ccept and use the pictures unless hat they show your product to the

best adv

TABLE 1.2: I MATION CHECKLIST

BUSINES PRODU

Business name Product description or range name Full business address (including the country) Style/Code No. Telephone number and mobile number Size/Dimension Facsimile number Colour E-mail address Finishes available Contact person and designation Raw materials used Business profile Accessories used Profile of the founders, owners, and senior partners Price list Business clients by name or by country Packaging Detailed listings of product lines and merchandise Delivery

handled

Services the business can offer Packing specification Business code of practic

of busines

e and terms and conditions

s

Terms of payment

Membership in dif eferent associations Conditions of sal


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What is my Projected Income?Making a Simple Financial Analysis

Terms to Remember

1. INCOME STATEMENT also referred as profit and loss statement (P&L), earningsstatement, operating statement or statement of operations, is a company's financial

statement that indicates how the revenue (money received from the sale of products and

services before expenses are taken out, also known as the "top line") is transformed into

the net income (the result after all revenu

Module

740 minutes

es and expenses have been accounted for, also

known as the "bottom line"). It displays the revenues recognized for a specific period,

and the cost and expenses charged against these revenues. The purpose of the income

statement is to show Entrepreneurs and investors whether the business made or lost

bbreviated COGS, is a financial accounting term which

money during the period being reported.

2. COST OF GOODS SOLD adescribes the direct costs attributable to the production of goods sold by a company. This

includes material cost and direct labor cost.

3. GROSS PROFIT-is the difference between revenue or income and the cost of making aproduct or providing a service.

4. OPERATING EXPENSES is an ongoing cost for running a product, business, or system.Its counterpart, a capital expenditure (CAPEX), is the cost of developing or providing

non-consumable parts for the product or system. For example, the purchase of a

photocopier is the CAPEX, and the annual paper, toner, power and maintenance cost is

the OPEX. For larger systems like businesses, OPEX may also include the cost of

workers and facility expenses such as rent and utilities.

5. REVENUE OR BUSINESS INCOME is the total earnings or revenue of the businessafter deducting all relevant expenses.
http://en.wikipedia.org/wiki/Financial_statementhttp://en.wikipedia.org/wiki/Financial_statementhttp://en.wikipedia.org/wiki/Revenuehttp://en.wikipedia.org/wiki/Net_incomehttp://en.wikipedia.org/wiki/Capital_expenditurehttp://en.wikipedia.org/wiki/Photocopierhttp://en.wikipedia.org/wiki/Photocopierhttp://en.wikipedia.org/wiki/Capital_expenditurehttp://en.wikipedia.org/wiki/Net_incomehttp://en.wikipedia.org/wiki/Revenuehttp://en.wikipedia.org/wiki/Financial_statementhttp://en.wikipedia.org/wiki/Financial_statement


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It's at the end of your business plan, but the financial plan section is the section that determines

whether or not your business idea is viable, and is a key component in determining whether or

not your business plan is going to be able to attract any investment in your business idea.

ojection and the balance sheet and a brief

xplanation/analysis of these three statements.

ypes of cost and

xpenses that are included in the income statement, first is the cost of sales- is a financial

Basically, the financial plan section of the business plan consists of three financial statements,

the income statement, the cash flow pr

e

For the purpose of simplicity, we will only discuss the concept of income statement and how to

make a projected income statement

In making a pro-forma income statement (Projected) you need to forecast your estimated sales

for a period of 12 months. You can base your estimate on the market study-typically a forecast

on how many customers who will buy your product.

Normally, a sales forecast includes not just sales as well. You need to present the business

expenses that your business will incur in the future. Typically, there are two (2) t

e

accounting term which describes the direct costs attributable to the production of goods sold by a

company. This includes material cost and direct labor cost. The result of computation after

deducting the Companys Sales from the Cost of Goods Sold is the Gross profit

Another financial concept that is relevant in the preparation of income statement is the operating

expenses-is an ongoing cost for running a product, business, or system. Its counterpart, a capital

expenditure (CAPEX), is the cost of developing or providing non-consumable parts for the

product or system. For example, the purchase of a photocopier is the CAPEX, and the annual

paper, toner, power and maintenance cost is the OPEX. For larger systems like businesses,

OPEX may also include the cost of workers and facility expenses such as rent, advertising

expenses, and transportation e xpenses in the business must

be accounted for to determine the prof ss. Here is the example of pro-forma

income statement that you be included in the business plan

xpenses. It is important to note that e

itability of the busine
http://en.wikipedia.org/wiki/Capital_expenditurehttp://en.wikipedia.org/wiki/Capital_expenditurehttp://en.wikipedia.org/wiki/Photocopierhttp://en.wikipedia.org/wiki/Tonerhttp://en.wikipedia.org/wiki/Tonerhttp://en.wikipedia.org/wiki/Photocopierhttp://en.wikipedia.org/wiki/Capital_expenditurehttp://en.wikipedia.org/wiki/Capital_expenditure


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Bench T Shirt

Projected Income Statement

December 2010

Less: Cost of Goods Sold 25,000.00

Sales $ 100,000.00

Website development 3,000.00

GROSS PROFIT 75,000.00

Less: Operating Expenses

Rent 12,000.00

Salary of Employees 10,000.00

Transportation Expenses 3,000.00

Advertising expenses 5,000.00

Office supplies 2,000.00

Total Operating Expenses $ 35,000.00

Net Income $ 40,000.00

Remember this Formula

Net Income = SALES - COST OF GOODS SOLD = GROSS PROFIT - OPERATING

EXPENSES


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Putting It All Together

efinitely navigate each and every aspect of a business. This compass will direct the

ay tread in the near future. Therefore, its a necessity for aspiring

ay consume most of your time and energy but always remember that in the

orth every minute expended just to make every future minute of our

and create your own market-entry strategy plan or business plan.

mat that will guide you in creating your own business plan.

Module

8 Congratulations!Youve been familiarized with the Basic Business Planning.

Business planning serves as both a structural outline for future businesses and a compass

that will d

path your venture m

entrepreneurs to create a market entry or business plan since it will not only help you save

money and time but it will also preclude any predicament that may come at any stage of a

business.

Business planning m

end, it will be well w

business done right.

Start now

Below is the corresponding for


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MARKET-ENTRY STRATEGY PLAN FORMAT

II. Business Objectiveses

Objectives

IV.Target Market4.1Demographic Profile of the Target Market

ures, Advantage & Benefits

6.3 r duct Distribution

6.4 r duct Promotion

Sales Promotion Strategy

VII. Financial Analysis: Projected Income Statement

VIII. Bibliography/List of Reference Materials

I. Executive Summary

2.1Short-term Objectiv2.2Long-term

III.Product Overview

4.2Market Needs4.3Market Population

V. Competitor Analysis

VI.6.1

Marketing MixProduct Strategy : Product Feat

6.2Pricing StrategyP o

P o6.4.1

6.4.2 Product Awareness Campaign


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Let us discuss briefly each part of the market-entry strategy plan.

1. EXECUTIVE SUMMARY (see Worksheet No. 10)ource: Excerpt from the book of Hisrich, Peters, and Shepherds Copyright, 2008 - Entrepreneurship 7th Edition)

overview of your business plan.

our executive summary should include a brief description of the business concept; the purpose

n overview of financial forecasts and

s of objectives, first is the short-term objective, which is setting your objectives in a

ort period of time usually one (1) year; and long-term goal, setting your objectives for the next

asurable, attainable, realistic, and time-

3. RODUCT OVERVIEW (see Worksheet No. 2)your product(s) and/or service(s) with some

uct or

service, and how many of them there are. It includes their demographic profile and other market

rget market provides a basis for

(S

This section of the business plan is prepared after the total plan is written. It is about one page

overview of the entire market-strategy plan.

Usually it is limited to the specific objectives to be achieved. It should provide a clear, concise

executive overview of the business that would be effective as an

Y

of the plan; an overview of the market potential; and a

expected returns for the business.

2. BUSINESS OBJECTIVES (see Worksheet No. 1)Defines specific quantifiable business objectives and goals of your business plan. Specifically,

on how you will satisfy your customers and how will you reach your target market. There are

two type

sh

five (5) years. These objectives should be specific, me

bound.

P

This part is about the brief technical description of

illustrations of you product/service, which is subject to your business plan.

4.

TARGET MARKET (see Worksheet No. 3)You need to know exactly what the people who might be interested in buying your prod

profile of your target customers. Knowledge of the ta

determining the appropriate marketing action strategy that will effectively meet its needs.


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5. COMPETITOR ANALYSIS (see Worksheet No. 4)Competitor analysis is to determine who your competitors are. This isn't the hard part. If you're

planning to start a small business that's going to operate locally, you can identify your

competitors just by driving around or looking in your local place. You need to gather the

information about your competition that you need for the competitive analysis. You need to

now what markets or market segments your competitors serve; what benefits your competitor

from them; and as much as possible about their products and/or

003- Introduction to Marketing 6th Edition)

r from your competitors and what benefits they provide to your

distribution. (see

uct and convince

target customers to buy it. (promotion

fedex & japi itc worskhop lecture

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