BDI3U – Grade 11 – Entrepreneurship – Unit 3 Notes

Entrepreneurship Notes

Unit 3

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

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– 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
Productivity-​ generally measured in terms of output per worker employed People-​ the personnel necessary to run the business most efficiently Promotion-​ the vehicle most entrepreneurs use to tell consumers about their products or services including 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

Advertising​- the paid, impersonal mass communication about products by an identified sponsor in an effort to persuade or influence behaviour. It is the mass, impersonal communication of information

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

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When is it used?

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  • –  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

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  • –  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:​ usually line drawings of people, animals or objects. A strong visual symbol in combination with a well-chosen brand name can communicate a great deal about a product or service before the consumer even tries it
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: r​ epetitive 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

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