Assignment 6

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Chapter14-DevelopingaStartupMarketingPlan.pptx

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CHAPTER 14 Developing a Startup Marketing Plan

CHAPTER OBJECTIVES

Discuss the role of the product adoption / diffusion curve for marketing strategy.

Explain how to create an effective marketing plan.

Discuss the forms of advertising and promotion that entrepreneurs can tap.

Describe the role of publicity in a marketing strategy.

Explain how entrepreneurs can employ social media to their advantage.

Discuss the role of personal selling in a marketing strategy.

MARKETING STRATEGY (slide 1 of 3)

Marketing includes all the strategies, tactics, and techniques used to:

Raise customer awareness.

Promote a brand, product, service, or business.

Build and manage long-term customer relationships.

Traditionally, marketing has been described in terms of the “5 Ps”:

1. People, or customers.

2. Product, or what is being offered to the customer.

3. Price, or what the customer is willing to pay.

4. Place, which is the channel through which customers can find the product or service.

5. Promotion, which involves the strategies for creating awareness and reaching the customer.

MARKETING STRATEGY (slide 2 of 3)

A marketing strategy that pushes a message to potential customers through advertising and promotion is a very costly approach and does not make sense for entrepreneurs, who typically have limited resources.

Rather, entrepreneurs design their products or services with the customers’ needs in mind and build long-term relationships.

That means that much of the “selling” that would otherwise have to be done has been taken care of by giving customers what they want, when they want it, and in the way they want it.

The possibilities for engaging with customers interactively are endless.

Technology is now enabling consumers to search for things they want to buy by means of image, voice, and gesture.

MARKETING STRATEGY (slide 3 of 3)

Consumers’ expectations are high, primarily in four ways:

Consumers want to interact with anyone, anytime, and anywhere in the easiest way possible.

They want to be able to do new things with new information in new ways.

They expect everything to be targeted to their precise needs, so they can have the unique experience they want.

They want this all to happen easily with no learning curve.

The bottom line is that customers want experiences.

One study found that experiences now influence two-thirds of the decisions customers make and the other third is mostly driven by price.

Today, marketing must consider all the touch points with the customer from brand awareness to product evaluation, purchase, and after-purchase experience.

14.1 PRODUCT ADOPTION AND THE CUSTOMER JOURNEY (slide 1 of 8)

Understanding the product life cycle and how customers adopt new products is critical to any marketing strategy because it enables you to plan for which customer segment to target first and what rate of sales you can expect.

To the extent that you can predict the points of takeoff (optimism) and slowdown (pessimism) in the sales cycle, you can better manage demand.

If you can manage demand, you can more effectively plan for varying levels of production, inventory, sales personnel, distribution, marketing, and advertising.

Finally, if you can more effectively plan for changes in sales patterns, you can adapt your strategy to remain competitive.

14.1 PRODUCT ADOPTION AND THE CUSTOMER JOURNEY (slide 2 of 8)

The adoption / diffusion curve is a tool that can help you understand and manage demand.

It describes how customers adopt new products.

Customers are grouped into categories based on how quickly they adopt a new product, ranging from those who adopt immediately to those who are the last to adopt.

14.1 PRODUCT ADOPTION AND THE CUSTOMER JOURNEY (slide 3 of 8)

The adopter groups are characterized in the following ways:

Innovators.

These are the visionaries; they are a very tiny customer base that is always interested in trying the latest, greatest thing.

Typically, younger in age, innovators represent the gatekeepers, the group that is instrumental in deciding whether a new product will go forward to ultimately achieve mass adoption.

Early Adopters.

These are the true first customers because they pay for the product.

Early adopters are eager to adopt new products to solve problems and create a competitive advantage for themselves.

They usually have money to spend, and they only require that the product be able to solve about 80 percent of their problem.

14.1 PRODUCT ADOPTION AND THE CUSTOMER JOURNEY (slide 4 of 8)

Early Majority.

This group comprises the more pragmatic customers who tend to wait until a new product is proven and plenty of people are using it.

The early majority need to know that a product actually works before they adopt it because they don’t want to make bad decisions.

Late Majority.

This group tends to be older in age and typically buys only proven products with good price points.

The late majority waits for the price to come down and they succumb to peer pressure.

Laggards.

This group tends to purchase the product only if they absolutely have to; in other words, laggards are skeptical that the product is necessary to solve their problem at any price.

FIGURE 14.1 New Product Adoption / Diffusion Curve

14.1 PRODUCT ADOPTION AND THE CUSTOMER JOURNEY (slide 5 of 8)

For technology products, the adoption / diffusion curve has a twist.

It contains a “chasm”—a period when the early adopters have been exhausted and the technology abruptly stops selling.

The reason for the stall is that innovators and early adopters are the only ones with an interest in the technology, while the rest of the potential market, which is far more pragmatic, is not experiencing any “pain” or problem that the technology can solve.

FIGURE 14.2 The Technology Adoption–Diffusion Curve

14.1 PRODUCT ADOPTION AND THE CUSTOMER JOURNEY (slide 6 of 8)

Geoffrey Moore suggests that to cross the chasm, you must identify multiple niche market applications that get the technology into many different customer sectors (called the Bowling Alley) simultaneously, then build a critical mass of these niches that creates awareness for your technology in the marketplace.

If done well, that critical mass may produce a flashpoint where the market en masse adopts the technology as the standard.

The flashpoint may propel the technology into what Moore calls a “tornado,” producing year-over-year growth of 100 percent or more.

14.1 PRODUCT ADOPTION AND THE CUSTOMER JOURNEY (slide 7 of 8)

What is important to take away from the discussion of adoption / diffusion cycles is that the rate at which a new product is adopted across the various customer segments is a function of several factors that include:

Perceived benefit.

Price and total product costs.

Usability.

Acceptance of promotional efforts.

Distribution intensity.

Switching costs.

Learning curve.

The ability to test the product before purchase.

14.1 PRODUCT ADOPTION AND THE CUSTOMER JOURNEY (slide 8 of 8)

In addition to the adoption pattern of customers, you also need to identify the points at which you interact with your customers from the moment you create awareness for your product or service to the end of the life cycle for that product / service.

Some of the components of the customer journey are essential and others are optional and depend on the type of business you have and the kinds of customers you serve.

TABLE 14.1 Components of a Customer Journey Map

14.2 THE MARKETING PLAN

The marketing plan for a startup is a living guide to how a company plans to build customer relationships over its life in order to fulfill the company’s mission statement.

It details the strategies and tactics that will create awareness on the part of your customers and build a brand and a loyal customer base.

Furthermore, an effective marketing plan develops a consistent message to your customer and creates an opportunity for you to make a sale.

Marketing plans are written at many points in the ongoing life of a business.

The original plan will contain a strategy for introducing the company and its products and services to the marketplace.

Later, a marketing plan may be used to launch new products and services and / or to grow the business.

14.2a Creating Customer Value

Here are some steps you can take to ensure that you are creating value for your customers with your marketing plan:

Identify your approach to the market.

This depends on which customer segment you’re serving and includes such things as the message, differentiation tactics, channel strategies, and performance goals.

Identify a niche that you can dominate.

Typically, this is a segment of the market that is not being served so you will be solving a unique problem customers have.

Identify the intangible benefits you are offering customers, such as quality, worth, and utility, as measured against what they will pay.

Customers buy intangible benefits such as saving money or time, convenience, and health—not product features.

14.2b Setting Marketing Goals (slide 1 of 4)

Once the value proposition for the customer has been defined, it’s time to consider all the marketing options or means to communicate your company’s message.

Here are some steps that will help you do that:

Talk to other business owners, customers, and suppliers, and read books and articles on marketing strategies for entrepreneurs.

Learn which approaches are typically used by other businesses in your industry because that will give you an idea of customer preferences and expectations.

14.2b Setting Marketing Goals (slide 2 of 4)

Generate a list of possibilities to consider, which may range from sponsoring a business conference to advertising in a national trade publication to developing a social media approach.

Imagine your business from the customer’s point of view.

Study the competition to determine what makes them successful or unsuccessful.

Analyze the marketing options and rank them by first eliminating those that either don’t meet the needs of the target market or simply are not feasible at the time.

Establish sales and marketing goals.

These goals should follow the SMART rule; they must be sensible, measurable, achievable, realistic, and time specific.

14.2b Setting Marketing Goals (slide 3 of 4)

Many experienced marketers suggest that an important step in creating the marketing plan is to condense all the ideas about your marketing strategy into a single paragraph.

Crafting a single well-written paragraph forces you to focus carefully on the central point of the overall marketing strategy.

This paragraph should include:

The purpose of the marketing plan.

The benefits of the product / service.

The target market.

The market niche.

The marketing tactics to be used.

The company’s convictions and identity.

The percentage of sales that the marketing budget will represent.

14.2b Setting Marketing Goals (slide 4 of 4)

With a clear and compelling one-paragraph marketing plan, you need to establish your launch objectives, which are the key goals for the marketing campaign.

What needs to be accomplished, when it will be achieved, and how the company intends to do it should be included.

For a startup venture, two important objectives are:

To create awareness for the company and its brand.

To reach target customers to produce sales quickly.

Objectives need to be matched to a timeline for achieving them.

14.2c Brand Strategy (slide 1 of 2)

A brand is defined as a “name, term, design, symbol, or any other feature that identifies one seller’s good or service as distinct” from other sellers.

A “brand image” is how your customer perceives your brand.

Brand strategy is a set of decisions about the brand’s positioning in a marketplace.

These decisions can include:

Developing the brand concept.

Building brand extensions to take the brand into new product areas.

Licensing the brand to third parties to expand opportunities.

Co-branding with another company.

14.2c Brand Strategy (slide 2 of 2)

“Brand equity” conveys the effectiveness of the brand in the market, often in terms of financial metrics such as return on marketing costs.

Building brand equity requires that customers form an emotional attachment to the brand.

To accomplish that, everything associated with your company—products, services, signage, web design, location, and so forth—must convey the overall value message that you want to project.

14.2d Assessing Effectiveness

Here are a few ways you can measure the effectiveness of marketing efforts so as to avoid wasting precious company resources:

Match sales forecasts to specific marketing tactics and assign a specific person to be responsible for measuring the outcome.

Ask customers how they heard about your company or the product / service.

Track specific marketing efforts, advertising, and promotion, and match specific performance outcomes to each effort.

FIGURE 14.3 Some Marketing Metrics for Entrepreneurs

14.2e Advertising and Promotion

Advertising and promotion are both used to create awareness for a company’s products and services and influence customers to buy, but they are not interchangeable terms because they have different objectives.

Advertising generally focuses on nonprice benefits and targets end-users.

It can also have some influence on the channels of distribution through which the customer will seek a product or service.

In that sense, advertising is employed to pull the product through the distribution channel—called a pull strategy.

By contrast, promotion tends to be more price-focused or incentive-focused and therefore is usually considered a push strategy.

TABLE 14.2 Push or Pull Strategy?

FACTORS TO CONSIDER	USE ADVERTISING (PULL)	USE PROMOTION (PUSH)
Price sensitivity	Not effective	Effective
Brand loyalty	High loyalty	Low loyalty
Need for information	High need	Low need
Risk—switching costs, learning curve	High risk for customer	Low risk for customer
Product life cycle stage	Growing or mature	New product or declining product
Market status	High market share	Low market share
Purchasing pattern	Predictable	Unpredictable
Contribution to profit	Above average	Below average
Differentiation	Strong differentiation	Little differentiation

14.3 ENTREPRENEURIAL MARKETING TACTICS

There are many ways to promote a company and its products and services effectively.

14.3a Traditional Advertising

Traditional advertising—a pull strategy—consists of print and broadcast media.

Most entrepreneurs today shy away from traditional media because it is not only much more expensive but it may not reach their target audience as effectively as digital media and social technologies might.

TABLE 14.3 Traditional Media Comparison Chart (slide 1 of 2)

TABLE 14.3 Traditional Media Comparison Chart (slide 2 of 2)

14.3b Publicity and Referrals (slide 1 of 2)

Publicity and word-of-mouth (referrals) are two of the most effective marketing tools around because they don’t cost your company any money.

What they do require is that you have a compelling story that will attract attention.

If your business or product is newsworthy, there are several ways to get some publicity.

Contacting newspapers, magazines, or online reporters, editors, and bloggers to pitch an idea and then following up with a phone call often works.

When contacting the press, be sure to have the following ready to go:

Press release.

Bios and photos of the key people in the story.

Any necessary background information.

Copies of any other articles written about your company.

14.3b Publicity and Referrals (slide 2 of 2)

Constructing an Effective Press Release

An effective news release should contain:

The date, the name of the person to contact for more information, and a phone number.

The release date.

An appropriate, descriptive headline.

The release information typed double-spaced with wide margins.

The who, what, where, when, and why at the very beginning of the press release.

A photo (if appropriate).

A note explaining briefly why the release was sent.

Getting Customer Referrals

The best customers are those acquired through referrals from current satisfied customers.

14.3c When It Makes Sense to Give It Away

Giving customers something for nothing makes sense in an environment where it’s hard to get the customer’s attention.

You should consider giving away information, consulting, or samples of a product when:

The customer is likely to return.

The cost for each additional item is low and margins are high.

Customers need to try the product or service in order to risk the money to buy it, especially if it’s unproven technology.

Samples of the product or service can be offered at a large event such as a conference or trade show.

The following should not be given away:

A service such as financial expertise that relies on credibility, because doing so may cause customers to question its value.

Expensive items and commodity items, which customers buy on the basis of price.

14.3d Internet Marketing and Social Media (slide 1 of 8)

In 2017, Internet ad revenues hit an all-time high of $72.5 billion.

Mobile advertising was the biggest platform for advertising.

Today, with everyone having access to the means to produce highly targeted messages to reach customer niches with relatively few resources, the competitive advantage of traditional Internet marketing disappears.

Any marketing strategy you decide on should be anticipated, personal, and relevant.

The reason why most online marketing campaigns are unsuccessful is that they are unanticipated, impersonal, and irrelevant.

14.3d Internet Marketing and Social Media (slide 2 of 8)

Social Media

Social media marketing is the direct result of the emergence of online communities and social networking sites like Facebook, Linked In, You Tube, and Pinterest.

Although there is no single best way to craft a viral strategy using social media, you should incorporate the following:

Provide free products and services.

Make it easy for customers to pass on the message.

Make sure that your mail server can handle the traffic.

Take advantage of existing social networks to expand your reach.

Use other people’s websites to share your message.

TABLE 14.4 Major Types of Social Media Applications

SOCIAL MEDIA APPLICATION	WHAT IT DOES
Media and file sharing	Upload, share, comment, photos, videos, audio
Social networks	Connect using personal business profiles
Blogs	Publish and comment: opinions and experiences
Ratings and reviews	Evaluating products, services, and experiences
E-commerce	Group purchasing and sharing experiences
Wikis	Search, create, edit articles as shared knowledge
Discussion forums	Open communities on specific topics
Shared workspace online	Collaboration on content for projects
Crowdsourcing	Source of collective knowledge for problem solving
Gaming	Play video games with others online

14.3d Internet Marketing and Social Media (slide 3 of 8)

Social Media Metrics

In general, there are four major categories of metrics that work across all social platforms and that can be used to track your effectiveness of reaching customers.

1. Conversation rate.

This measures the number of conversations per post.

2. Amplification rate.

This measures the number of times your post is shared.

3. Applause rate.

Examples: Facebook “likes,” thumbs up or down.

4. Economic value.

This is the sum of your short- and long-term revenues and cost savings across all your media channels.

14.3d Internet Marketing and Social Media (slide 4 of 8)

Search Engine Marketing

Search engine marketing (S E M) and search engine optimization (S E O) are simply tools for increasing the level of visibility of your website when customers search for your company online.

Optimizing a site with appropriate keywords can help customers find a company much faster, but it is important to note that major search engines such as Google have very specific rules regarding how keywords are used.

Failing to follow those rules could get a website “Google-sacked,” which means that the site is not assigned a Page Rank (used for parsing sites) and therefore simply disappears from a user’s search.

14.3d Internet Marketing and Social Media (slide 5 of 8)

Search Engine Marketing (continued)

A number of new terms have emerged out of keyword search marketing, and they represent ways to capture value for an advertiser and measure how effective that advertising is.

Conversion rate.

The number of customers who take a particular action such as register on the site, subscribe to a newsletter, download software, or purchase a product.

Cost-per-action.

A payment model where the advertiser pays based on some manner of conversion such as a sale or site registration.

Cost-per-click.

The cost of a paid click-through.

14.3d Internet Marketing and Social Media (slide 6 of 8)

Search Engine Marketing (continued)

Cost-per-impression.

Cost per 1,000 advertising impressions, with an impression being a single instance of an online advertisement being displayed.

Pay per lead.

A model where payment is based on qualified leads.

Affiliate Programs

Affiliate programs are basically strategic partnerships with other companies that offer complementary products and services.

Example: Banner exchange programs—a banner company posts your banner on other compatible Internet sites.

14.3d Internet Marketing and Social Media (slide 7 of 8)

Affiliate Programs (continued)

There are many effective ways to attract customers to a website.

Assure customers that their private information will not be sold.

Give customers something free to entice them to discover more.

Offer customers more, beyond the free information, that they will have to pay for.

Use electronic gift certificates as a way of getting customers to try products or services.

Provide a toll-free number for people who need to hear a human voice to overcome resistance.

Offer to accept payment for items in as many ways as possible: credit cards, checks, debit cards, Pay Pal, and so on.

14.3d Internet Marketing and Social Media (slide 8 of 8)

Content Strategy

Content tactics typically include developing research, e Books, Webinars, white papers, and social media.

Through an effective content strategy targeted to the various touch points with customers, you have an opportunity to secure a competitive advantage by addressing the needs of business customers at every stage of the buying process.

Privacy Issues and Other Risks of Social Technologies

Social technologies tend to increase the chances that confidential information will be leaked and that disgruntled customers will take to the Internet, reaching a global audience with their complaints.

Customer-focused companies inform their customers how the information collected will be used.

The best practice is to get a customer’s permission before using his or her information for any purpose.

14.4 PERSONAL SELLING

You will use your personal selling skills to acquire customers, partners, and investors, among others.

It is important to learn what your customers want from the sale and to give them what they want.

The following are some suggestions:

Gather as much information as possible about your customer’s needs and build credibility with them before trying to sell anything.

Position your company as a solution provider in the mind of the customer, offering them a product or service that actually solves a problem they have.

If the customer declines your offer, you should maintain a sense of composure, then inquire why, and follow up by repeating the value the company is providing.

Invite the prospect to contact two existing customers and ask them about their experience working with you.

14.4a Selling at Trade Shows and Exhibits

For entrepreneurs in many industries, trade shows, fairs, and exhibits are a primary way to expose their products and do some personal selling.

Attending trade shows is an effective way to find out who the competitors are and what marketing techniques they are using.

A trade show is one of the best places to meet and negotiate with sales representatives and to gather contact information for a mailing list.

The primary reason to display products at a trade show is to eventually sell more products.

14.5 MANAGING CUSTOMER RELATIONSHIPS

Today, retaining and maintaining current customers is more important than spending money to find new customers.

It has been reported that 65 percent of a company’s business comes from current customers and of those customers, 20 percent will be the source of most of your profits.

Because it costs five to ten times more to go after a new customer than to serve an existing one, getting the right customers is critical.

With good customer profiles, you can match demographic information about current customers with demographic data in the geographic area of interest to find prospects more effectively.

Benefits of building relationships with customers:

If a problem occurs, a customer who has a relationship with the company won’t automatically shift their loyalty to a competitor.

Over time, customers are no longer viewed as a series of transactions but as bona fide, contributing members of the team who bring value to the bottom line.

14.5a Identifying and Rewarding Lifetime Customer Value

It is not uncommon for a company to find that as few as 24 percent of its customers account for 95 percent of its revenues.

Those 24 percent are the customers the company needs to know well and to keep happy, because they are the customers who will readily try new products and services and refer the company to others.

For a company to grow, it needs customers to talk about their experience with others who might then become new customers.

What you must do is make sure that what they say will result in new customers and that means you need to figure out your customer’s lifetime value (L T V).

Calculating a customer’s lifetime value to your company entails estimating their future purchases based on past purchases, adding in the value of referrals, and subtracting the cost of maintaining the relationship.

14.5b Complaint Marketing

A dissatisfied customer will probably tell at least nine other people about the problem he or she faced with your company.

Complaints should be viewed as opportunities for continual improvement.

Making it easy for a customer to register a complaint and carry on a dialogue with a human being who listens and attempts to understand is an important way to learn from the customer.

One way to stem complaints at the source is to provide satisfaction surveys at every point of contact with the customer so that problems can be coped with quickly.

A customer should be allowed to explain a complaint completely, without interruption.

The most important message that can be sent to customers through a company’s marketing effort is that the customer is the most important part of the organization and the company will do whatever it takes to keep good customers satisfied.