Marketing: Value Proposition and USP

• A business plan is a comprehensive paper detailing situation analysis, objectives, strategies, and tactics for monitoring and controlling an enterprise
• The Marketing Process involves knowing the customers

Marketing Process

• Marketing process starts with identifying customer needs to create a meaningful value proposition
• Next is studying customer wants or desires to build a unique selling proposition
• Then it is important to identify the most strategic market to tap

Value Proposition (VP)

• States why a customer buy a certain product or service
• An entrepreneur should address customer problems, have quantifiable benefits, and differentiate from the competitors

Unique Selling Proposition (USP)

• This refers to how a product or service is sold to customers
• After creating a VP, determine how to advertise or promote unique product or service features

Tips on How to Create an Effective Unique Selling Proposition (USP) to Target Customers

• Identify and rank the uniqueness of the product/service
• Be specific and emphasize the differentiator against competitors to add real value
• KISS (Keep It Short and Simple) in a catchy way, like a newspaper headline

Know Your Customers: Marketing Research

• This is a comprehensive process of understanding customer intricacies and the industry
• Should scrutinize the target market, their requirements, and the business's market size

Market Size

• The arena where the entrepreneur's business will play, it is the approximate number of buyers and sellers in a particular market

Steps in Conducting a Strategic Marketing Research

• Estimate the potential market (Market Space/Market Universe) which is the approximate number of customers who will buy the product/avail the service
• Eliminate customers unlikely to buy the product/avail the service
• Estimate market share, which is the percent of total sales in an industry generated by a company
• Use surveys, customer reviews, or other data to calculate potential customers and decide if the business is worth the capital

Customer Requirements

• Customers are the lifeblood of the business who shape business decisions

• Thus, "the customer is always right" is a mantra for successful entrepreneurs

• Specific features/requirements needed from a product/service

• Entrepreneurs must know WHO buys, WHAT, WHEN, WHERE, HOW, and WHY they buy, as well as be vigilant of changing requirements

Primary and Secondary Target Market

• Market Intelligence includes customer profiling and drives entrepreneurial strategies and tactics

Market Segmentation

• Grouping similar/homogeneous customers by demographic, psychographic, geographic, and behavior

Secondary Target Market

• Customers without enough purchasing power/fewer demands which can be converted with effective marketing strategies

Marketing Segmentation: Demographic or socioeconomic segmentation

• Grouping customers based on income, social class, occupation, gender, age, religion, and ethnicity

Marketing Segmentation: Psychographic Segmentation

• This groups customers according to perceptions, way of life, motivations and inclinations

Motivation Segmentation

• Categorizes motivations as Physiological (avoid pain, give pleasure) or Psychological (customer preferences)
• Also defined as Aspirations (inner peace, financial stability, work-life balance) or Deprivation (lack of financial security, love, knowledge)

Inclinations

• Involves preferring one product over another as a result of gaining refreshing experience when using the product

Marketing Segmentation: Geographic Segmentation

• Groups customers by location
• Encompasses cultures, beliefs, preferences, politics, and lifestyles of a geography

Marketing Segmentation: Behavioral Segmentation

• Groups customers by their actions
• These actions are instigated by occasions (Ex. Christmas season, Valentine season, Summer season, Birthdays), and Graduations
• Also defined as desired benefits, and the entrepreneur determines the customer's exact needs and offer the most suited products or service for them or consistent usage/availment of the product

Talking to your Customers

• The last step in marketing research involves establishing a market research design
• Responses are either qualitative or quantitative

Qualitative vs. Quantitative Research

• Qualitative Research includes identifying written/spoken customer opinions
• Quantitative Research involves analyzing customer preferences using statistics

Four Most Common Methods of Collecting Data from the Target Customers

• The Interview is a face-to-face contact between a respondent and researcher
• Helpful to gather customer feedback to guide the business

Interview: Two Main Types

• Unstructured Interview is informal and does not follow a specific set of questions, with answers answered freely
• Structured Interview employs specific questions and produces quantitative data

Focused Group Discussion (FGD)

• It is a process of mining customer/noncustomer experience and insights about a specific product or service led by a moderator
• Participants are selected based on the objective of the entrepreneur/should be homogeneous

Observation

• Generates ideas by documenting patterns of people/objects/events without requiring participation

• The benefit is researchers see real behavior instead of hearing what they say

• Can be performed by a human/machine observer

Methods of Gathering Data: Observations

• Human Observer record information using their 5 senses
• Examples include customer purchase patterns and mystery shoppers

Methods of Gathering Data: Machines

• Machine Observer employ equipment to record information
• Examples include video cameras, traffic counters and Web analytics

Examples of Machine Observation

• Barcode Scanners help researchers understand purchase behavior by reading product codes
• GPS Technology allows tracking of vehicles/pedestrians exposed to out-of-home advertisements

Traditional and Online Surveys

• Involves getting answers from a sample of respondents derived from a particular population
• Can be distributed and answered verbally, by writing, or through the Internet

Sampling Techniques

• Probability Sampling - Samples given equitable/nonzero chances of being selected from a population.
• Nonprobability sampling - Samples are selected according to their accessibility/personal choice of the researcher and not given equal chance

Researcher Must Identify

• Sample Size: The researcher must calculate an appropriate sample size to avoid wasting capital/time or getting imprecise results
• Also the Questionnaire Blueprint

The Marketing Mix: The 7 Ps of Marketing

• Widely accepted strategic marketing tool, this combines the original 4Ps (product, place, promotion, price) with the additional 3Ps (people, packaging, and process) in formulating marketing tactics
• Emphasizes the right combination to effectively serve customer needs, achieve profitability objectives, and conduct a situation/ SWOT analysis

The 7Ps of Marketing

• Entrepreneurs must use the following: conduct a situation analysis, set objectives; conduct a SWOT analysis

Product, Place, Price, and Promotion

• Product - The suitable product/service for the opportunity including why customers buy or avail
• Place - The best business location with potential customers and easy transactions, including distribution
• Price - The appropriate price and pricing strategies and tool to drive awareness/increase sales
• Promotion - The most effective advertisement or combination to drive awareness/increase sales

People, Packaging, and Processing

• People - Hired people need basic skills for the job, including leadership abilities
• Packaging - The best packaging for the product to attract customers, should be cost-efficient, also Physical evidence is needed to set up to sell the service
• Process - The step-by-step procedure or activity workflow that is efficient to serve the customer

Product

• It is any physical good, service, or idea created by an entrepreneur addressing existing customer problems

The Three-Level Concept of Products/Services

• Level 1: Core Benefits of the Product or Service
• Level 2: Physical Characteristics of the Product or Service
• Level 3: Augmented Benefits of a Product or Service (additional benefits)

Place

• Location or medium of transaction
• In a physical location, the entrepreneur must research area population, traffic, common paths, buying behavior, and location preferences
• Analytics data should guide Web performance

Logistics

• Product distribution and the whole business
• For products covers production, ordering, raw material, or finished good receiving, storage, reorder points, and transportation systems

Price

• Peso value assigned by the entrepreneur for a certain product or service considering cost, competition, objectives, positioning, and target market
• The only 'P' that generates revenue

Most Common Pricing Strategies

• Bundling – Two or more products/services in one reduced price
• Penetration Pricing – Set low prices to rise market share, then eventually increase
• Skimming – Prices are initially high and then lowered for a wider market
• Competitive Pricing - Benchmark prices with competitors.
• Product Line Pricing – Price different products/services within a parallel product array using varying price points

Additional Pricing Strategies

• Psychological Pricing – Considers the psychology and positioning of price in the market
• Premium Pricing- Is using a Very high priced product/service to reflect elitism and superiority
• Optional Pricing - Adds an extra product or service on generating more revenue.
• Cost-based Pricing – the basis of markup is the cost of sales
• Cost Plus Pricing – markup is based on a certain percentage of cost

Two Classifications of Costs

• Variable Costs or Uncontrollable Costs the costs directly proportional to the products manufactured/number of services performed
• Fixed Costs or Controllable Costs - the costs not directly proportional to product manufacturing/service performance

Promotion

• Presenting products/services to the public to address their needs, wants, problems, or desires
• The main goal is to gain attention

Promotional Tools

• Advertising - A communication which influences the behavior of a customer choosing a product/service over competitors.
• Selling - Involves the act of trading a product or service for a price/fee
• Sales promotion - Short-term gimmicks with incentives/appealing activities incorporated to entice customers buying a product or avail
• Public Relation - Initiatives with the goal of making name of the business reputable to stakeholders, or clients.

People

• Play a vital role in servicing customers in today's marketing arena
• How employees serve customers has become influential in the customer's buying behavior
• Employees also need to be well-compensated with benefits

Packaging

• How a product or service is presented to customers
• It is the overall identification (look and feel) of the product or service
• Preserves the shelf life of the product or service and entices customers to purchase
• In selling services uses the term servicescape to refers to the overall ambiance of the place where the service is performed

Process

• Step-by-step procedure or activity workflow that is efficient to customer service
• Includes input throughput, and output components

Brand

• The identity of a company, product, service, or entrepreneur
• The challenge is to understand how to craft, market, and deliver the brand, which is the entire message of brand management
• Brand Management involves the supervision of tangible/intangible elements of a brand

Branding

• It is the process of integrating strategies formed from marketing mix to identity the product or service
• The goals are establishing reliability/trustworthiness, differentiating with competitors, and driving customer loyalty/retention

Brand Attributes

• To be different and catchy brands must be Unique, Extendable, Easy to remember
• Also brands should describe benefits of the product/service while also being adaptable, positive and inspiring