Technopreneur Midterm PDF

BM2217 STRATEGIC PLANNING FOR TECHNOPRENEURS What is Strategic Planning? We know how important planning and strategizing are in our everyday lives. The mere budgeting of our daily finances can be considered as strategizing. Wars and sports games are won using sound strate...

BM2217 STRATEGIC PLANNING FOR TECHNOPRENEURS What is Strategic Planning? We know how important planning and strategizing are in our everyday lives. The mere budgeting of our daily finances can be considered as strategizing. Wars and sports games are won using sound strategies. Businesses flourish with good strategy. Strategic Planning vs. Strategic Management Strategic planning is developing detailed business strategies, putting them into practice, and analyzing the outcomes of a company’s long-term goals. It is a theory that emphasizes combining a business’s marketing, financial, and human resources departments to meet its strategic goals. The goal of strategic management is to maintain a competitive advantage over rivals and take control of the market as a whole. Further, it evaluates, guides, and changes the strategy per the business climate progressions. Strategic management assists in creating a strategic vision, establishing goals, establishing direction, and creating and implementing strategies that align with the organization’s goals to evaluate the organization’s internal and external business environment. Figure 1. Key Differences between Strategic Planning vs. Strategic Management Source: https://keydifferences.com/difference-between-strategic-planning-and-strategic-management.html 05 Handout 1 *Property of STI [email protected] Page 1 of 8  BM2217 Strategic Planning Process Strategic Planning Strategy Formulation Strategy Implementation Strategy Evaluation Figure 2. The steps in strategic planning Source: https://www.guidelinesandprinciples.org Strategic planning calls for in-depth planning and foresight on an organization’s upper-level management. Before choosing a course of action and planning how to carry it out, executives may consider several alternatives. In the end, a company’s management will hopefully settle on a strategy that can be implemented cost-effectively with a high possibility of success and avoid undue financial risk. Positive outcomes are often thought of as improving the business’s bottom line. Generally speaking, strategic planning is regarded to be established and carried out in three (3) important steps: 1. Strategy Formulation (Determination of strategic objectives) - Key objectives can be extracted from the mission and vision statements of the enterprise. From here, strategic objectives can be made. Strategic objectives refer to the specific performance targets the business wants to accomplish. These objectives define how the enterprise’s mission will be met. For example: a. Expand delivery services by 25% within a year. b. Increase production by 50% by the end of this year. c. Increase the number of branches in one (1) year. The company must conduct an internal and external audit to evaluate its current situation before developing a strategy. This is done to determine the opportunities and threats and the organization’s strengths and weaknesses (SWOT Analysis). Managers use the analysis to decide which plans or markets to focus on or ignore, how to allocate the company’s resources optimally, and whether to expand operations through a merger or joint venture. 2. Strategy Implementation (Adoption or use of strategic course of action) - Following the formulation of a strategy, the business must allocate resources for its implementation and establish specific targets or goals related to its implementation. How well upper management 05 Handout 1 *Property of STI [email protected] Page 2 of 8  BM2217 communicates the chosen strategy throughout the company and gets all employees to commit the desire to put the strategy into action determines the success of the implementation stage. The construction of a solid structure, or framework, to implement the strategy, optimize appropriate resource usage, and reorient marketing activities following the strategy’s aims and objectives are all critical components of successful strategy implementation. 3. Resources come in different forms. Money and even labor are precious resources that can be used. However, without a sound strategy, these can go to waste, so it is imperative to the enterprise how and how much they should allocate resources based on the various activities required to achieve the objectives. 4. Strategy Evaluation (Evaluation of the performance of the chosen strategy) - Any experienced entrepreneur is aware that success today does not guarantee success in the future. As a result, managers must evaluate a strategy’s performance following its implementation phase. Three (3) essential steps are involved in strategy evaluation: Evaluating performance. Evaluating the internal and external factors that influence the strategy’s implementation. Adjusting the strategy’s effectiveness. For instance, a company might discover that to achieve the desired improvements in customer relations. It needs to adopt a brand-new Customer Relationship Management (CRM) software program after implementing a strategy to enhance customer service. Each of the three (3) important steps is placed inside three (3) progressive levels: operational, middle management, and senior management levels. Therefore, to assist the business in functioning as a more efficient and effective team, it is vital to encourage communication and interaction between managers and employees at all levels. Strategic Planning Models As discussed, strategic planning is crucial to the enterprise’s long-term success. It gives a sense of direction to the business and is essential in making decisions. Many established entrepreneurs and technopreneurs treat strategic planning like a blueprint of an architectural building. There is no best or great model, and the usage of such plans depends on how an enterprise will achieve its goal. Below are the basic strategic planning models being used by enterprises (Business Benefits Group, n.d.). 1. Basic Strategic Planning Model – usually consists of creating a mission statement detailing the enterprise’s existence. The business then will figure out its intermediate goals, referring to what needs to be done to accomplish its mission. Best for: Small businesses or organizations Companies with little to no strategic planning experience Organizations with few resources 2. Goal-based Strategic Planning Model – is designed for more established businesses and enterprises. Using this strategic planning model entails using a SWOT analysis. Right after, the 05 Handout 1 *Property of STI [email protected] Page 3 of 8  BM2217 enterprise identifies goals and issues it can take advantage of to prioritize its objectives better. The next step is formulating a mission statement and action plans, creating a strategic plan, developing an operational plan, and formalizing the budget for the enterprise’s first year. Best for: Organizations with basic strategic planning experience Businesses that are looking for a more comprehensive plan 3. Scenario Strategic Planning Model - This makes use of a PESTEL analysis. This model can be used by an enterprise that wants to beef up and prepare for different scenarios, such as changes in the economy, trends in society, new laws, and other external forces that can alter how it does business. The enterprise can list the most common problems that could affect their business over the next three (3) to five (5) years and create responses on how to resolve them. Best for: Organizations trying to identify strategic issues and goals caused by external factors 4. Alignment Strategic Planning Model - This model creates alignment between a business’s resources and mission. It helps fine-tune the enterprise’s objectives or learn why its goals are not being achieved as planned. This model starts by determining the business’ resources, mission, programs, and required support. After this, it is important to know what areas in the business are working well and which ones need further adjustment to reach the desired effect. Lastly, the business needs to include adjustments as strategies in the plan. Best for: Organizations that need to fine-tune their strategies Businesses that want to uncover issues that prevent them from aligning with their mission Companies that wish to reassess objectives or correct problem areas that prevent them from growing 5. Organic Strategic Planning Model - This model requires continual reference to common values and shared reflection around current processes. Organic planning often uses a technique known as storyboarding to let participants create their ideas before sharing them with a larger group. In this type of planning, brainstorming is imperative to pinpoint the needs of the enterprise and target the issues that need addressing. Best for: Large organizations that can afford to take their time Businesses that prefer a more naturalistic, organic planning approach that revolves around common values, communication, and shared reflection Companies that have a clear understanding of their vision 05 Handout 1 *Property of STI [email protected] Page 4 of 8  BM2217 6. Real-time Strategic Planning Model - The real-time strategy planning approach is even more adaptable than the organic model. It aids in presenting an organization’s vision, values, and mission. Lists are frequently presented to board members or management for further discussion during real-time strategic planning. Best for: Companies that need to react quickly to changing environments Businesses that are seeking new tools to help them align with their organizational strategy 7. Inspirational Strategic Planning Model - This quick strategy starts with creating a very inspiring vision for the organization and the goals that go along with it. This model is better for more established businesses than the basic model. Best for: Businesses with a dynamic and inspired start-up culture Organizations looking for inspiration to reinvigorate the creative process Companies looking for quick solutions and strategy shifts Strategic Decision-Making According to Henry Mintzberg, the following are the most typical approaches or modes of strategic decision-making: Entrepreneurial mode. It states that one powerful individual makes strategy. This mode focuses on opportunities and growth, not business problems. Strategy is guided by the founder’s vision of direction and is exemplified by significant, bold decisions. The dominant goal of this mode is the growth of a corporation. Example: Amazon.com, founded by Jeff Bezos, reflects Bezos’ vision of using the Internet for marketing everything that can be bought. Adaptive mode. It is characterized by reactive solutions to existing problems rather than a proactive search for new opportunities. Strategy is fragmented and is developed to move a corporation forward incrementally. This mode lacks clarity and consensus on strategic goals and is only appropriate for dealing with complex and changing environments. Example: Due to the Covid-19 pandemic lockdown, movie theaters worldwide were temporarily shut down. Walt Disney, a multinational mass media and entertainment company, decided to launch Disney+, a home entertainment subscription streaming service with access to all the Disney brand’s classic, present, and upcoming movies. Planning mode. It systematically gathers appropriate information for situation analysis, generates feasible alternative strategies, and rationally selects the most appropriate strategy. It includes the proactive search for new opportunities and the reactive solution to existing problems. Example: After carefully studying trends in the mobile and communication industries, Samsung noted that the company needed to rebrand itself from being an appliance manufacturer to a customer- 05 Handout 1 *Property of STI [email protected] Page 5 of 8  BM2217 focused and highly reliable information technology infrastructure and electronic commerce service. By late 2000, the company had launched several phones, leading to global success. Logical Incrementalism. In this mode, top management first develops a reasonably clear idea of the corporation’s mission and objectives. It is a fusion of strategy formulation and implementation. This approach appears useful when the environment is changing rapidly, when it is building consensus, and when resources must be developed before committing the entire organization to a specific strategy. Example: In the petroleum industry, corporate headquarters established the mission and objectives but allowed the business units to propose strategies to achieve them. Strategic Decision-Making Process Managers of successful organizations do more than find a way to make money and sell products or services. They also think of the big picture and make decisions to get the company where it wants to go. This type of decision-making guides the choices created and aligns them with the company objective. The steps in the strategic decision-making process are as follows: 1. Evaluate current performance results. The organizational performance must be assessed based on return on investment, profitability, current mission, objectives, strategies, and policies. 2. Review corporate governance. The organization must evaluate the performance of its board of directors and top management. 3. Scan and assess the external environment. The organization must determine the strategic factors that pose opportunities and threats. 4. Scan and assess the internal corporate environment. The organization must determine its strengths or core competencies and weaknesses. 5. Analyze strategic factors. The organization must pinpoint its problem areas and revise its corporate mission and objectives. 6. Generate, evaluate, and select the best alternative strategies. The organization must identify the best course of action to solve an identified problem and achieve a set of objectives. 7. Implement selected strategies. The organization must implement strategies through company programs, budgets, and procedures. 8. Evaluate implemented strategies. The organization must monitor the implemented strategies through feedback systems and control of activities that ensure minimum deviation from original plans. 05 Handout 1 *Property of STI [email protected] Page 6 of 8  BM2217 05 Handout 1 *Property of STI [email protected] Page 7 of 8  BM2217 References Bamford, C., Hoffman, A., Hunger, D., &Wheelen, T. (2018). Strategic management and business policy: Globalization, innovation and sustainability (15th ed.). United Kingdom: Pearson Education Limited. Business Benefits Group. (n.d.). The 5 strategic planning models that all executives should know. https://www.bbgbroker.com/strategic-planning-models CFI Team (2022) Strategic Planning. https://corporatefinanceinstitute.com/resources/management/strategic-planning/ Hannan, M. T. (2015, November 19). Organizational analysis. https://www.britannica.com/science/organizational-analysis Morgan, J. (n.d.). The 5 types of organizational structures. http://www.forbes.com/sites/jacobmorgan/the-5-types-of- organizational-structures-part-5-holacratic-organizations Sridharan, M., Gadjji, M., Agrawal, S. (2022) Minszberg’s 5PS – How to define strategy? https://thinkinsights.net/strategy/ mintzbergs-5ps/ Team Asana (2022.) 7 strategic planning models, plus 8 frameworks to help you get started. https://asana.com/resources/strategic-planning-models Weller, J. (2021) How to Use Strategic Planning Frameworks and Models. https://www.smartsheet.com/strategic-planning- models 05 Handout 1 *Property of STI [email protected] Page 8 of 8  BM2217 UNDERSTANDING THE TARGET MARKET Target Market According to Margaret James (2022), a target market is “the specific group of people that a company has determined to be the most likely candidates to use its product or service offerings because of their shared similar needs or characteristics — age, income, and lifestyle.” Technopreneurs can establish themselves as experts on the wants and needs of a specific group by narrowing their focus on their target market. Technopreneurs can also quickly respond to changes in their target market’s interests or opinions and closely monitor other businesses' attempts to entice those customers away. Customer vs. Consumer The terms "customer" and "consumer" are frequently used interchangeably, but they are not synonymous (Needle, 2022). A consumer is any individual who uses a product or service, whether for personal or business purposes. A customer is any person or business that buys a product or service but might not be the end user (consumer). Sample Scenario: Edward enters the convenience store to purchase coffee. If Edward drinks the coffee, he becomes a consumer. If Edward bought the coffee for someone else, he remains a customer, and the person who drinks the coffee is the consumer. Customer Profiling and Segmentation Figure 1. Customer Profiling vs. Customer Segmentation Source: https://www.meaningcloud.com 06 Handout 1 *Property of STI [email protected] Page 1 of 5  BM2217 Customer Profiling Dimitris (2020) defined customer profiling as “identifying the ideal customers based on a set of distinctive characteristics.” Customer profiling includes the target market’s interests, behavior, location, and demographics. Creating buyer personas — semi-fictional characters — is the most common method for defining customer profiles. Other identifiers, such as demographics, location, hobbies, preferred social media channels, likes and dislikes, purchasing patterns, psychographics, and credit history, can be used to build a customer profile. By assigning a profile to each customer, businesses can consistently improve or develop new products and services that appeal to a group of customers. Customer Segmentation Customer segmentation is the process by which a business divides customers based on common characteristics, such as demographics or behaviors, so the marketing or sales team can reach those customers more effectively (Qualtrics, 2022). In short, using customer profiling and segmentation enables technopreneurs to comprehend who their customers are. Technopreneurs can make better decisions, provide more individualized customer support, and increase customer loyalty by combining the two practices. Kristen Baker (2022) stated that understanding customers is essential to the success of a business, and customer segmentation is a crucial component of that understanding. There is no one-size-fits-all strategy for successful customer segmentation. There are a variety of customer segmentation models to consider: Demographic Segmentation – Age, gender, income, education, marital status Geographic Segmentation – Country, state, city, municipality, town Psychographic Segmentation – Personality, values, attitude, interest Technographic Segmentation – Mobile used, desktop used, apps and software used Behavioral Segmentation – Tendencies and frequent actions, habits, features or product use Needs-based Segmentation – Products or service must-haves, needs of specific groups Value-based Segmentation – Economic value of a particular customer group Firmographic Segmentation – Group customers based on shared organization attributes Relevance of Customer Profiling and Segmentation to Technopreneurship According to an article published last 2022 by GWI, a global market research technology firm, the following factors describe today’s consumer: 1. Ninety-one percent (91%) of consumers own a mobile phone. 2. Online shopping is now a mainstream activity. 3. An average internet user has up to eight (8) social media accounts. 4. Thirty percent (30%) of online consumers use virtual private networks to secure their personal information. 5. Seventy-five percent (75%) of consumers purchase products online every month. 06 Handout 1 *Property of STI [email protected] Page 2 of 5  BM2217 Since effective marketing is adaptable, personalized, and responsive to consumer needs, understanding these reasons is more crucial than ever. The undeniable advantage of operating an online business is that it gives technopreneurs the flexibility to present their products without the constraints of a physical store. It also allows them to respond quickly to their customers’ inquiries and resolve issues immediately. Additionally, it expands the company's reach to potential clients to sell products and services or generate inquiries outside business hours. As a result, technopreneurs can provide better customer service to potential customers thanks to the internet. Methods of Customer Profiling and Segmentation Customer profiles can be created for a company’s entire customer base or for particular groups that the company is interested in, such as high-value customers, customers who are purchasing a new product or service, and customers who are more likely to buy online than in-store. Technopreneurs can better understand the wants and needs of key "segments" by analyzing more granular groups. It will help increase personalization, engagement, and lifetime returns on customer relationships (Oates, 2023). The methods of customer profiling and segmentation are the following: 1. Use a customer profiling template. The process of customer profiling can be shortened by downloading and using pre-made templates. All that is required is to complete the blanks. 2. Choose customer profiling software. Technopreneurs must first collect information from their current clientele to ensure accurate and effective customer profiles. 3. Analyze demographics. The best way to define a customer profile is to look at demographics from the outside, more deeply into needs, and finally at what the business offers. 4. Collect customer feedback. Technopreneurs need to meet them to understand what customers are like clearly. As a result, customer interviews and surveys are among the best tools for creating a customer profile. 5. Review customer journey map. Knowing their challenges, needs, and goals is best to understand better what customers want from the business. 6. Focus on the problem and solution. Technopreneurs must know who their customers are — or will be — how and why they use the product or service. Examine the current users and their actions closely. 7. Examine contextual details. The final step in finishing the customer profile is to examine all the information to see how to assist them. 8. Understand the industry. Technopreneurs can also define their brand identity with the help of industry knowledge. It is recommended to differentiate products and services to stand out. 9. Build personas. Personas are fictional profiles representing a target audience's group of similar people. They can assist in determining how to deliver the appropriate messages, offers, and products at the proper time while reaching people on a more personal level. 06 Handout 1 *Property of STI [email protected] Page 3 of 5  BM2217 10. Analyze and iterate on customer personas. Collect the external factors, qualify the contextual details, and develop a thorough understanding of how the business provides value to each type of customer. Decision-Making Process Figure 2. Factors Influencing Consumer Behavior Source: https://bbamantra.com/factors-influencing-consumer-behaviour.jpg According to Marek Sotak (2016), there are five stages that people go through when making decisions: Stage 1 – Need Recognition (Identify the Problem). Everything begins with a particular requirement and issue to be resolved. Customers might not fully comprehend their issue or know how to fix it. At this point, they look for help. What should technopreneurs do? Provide evidence that they understand their customer’s areas of concern. Use testimonials from previous customers, case studies, quotes, and social proof. Prove that the product or service being offered can solve their problem. Stage 2: Information Search (The paradox of choice). In the next stage, customers seek as much information as possible to confidently decide. What should technopreneurs do? Make the information about their product or service clear and simple to find and understand. Information regarding price, features, and services ought to be readily available to customers. Stage 3: Evaluation of Alternatives (The value outweighs the cost). Ultimately, customers need to determine if the advantage they get is worth more than the price they would have to pay. 06 Handout 1 *Property of STI [email protected] Page 4 of 5  BM2217 Customers will look for rivals in a particular service category to compare with. Alternative solutions that solve the same problem differently but are not direct competitors will also be reached by decision- makers. What should technopreneurs do? Make it clear how much the product or service is worth. Help users determine the value versus cost. Show familiarity with the competitor’s products and service prices. Compare products or services to other services that meet their needs. Stage 4: Make the purchase (Understand the costs, and find the right fit). Customers are prepared to purchase at this point. All of their requirements have been met up to this point. They confirmed the benefits and demonstrated values. They are aware that the gain would outweigh the drawback. They have compared and analyzed the available offers. They may begin a negotiation process, but nothing is certain until they close and convert. What should technopreneurs do? The sales procedure needs to be easy. Reiterate the value and benefits of the product or service. Stage 5: Post-purchase evaluation (Retention). At this point, customers enter the retention phase of the decision-making lifecycle. They begin to comprehend how to utilize the product-service mix to realize the value in the early stages. What should technopreneurs do? Provide after-sales support. Direct new users to the features with the most significant impact. During these phases, various experiences help customers reach a point of conversion. All stages of their experience can be influenced. When they first realize they have a need, look for information, and look at other options before making a purchase, they will come across your application and resources. You can also assist them in their post-purchase evaluation even in that case. The resources that every business provides for its customers can light the way and guide them through the process. Webinars, recommendations from friends and family, online searches, free trials, and many other options will help establish the business's name, brand, and identity. References Baker, K. (2022) Customer Segmentation: How to Effectively Segment Users & Clients. https://blog.hubspot.com/service/customer-segmentation Dimitris (2020) Customer Profiling and Segmentation Basics. https://coara.co/blog/customer-profiling-and-segmentation GWI (2022). Consumer profiling: the beginner’s guide. https://www.gwi.com/reports/beginners-guide-to-consumer-profiling James, M. (2022) Target Market: Definition, Purpose, Examples, Market Segments. https://www.investopedia.com/terms/t/target-market.asp Marketing Evolution (2022) Customer Segmentation Models: Types, Benefits & Uses. https://www.marketingevolution.com/marketing- essentials/customer-segmentation-models Matarranz (2015). Improve your Customer Experience Management with Text Analytics. https://www.meaningcloud.com/blog/improve-customer- experience-management-with-text-analytics Needle, F. (2022) Customer vs. Consumer: What’s the Difference? https://blog.hubspot.com/service/customers-vs-consumers Oates, D. (2023) How to build a customer profile for effective marketing. https://www.experian.co.uk/blogs/latest-thinking/marketing-solutions/profiling- customers/ Qualtrics (2022). What is customer segmentation analysis, and how can it help?. https://www.qualtrics.com/experience-management/brand/customer- segmentation/ Sotak, M. (2016) Improve conversion rates by helping decision makers. https://inlinemanual.com/blog/what-decision-makers-need/ 06 Handout 1 *Property of STI [email protected] Page 5 of 5  BM2217 THE MARKETING MIX The Marketing Mix Marketing Objectives and Strategies Technopreneurs should set goals specific to how much money the business makes. The goal of marketing should be to bring in more money from sales. On the other hand, the brand should be the focus of the marketing efforts (Kotler et al., 2018). Primary Goals of Marketing 1. Focusing on customer wants and needs to distinguish products from the competition; 2. Integrating all the organization’s activities to satisfy customer wants and needs; and 3. Achieving the organization’s long-term goals by satisfying customer wants and needs The Marketing Mix According to The Economic Times (2023), a company’s strategy to promote brands or products in the market is referred to as the marketing mix. A typical marketing mix includes price, product, promotion, and place. However, in today’s marketing mix, additional Ps like packaging, positioning, people, and process are becoming increasingly essential. The marketing mix’s various components interact with one another. They can make a company’s business plan successful if done correctly. However, the business’s recovery could take years if mismanaged. Understanding the marketing mix, conducting market research, and consulting with various stakeholders are all necessary. Figure 1: The 8Ps of Marketing Source: https://distributedigital.co.uk.jpg The Eight Ps of Marketing (Hill, 2022): 1. Product – refers to the item the business offers customers, whether tangible (like physical goods) or intangible (like digital goods or services). 2. Price – refers to the amount customers are willing to pay for a product or service. 3. Place – the location of the product or service’s purchase, sale, and experience. It varies from business to business, depending on retail and direct online sales. 4. Promotion – refers to the activities used to promote a product, brand, or service. The goal is to make people aware of the product, entice them to buy it, and get them to do so over other options. 5. People – is all about those involved in the launch or campaign, including the company’s key executives, endorsers, and the marketing team. These people will be accountable for delivering 07 Handout 1 *Property of STI [email protected] Page 1 of 8  BM2217 marketing promises, so they must possess the skills necessary to implement the marketing strategy. 6. Physical Evidence – refers to anything that helps the target audience trust the business. It could be the item itself, its packaging, the setting where it is sold (like a physical store), or how it is delivered (like by courier). In the digital business, this could be in the form of testimonials, reviews, or even digital products like e-books and online courses. 7. Process – a set of steps that help businesses figure out customer problems, look at market opportunities, and make marketing materials to reach the people they want to see. 8. Positioning – refers to the capacity to alter how consumers perceive a brand or product compared to competitors. Establishing a brand’s image or identity so that consumers perceive it in a certain way is the goal of market positioning. Types of Promotion The promotion strategies utilized to generate demand for a product or service are called the promotions mix. In contrast to the marketing mix, it focuses on specific product or service promotion methods. Each of these promotion methods contributes to a company’s revenue generation in its unique way (Indeed, 2021). Figure 2: The Promotional Mix Source: https://www.marketing91.com/promotional-mix 1. Advertising – is a mass communication method used to get people to do something, usually regarding a commercial product or service. Four (4) types of advertising (Shopify, 2022): Print Advertising – newspaper, magazines, catalog mail Broadcast Advertising – television, radio, podcast Public/Outdoor Advertising – billboards, transit advertising, street walk ads Digital Advertising – online display ads, search engine marketing, social media ad placement 2. Selling – personal selling is a face-to-face selling technique by which a salesperson uses interpersonal skills to persuade a customer to purchase a particular product by highlighting various features. Examples: Salespersons at retail stores, Real Estate Agents, Insurance Agents, Medical Representatives 3. Direct Marketing - any marketing that communicates or distributes directly to individual customers rather than through a third party like the mass media. Examples: E-mail, direct mail, telemarketing, text blast, leaflet distribution, social media marketing 07 Handout 1 *Property of STI [email protected] Page 2 of 8  BM2217 4. Sales Promotion - a sales promotion is a marketing strategy in which a company uses short-term campaigns to get people interested in a product, service, or other offer and make people want it (Kelwig, 2022). Examples: Product bundles, flash sales, free trials, free shipping, Buy-1-Take-1, Coupons, Vouchers 5. Public Relations - the set of techniques and strategies for managing how information about an individual or company is disseminated to the public, especially the media. Public Relations tries to portray a person or brand naturally, like getting positive press from outside sources and recommending business decisions that will get support from the public (Hayes, 2022). Examples: Product placement, sponsorship, consumer education, brand ambassadors, corporate social responsibilities, social media advocacy and campaigns Digital Marketing Digital channels for direct customer communication and sales are the newest and fastest-growing marketing medium. The Internet gives marketers and customers more opportunities for individualization and interaction. Marketers separate earned (or free) media from paid and owned media. Paid media is an outbound strategy comprising public relations, marketing, and other promotional activities produced for and paid for by the company. Earned media includes news articles, blogs, and social network discussions that mention a brand and provide word-of-mouth and PR benefits to a business without paying for them directly. Owned media is any online property owned and controlled by the company, such as a blog, website, or social media channels. Figure 3. The Media Framework Source: https://generalassemb.ly/PaidOwned.jpg The variety of online communication options means companies can offer or send tailored information or messages that engage consumers by reflecting their unique interests and behavior. The four (4) main categories of online marketing communications are: A. Web sites. Nowadays, companies design websites that embody or represent their purpose, history, products, and vision. They aim to make it attractive and interesting on the first view encouraging repeat visits. A website also measures the number of unique visitors, length of visit, number of page views, etc. 07 Handout 1 *Property of STI [email protected] Page 3 of 8  BM2217 However, companies must be sensitive to online security and privacy-protection issues. It should also pay special attention to context, content, and constant change. There are seven (7) key design elements of an effective website: Context – layout and design Content – text, pictures, sound, and video the site contains Community – how the site enables user-to-user communication Customization – the site’s ability to tailor itself to allow users to personalize the site Communication – how the site enables site-to-user, user-to-site, or two-way communication Connection – the degree that the site is linked to other sites Commerce – the site’s capabilities to facilitate commercial transactions B. Pay-per-click ads (PPC). Pay-per-click ads, also known as paid search or search ads, are now considered an integral component of online marketing. Pay-per-click ads have significantly increased the competition on product or service terms that serve as a proxy for consumer interest. The following are suggested guidelines when using pay-per-click ads (PPC) on search engines (Google, Yahoo, Bing) for online marketing communications: Broader search terms (“MP3 player” or “iPod”) are helpful for general brand building. Specific terms identifying a particular product model or service (“Apple iPod classic 160GB”) are useful for generating and converting sales leads. Search terms must be spotlighted on the appropriate pages of the marketer’s website so search engines, such as Yahoo, Google, and Bing, can quickly identify them. Any product can usually be identified using multiple keywords, but marketers must bid on each keyword according to its likely return on revenue. It also helps to have popular sites link to the marketer’s website. Data can be collected to track the effects of paid searches. C. Display ads. Display or banner ads are small, rectangular boxes typically containing text and a picture that businesses pay for to be posted on relevant websites. The more people see it, the more it costs; Internet users only actively look for things online 5% of the time. Compared to common search advertisements, display ads still have a lot of potential for the information. However, advertising must be persuasive, attract attention, and be targeted and monitored. Interstitials are adverts that appear in-between pages, frequently with video or animation. Unfortunately, some consumers find such pop-up ads intrusive and distracting. D. E-mail Marketing. E-mail enables marketers to reach out and inform customers at a fraction of the cost of a direct mail campaign. E-mails are a highly effective tool for sales. The frequency with which they ask for purchases has been projected to be at least three (3) times that of social media ads, and the typical order value is higher. Companies like Nissan and Kellogg focus on combining search engine marketing and e-mail. Although consumers are inundated with e-mails, many use spam filters to stop the flow. Privacy concerns are also rising. Customers of some businesses are being asked whether and when they want e-mails sent to them. E-mails need to be relevant, timely, and targeted. 07 Handout 1 *Property of STI [email protected] Page 4 of 8  BM2217 E. Search Engine Optimization (SEO) and Search Engine Marketing (SEM) Search Engine Optimization (SEO) is optimizing a website to receive the most visitors through a search engine. By contrast, Search Engine Marketing (SEM) focuses on paid search business solutions. SEM involves buying traffic through paid search listing paired with specific keywords being searched for on the search engine. SEO and SEM have advantages, and marketers should combine both since most organizations have several initiatives to benefit from both types of searches. Factor SEO SEM Triggered by Keywords Keywords No control over search results Almost total control over Control of search results (search engine algorithms where and when search results ranking control this) (paid advertising) appear Cost Free Paid Measurement Web analytics, search Web analytics and paid search (impressions, clicks, etc.) consoles advertising tools Brand awareness, advocacy, Time- and location-sensitive Best use cases education, and support marketing campaigns Search engines are Internet services or software designed to search information on the Web that corresponds to a request (e.g., keywords) specified by the user. Considering that there are billions of websites on the Internet, search engines play a crucial role in helping us find the correct information in a limited amount of time. Digital marketers use search engines for the following reasons: Brand awareness: A brand is seen and recognized by consumers in a top search result once a branded search term or the brand’s name is searched for. Online sales: Search engines drive traffic to the webpage to purchase a product or service. Lead generation: Organic search can acquire potential consumers through the content or targeted keywords used. Paid search aids in search and web analytics employed in Return on Investment (ROI) calculations. Marketing Development Plan A market development plan, also known as a market development strategy, focuses on expanding existing product lines into new markets. Businesses often use it to find and develop new opportunities to sell their products in markets that have not been explored before. It can also be used to develop a new product line for selling to new and existing customers (Coleman, 2022). 07 Handout 1 *Property of STI [email protected] Page 5 of 8  BM2217 Figure 4: Marketing Development Plan Source: https://blog.hubspot.com/marketing/market-development-strategy 1. Market Penetration. A market penetration strategy may be attempted by businesses when they want to expand with low risk within their existing markets. Product Launches: A business may introduce new versions of a product that it already sells well. Launching a new product boosts sales by creating excitement and buzz about the brand. 2. Product Development. Product development is a more risky way to expand into an existing market, but this market development strategy can be profitable. The process of creating new products is delicate. Because product development is driven by market interest, businesses should know their market. This strategy can be challenging if the audience is not receptive due to inadequate product education, a poor marketing campaign, or even the wrong time to launch the product. Rebranding: Companies can rebrand themselves to reconnect with their existing market and position themselves as a viable alternative to the competition. A company can rebrand a product to better position it within its current market by altering its packaging, offering a new size, flavor, or color, or even changing its name or brand. Price Update: An additional strategy for expanding into an existing market is to change the price of a product to make it more affordable or more appealing to that market. Repositioning the brand in the market to emphasize luxury or value, thereby justifying higher prices to attract those customers. 3. Market Development. Businesses can use a market development growth strategy to direct their efforts in a manner that encourages market development and business expansion. It is accomplished through effective risk management and in-depth market research to avoid typical roadblocks to business expansion. Geographic Expansion: Based on a company’s current location, research can reveal markets where the company can thrive. Both physical and online businesses can benefit from geographic expansion. 07 Handout 1 *Property of STI [email protected] Page 6 of 8  BM2217 Franchising: Another low-risk method of expanding into a new market is to grant individual business owners the right to use a company’s brand and trademarks. In most franchising agreements, the franchisee pays the franchisor an initial fee to obtain the right to run the business. 3. Diversification. Occasionally, a company may create a product for a completely different industry and market than its usual operations and market. As a result, diversification can be risky for the business, but it can also be gratifying if done well. Similar Product Diversification: A business may realize that the raw materials or byproducts of the products it sells can be used to make a completely new product that can be sold to a different audience than the ones it currently sells to. Unique Product Diversification: To break into a new market, a company may offer a product or service that is unlike anything else in its industry rather than using existing products. Globalization Marketing Globalization refers to the marketing strategies of businesses that intend to sell their products worldwide rather than to specific demographics locally. Since the barriers previously stifled, financial transactions and partnerships have begun to dissipate in the global market, making the entire world a marketing audience is now easier. Foreign businesses can now market their brands abroad by considering language, culture, and financial situation to appeal to demographics worldwide. Marketing is impacted by globalization because it streamlines the process, as opposed to localization methods, which require specifics for each market or country. It has made marketing a much more accessible and inclusive industry, allowing businesses to appeal to their international customer base’s wants, needs, and circumstances. While businesses used to dominate specific countries or regions, globalization has increased international competition (Indeed, 2022). Benefits of globalization: Access to new cultures Technology advances and innovation Lower costs of products Higher standards of living across the globe Access to new markets Access to new talented and highly skilled workers Challenges of globalization: Global communication challenge International employee expectations Supporting foreign customers Increased competition Different marketing and communication approaches 07 Handout 1 *Property of STI [email protected] Page 7 of 8  BM2217 References Coleman, B. (2022) How to Build a Market Development Strategy https://blog.hubspot.com/marketing/market- development-strategy Hayes (2022) Public Relations (PR) Meaning, Types, and Practical Examples https://www.investopedia.com/terms/p/public-relations-pr.asp Hill, A. (2022) Your Simple Guide to the 8 Ps of Marketing https://distributedigital.co.uk/8ps-of-digital-marketing/ Indeed (2021) Marketing’s Promotional Mix: Definition and How To Use It https://www.indeed.com/career- advice/career-development/marketing-promotional-mix Kotler, P., Keller, K. L, Ang S.W., Tan C.T., Leong S.W. (2018). Marketing Management 7th Edition: An Asian Perspective. Pearson Education Limited. Kotler, P., Keller, K.L., Brady M., Goodman, M., Hansen T. (2019). Marketing Management 4th European Edition. Pearson Education Limited. Kelwig (2022) Sales promotion: Definition, examples, ideas, and types https://www.zendesk.com/blog/sales- promotion/ Shopify (2022) What Is Advertising? Definition and Guide https://www.shopify.com/blog/what-is-advertising The Economic Times (2023) What is ‘Marketing Mix’ https://economictimes.indiatimes.com/definition/marketing-mix 07 Handout 1 *Property of STI [email protected] Page 8 of 8  BM2217 BUSINESS MODEL Time Value of Money According to Lusk (2022), the time value of money (TVM) is the concept that the money you have in your pocket today is worth more than the same amount if you receive it in the future because of the profit it can earn during the interim. For example, you can receive P100,000 cash today or P50,000 per year for the next two (2) years, totaling P100,000. Ignoring taxes, the P100,000 cash today is worth more, according to the TVM principle, because you can put your money to work. You can invest in stocks, buy real estate, or put it in a certificate of deposit Understanding the time value of money can help you decide which job has better salary terms, what is a good rate for a loan, or if the investment you’re considering has good growth potential. Figure 1: The 8Ps of Marketing Source: https://distributedigital.co.uk.jpg PV is the present value of money. i is the interest rate or other return that could be earned. t is the number of years to take into consideration. n is the number of compounding periods of interest per year. An example of using TVM: Using the example above, assume you would invest the P100,000 in a stock that pays 20% yearly, compounded monthly. To calculate the value of the money in two (2) years, here is how it works: FV = P100,000 x (1+(0.2/12))(12x2 ) FV = P100,000 x 1.486914618 FV = P148,691.46 It means the P100,000 you get today will be worth P148,691.46 in two (2) years. If you wait two (2) years to receive the P100,000 payment, you will lose out on P48,691.47 interest, which you could have earned then. With investments that have higher returns, such as stocks or real estate, the missed opportunities will be even bigger. While you probably will not use this formula regularly to calculate the future value by hand, it gives you an idea of the opportunity cost of money today versus tomorrow. It can help you make better financial decisions in the future. 08 Handout 1.1 *Property of STI [email protected] Page 1 of 6  BM2217 Revenue Generation The overall process by which businesses find ways to generate income and improve profitability is known as revenue generation (Bank for Canadian Entrepreneurs, n.d). The sales team can learn how to increase the business’s profit and income by implementing a revenue generation process. Additionally, it gives the business a clear view of all revenue streams, making it simple to determine where income comes from and where adjustments can be made to increase it. Utilizing knowledge and context from prior experiences to define a course for the business is essential to creating and implementing a solid revenue plan. The following models are some of the most commonly used revenue generation sources: 1. Personal investment. A person invests and manages financial instruments, such as stocks, bonds, real estate, and others, as a personal investment. Individual investors must create investment plans and frameworks based on their unique characteristics. 2. Love money. It is money given to a spouse, parents, friends, or other loved ones. It is referred to as “patient capital,” which will be repaid as your business’s profits rise. 3. Venture Capital. Investors provide venture capital, a type of private equity and a form of financing, to small and startup businesses that they believe have the potential for long-term growth. Wealthy investors, investment banks, and other financial institutions typically provide venture capital in exchange for shares of stocks. 4. Angels. Angels are typically wealthy individuals or retired executives who make direct investments in privately held small businesses. In addition to their experience and extensive network of contacts, they frequently serve as leaders in their respective fields and contribute technical and managerial expertise. In exchange for putting their money at risk, they reserve the right to oversee the management practices of the business. 5. Crowdfunding. A type of fundraising called “crowdfunding” involves a business asking the general public for money, typically in exchange for equity in the business. Most of the time, it involves a private business requesting many people for small donations. It contrasts the common method of raising capital through venture capitalists or angel investors, in which a small group of actors invest larger sums in the business. 6. Business Incubators. Future businesses and other startups are frequently invited to share incubator spaces and technical, administrative, and logistical resources with other established businesses. An incubator, for instance, might let other businesses use its laboratory so that a new business can develop and test its products for less money before starting production. This support often helps businesses in cutting-edge fields like biotechnology, information technology, multimedia, and industrial technology. 7. Grants and Subsidies. Grants can be used for specific things and do not usually need to be repaid. On the other hand, subsidies are defined as direct contributions, tax breaks, and other special assistance governments provide to businesses to offset operating costs over an extended period. 8. Loans. Loans are the most common form of funding for small and medium-sized businesses. A sum of money is advanced to the borrower by the lender, typically a government agency, financial institution, or corporation. The borrower agrees to a set of conditions in return, including any finance charges, interest, and repayment date. 08 Handout 1.1 *Property of STI [email protected] Page 2 of 6  BM2217 Basic Pricing Strategies and Techniques Price is a crucial factor in influencing consumer choice. Making pricing decisions requires careful consideration of various variables, including the business, market competition, brand positioning, and the target market. Businesses must set a price for the first time when developing a new product, introducing their existing product into a new distribution channel or geographical area, or entering a new contract. The following is the six-step procedure for setting a pricing policy: Step 1: Selecting the Pricing Objective. Identifying the pricing objective is the primary step toward pricing. Value. The word “cheap” can mean two (2) different things. It may indicate a lower cost, but it may also indicate that the product is not high-quality. There is a reason why consumers associate low- quality goods with low prices. The assumption that a product is of higher value is incorporated into its higher price. Convinces customers to buy. A high price may convey value, but it would not matter if it is too much for a potential customer to pay. If businesses charge a low price, the product will appear cheap and be ignored. The ideal price encourages customers to choose the product over those of rivals’ similar offerings. Gives customers faith in the product. The opposite is true if products with higher prices show value and exclusivity. If businesses set their prices too low, it will appear like the product is not well-made. Step 2: Determining Demand. Demand refers to the consumer’s desire to purchase goods and services and willingness to pay a specific price. In economics, prices lead to varying demand levels and impact a business’s marketing objectives. The normally inverse relationship between price and demand is captured in a demand curve (see Figure 2): The higher the price, the lower the demand. For luxury goods, the demand curve sometimes slopes upward. Some consumers take the higher price to signify a better product. However, if the price is too high, demand may fall. Figure 1. Inelastic and Elastic Demand Source: Marketing Management: European Edition, 2019, p. 520 08 Handout 1.1 *Property of STI [email protected] Page 3 of 6  BM2217 Step 3: Estimating Costs. The demand for a product sets a ceiling (limit) on how much the business can charge for its products or services, whereas costs set the floor (base). Most businesses want to set a price that covers the costs of producing, distributing, and selling the product, including a fair return for its effort and risk. Types of Costs and Levels of Production: Fixed costs, or overhead costs, do not vary with production level or sales revenue. A business must pay monthly bills for rent, heat, interest, salaries, and so on, regardless of output. Variable costs vary directly with the level of production. For example, each tablet computer produced by Samsung incurs the cost of plastic and glass, microprocessor chips and other electronics, and packaging. These costs are constant per unit produced and are called variable costs because the total varies with the number of units produced. Total costs are the sum of the fixed and variable costs for any given production level. The average cost is the cost per unit at that production level; it equals total costs divided by production. Management wants to charge a price that will at least cover the total production costs at a given production level. Step 4: Analyzing competitors’ costs, prices, and offers. When pricing a product, a technopreneur must consider the prices of its competitors and the possible reactions these prices might generate from consumers. If the business’ products or service includes features not offered by the competitor, it should evaluate its value to the customer and add that value to the competitor’s price. If the competitor’s offer contains features not offered by the business, it should subtract its value from its price. Step 5: Selecting a pricing method. Taking into consideration the customers’ demand, cost function, and competitors’ prices, the business is now ready to select a price using the following pricing method: A. Markup pricing: The basic pricing method is to add a standard markup to the product’s cost. 𝑓𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡 𝑈𝑛𝑖𝑡 𝑐𝑜𝑠𝑡 = 𝑣𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝑐𝑜𝑠𝑡 + 𝑢𝑛𝑖𝑡 𝑠𝑎𝑙𝑒𝑠 𝑢𝑛𝑖𝑡 𝑐𝑜𝑠𝑡 𝑀𝑎𝑟𝑘𝑢𝑝 𝑝𝑟𝑖𝑐𝑒 = (1 − 𝑑𝑒𝑠𝑖𝑟𝑒𝑑 𝑟𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝑠𝑎𝑙𝑒𝑠) B. Target-return pricing: The business determines the price that yields its target rate of return on investment. 𝑑𝑒𝑠𝑖𝑟𝑒𝑑 𝑟𝑒𝑡𝑢𝑟𝑛 × 𝑖𝑛𝑣𝑒𝑠𝑡𝑒𝑑 𝑐𝑎𝑝𝑖𝑡𝑎𝑙 𝑇𝑎𝑟𝑔𝑒𝑡 − 𝑟𝑒𝑡𝑢𝑟𝑛 𝑝𝑟𝑖𝑐𝑒 = 𝑢𝑛𝑖𝑡 𝑐𝑜𝑠𝑡 + 𝑢𝑛𝑖𝑡 𝑠𝑎𝑙𝑒𝑠 𝑓𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡 𝐵𝑟𝑒𝑎𝑘 − 𝑒𝑣𝑒𝑛 𝑣𝑜𝑙𝑢𝑚𝑒 = 𝑝𝑟𝑖𝑐𝑒 − 𝑣𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝑐𝑜𝑠𝑡 C. Perceived-value pricing: Businesses increasingly base their prices on the customer’s perceived value. The perceived value of a product is based on various factors, such as the buyer’s image of the product’s performance, the channel deliverables, warranty quality, customer support, and other softer attributes. D. Value pricing: Value pricing significantly impacts how a business sets prices. Businesses that charge a fair price for high-quality goods retain customers by providing a good product value. Value pricing is not just about setting lower prices; it is about redesigning the business’s operations to become a low-cost producer while still meeting customer expectations for quality. 08 Handout 1.1 *Property of STI [email protected] Page 4 of 6  BM2217 E. Everyday Low Pricing (EDLP): Constant prices or EDLP eliminate week-to-week price uncertainty and the high-low pricing of competitors’ promotions. In high-low pricing, the retailer charges higher prices daily but runs frequent promotions with prices temporarily lower than the EDLP level. F. Going-rate pricing: In going-rate pricing, small-to-medium businesses base its price largely on competitors’ prices rather than when their own demand or costs change. Some may charge a small premium or discount but still preserve the difference. G. Market-Skimming Pricing. Many businesses that invent new products set high initial prices to skim revenues layer-by-layer from the market. Market skimming makes sense when the product’s quality and image support its higher price; enough buyers must want it at that price. H. Market-Penetration Pricing. Businesses set a low initial price to penetrate the market quickly, attract many buyers quickly, and win a large market share. Production and distribution costs must decrease as sales volume increases, and penetration pricing maintains its low-price position. Otherwise, the price advantage may be only temporary. I. Product Line Pricing. It is used when a business has multiple products in a product line. Businesses adopt this process to separate similar products into various price groups to create different quality levels in the customers’ minds. Samsung offers Smartphone series with different features at different prices. J. Optional-Product Pricing. Also known as Razor-and-Blade pricing is used when businesses sell main products for a lower price than they ordinarily would and rely on the sales of optional products to make up for the difference. Printers are cheaper to buy than it is to buy ink. K. Product Bundle Pricing. It is used when businesses often combine two (2) or more products as a package for a reduced price than what the items would cost if sold separately. Common bundle samples are fast food restaurants’ value meal combos. L. International Pricing. A business’s price in a specific country depends on many factors, including economic conditions, competitive situations, laws and regulations, and the nature of the wholesaling and retailing system. M. Promotional Pricing. With promotional pricing, businesses will reduce the price of their products drastically for a short period to create buying excitement and urgency. Promotional pricing takes several forms, such as: Special-event pricing. It involves price reduction of products according to special events or certain seasons to draw more customers and gain revenue. Limited-time offer pricing. It involves promotional deals such as online flash sales, free shipping, and discount codes that create buying urgency, making buyers feel lucky to have gotten in on the deal. Rebates. This promotional deal offers a cash-back incentive based on the portion of interest or dividends by the buyer. Businesses employ this strategy to increase the volume of purchases made by customers. Step 6: Selecting the final price. Pricing methods narrow the range from which the business must select its final price. In choosing the price, the business must consider additional factors, including the impact of other marketing activities, business pricing policies, gain-and-risk-sharing pricing, and price impact on other parties. 08 Handout 1.1 *Property of STI [email protected] Page 5 of 6  BM2217 References Bdc (n.d) 8 sources of startup financing https://www.bdc.ca/en/articles-tools/start-buy-business/start-business/start- up-financing-sources Coleman, B. (2022) How to Build a Market Development Strategy https://blog.hubspot.com/marketing/market- development-strategy Hayes (2022) Public Relations (PR) Meaning, Types, and Practical Examples https://www.investopedia.com/terms/p/public-relations-pr.asp Hill, A. (2022) Your Simple Guide to the 8 Ps of Marketing https://distributedigital.co.uk/8ps-of-digital-marketing/ Indeed (2021) Marketing’s Promotional Mix: Definition and How To Use It https://www.indeed.com/career- advice/career-development/marketing-promotional-mix Kotler, P., Keller, K. L, Ang S.W., Tan C.T., Leong S.W. (2018). Marketing Management 7th Edition: An Asian Perspective. Pearson Education Limited. Kotler, P., Keller, K.L., Brady M., Goodman, M., Hansen T. (2019). Marketing Management 4th European Edition. Pearson Education Limited. Kelwig (2022) Sales promotion: Definition, examples, ideas, and types https://www.zendesk.com/blog/sales- promotion/ Lusk, Veneta (2022) Time value of money: The guiding principle for virtually every financial and investing decision https://www.businessinsider.com/personal-finance/time-value-of-money Shopify (2022) What Is Advertising? Definition and Guide https://www.shopify.com/blog/what-is-advertising The Economic Times (2023) What is ‘Marketing Mix’ https://economictimes.indiatimes.com/definition/marketing-mix Zimmermann, S. (2022) Time Value of Money (TVM) https://www.annuity.org/personal-finance/investing/time-value- of-money/ 08 Handout 1.1 *Property of STI [email protected] Page 6 of 6