Chapter 5

Opportunity Seizing

Identify the Target Market

The more focused the target market definition, the better for the marketing communication
group to know who to send messages to and for the sales force to know who to approach.

Opportunity Seizing

Positioning is the act of designing the company’s offering and image to occupy a distinctive place in the
target market’s mind. The end result of positioning is the successful creation of a market-focused value
proposition, a cogent reason why the target market should buy the product.

Being relevant is about identifying and solving pain points. The pain points can be actual
(unsatisfied performance) or latent (creating a higher level of satisfaction)

Being unique is about creating distinctive value compelling enough to attract customers to buy
continuously.

Marketing: Mindset, Market and Message

Value Proposition

Among the elements of the marketing mix, the first elements to be assembled is always the value
proposition, or the product vis-à-vis price, as these two are inseparable.

The entrepreneur needs to decide if the value proposition will be superior, parity, inferior or even
different to what is available in the marketplace.

Voice of Customers (VOC)

It is a research process used to capture the changing needs of consumers (end users) and
customers (channels). A key to voice of customers is identifying and understanding pain points, barriers
and its root causes to trigger greater demand in an industry.

Pain Points

Pain points are the combination of a consumer’s dislikes as well as his or her wish list since the
latter might not be suggested unless there is some dissatisfaction.

Pain Point Process

Step 1 – Pain Hunting

Step 2 – Pain Points Identification

Step 3 – Pain Points Understanding

Step 4 – Pain Points Healing

Step 1- Pain Hunting

Entrepreneurs must choose a specific group of people as their target market. Whether customer
or noncustomer group, the group must behave in a homogenous way like having common traits and
seeking common benefits.

Step 2- Pain Points Identification

 To know consumer pain points, the target market can be asked what they dislike about a
particular brand or product. These dislikes can be plotted on a moment-of-truth map that captures the
consumer buying journey.

Note the best time to ask is when the consumers are conscious of these pain points so get as
close to the customers when they are using the product or encountering your service.

Step 3- Pain Points Understanding

Not all pain points have some level of importance. Entrepreneurs must understand the
frequency, and depth then choose the key pain points priorities that must be solved due to relative
higher impact that can be felt by the customers. This where critical processes need to be identified and
prioritized based on which can solve more of customer’s problems or create greater value for the
customers.

Step 4- Pain Healing

It is important for entrepreneurs to have empathy and not just understand pain points, but also
accept that change is needed, and that speed of change by external factors may leave them obsolete in
their industry.

Marketing Mix , more popularly known as the 4 Ps of marketing is a set of controllable and inter-
related variables composed of product, place, price and promotions that the company assembles to
satisfy a target group.

Product/Service

The first of the Four Ps of marketing is product. A product is the tangible good or the intangible service
that the enterprise offers to its customers in order to satisfy their needs and to produce their expected
results. Some products have built up so much loyalty to the point that their brand names have become
their best selling proposition.

A product can be classified as tangible or intangible.

A tangible product is a physical object that can be perceived by touch such as a building, vehicle, or
gadget. Most goods are tangible products.

 Goods – Tangible products customers can see, hear, smell, taste, or touch.

 Goods-services continuum – spectrum along which goods and services fall according to their
attributes, from pure good to pure service.

An intangible product is a product that can only be perceived indirectly such as an insurance policy.
Intangible data products can further be classified into virtual digital goods (“VDG”), which are virtually
located on a computer OS and accessible to users as conventional file types, such as JPG and MP3 files.

Virtual digital goods require further application processing or transformational work by programmers, so
their use may be subject to license and or rights of digital transfer.

3 Types of Product

 Durables – products which have long interval between repeat purchases because of their long-
lasting nature.

 Non-durables – Products which have stronger repeat purchases because they are consumable.
  Services – Products which are essentially intangible because there are no physical items
involved.

3 Levels of Product

 Formal Products – is the physical or tangible product; It is reflected in the quality, features,
brand name, styling, and packaging.

 Augmented Products – are the “extras” built-in to the product.

 Core Products – is the generic benefit that each product gives.

Price determinations will impact profit margins, supply, demand and marketing strategy. Price is the
amount of money that your customers have to pay in exchange for your product or service.

Four major pricing objectives are:

 Survival

 Maximum current profit

 Maximum market share

 Product-quality leadership.

Survival

Survival is one of the most fundamental pricing objectives. This generally means temporarily setting
prices low, even at times below costs, in order to attract more sales.

As long as prices cover variable costs and some fixed costs, the company stays in business. Survival is a
short-run objective; in the long run, the firm must learn how to add value or face extinction.

Maximum current profit

Many entrepreneurs try to set a price that will maximize current profits. They estimate the demand and
costs associated with alternative prices and choose the price that produces maximum current profit,
cash flow, or rate of return on investment.

In emphasizing current performance, the company may sacrifice long-run performance by ignoring the
effects of other marketing variables, competitors’ reactions, and legal restraints on price.

Maximum market share

Some businesses want to maximize their market share. They believe a higher sales volume will lead to
lower unit costs and higher long-run profit. They set the lowest price, assuming the market is price
sensitive.

An organization can increase its market share even if sales for the total industry are flat or decreasing.

Product-Quality leadership

A business might aim to be the product-quality leader in the market. Many brands strive to be
“affordable luxuries”—products or services characterized by high levels of perceived quality, taste, and
status with a price just high enough not to be out of consumers’ reach.

Types of Pricing Strategies

Premium pricing

Premium pricing, also called image pricing or prestige pricing, is a pricing strategy of marking the price of
the product higher than the industry standards/competitors’ products. The idea is to encourage a
perception among the buyers that the product has a more utility or a higher value when compared to
competitors’ products just because it is sold at a premium price.

Penetration Pricing

Penetration pricing is a pricing strategy where the price of the product is initially kept lower than the
competitors’ products to gain most of the market share and to trigger word of mouth marketing. Once
customers become loyal and the brand achieves a strong market penetration, marketers increase the
prices to a point where they get optimum profits without 0 much loss of customers.

Price Skimming

Price Skimming is a strategy of setting a relatively high introductory price of the product when the
product is new and unique and the market has fewer competitors. The idea is to maximize the profits on
early adopters before competitors enter the market and make the product more price sensitive. The
strategy got its name from successive skimming of layers of cream or the customer segments as the
prices are lowered over time.

Psychological Pricing

Psychological pricing refers to the psychological pricing strategies marketers use to make customers buy
the products, triggered by emotions rather than logic. Such strategies come in the form of:

 Charm pricing

 Prestige pricing

 BOGOF

Charm Pricing:

This involves reducing the price by a minimal amount (say 1 cent) which makes the customer perceive
the price to be less.

Prestige Pricing:

This involves rounding off and setting a higher price for premium and exclusive products as rounded
figures are easily processed and are preferred in such cases.

BOGOF:

Buy one, get one free offers trigger the greed among the customers as they get two products for the
price of one. This strategy is often used to clear up the stock or increase the volume of sales

Freemium

Freemium is an Internet-based pricing strategy where basic services are provided free of charge but
charges are levied on additional premium features. The freemium strategy is different from premium
with free samples strategy as you don’t pay anything to utilize the free services provided under the
freemium business model.
Predatory Pricing

Predatory pricing, or below the cost pricing, is an aggressive pricing strategy of setting the prices low to
a point where the offering is not even profitable, just in an attempt to eliminate the competition and get
the most market share. An ongoing price war among the competitors may lead to one adopting a
predatory pricing strategy to make the competitor exit the arena. Predatory pricing is illegal in many
countries under the antitrust laws and competition acts as it acts as a barrier to healthy competition and
leads to businesses enjoying a monopoly.

Place

Place or placement has to do with how the product will be provided to the customer. Place involves
decisions concerning distribution channels to be used, the location of outlets, methods of transportation
and inventory levels held.

Image and Location Conditions

This refers to the physical look of locations, sanitary conditions, crime and safety levels, etc. The
reputation of a location is also important.

Exact Fit to Target Customers

Is the location traffic generally composed of your target customers?

Future Area Development

A certain location might not have the most customers or the best economics in the short term, but it
might become a central business hub within the next five years.

Promotion

The marketing communication strategies and techniques all fall under the promotion heading. These
may include advertising, sales promotions, special offers and public relations. Whatever the channel
used, it is necessary for it to be suitable for the product, the price, the place and the end user it is being
marketed to.

Elements of the Promotional Mix

Promotional Mix

Subset of the marketing mix in which marketers attempt to achieve the optimal blending of the
elements of personal and nonpersonal selling to achieve promotional objectives.

PERSONAL SELLING

Interpersonal influence process involving a seller’s promotional presentation conducted on a person-to-

person basis with the buyer.

NONPERSONAL SELLING

Promotion that includes advertising, product placement, sales promotion, direct marketing, public
relations, and guerrilla marketing – all conducted without face-to-face with the buyer.

 Advertising

Is any paid, nonpersonal communication through various media about a business firm, not-for-profit
organization, product, or idea by a sponsor identified in a message intended to inform or persuade
members of a particular audience.
  Product Placement

Is a form of promotion in which a marketer pays a motion picture or television program owner a fee to
display a product prominently in the film or show.

 Sales Promotion

Marketing activities other than personal selling, advertising, guerilla marketing, and public relations that
stimulate consumer purchasing and dealer effectiveness.

 Direct Marketing

Direct communications, other than personal sales contracts, between buyer and seller, designed to
generate sales, information requests, or store or website visits.

 Public Relations

Firm’s communications and relationships with its various publics. These include customers, suppliers,
stockholders, employees, the government, and the general public.

Publicity is the marketing-oriented aspect of public relations. It can be defined as non-personal

stimulation of demand for a good, service, person, cause, or organization through unpaid placement of
significant news about it in a published medium or through a favorable presentation of it on the radio or
television.

 Guerrilla Marketing

Unconventional, innovative, and low-cost marketing techniques designed to get consumer/s attention in
unusual ways.

Buzz marketing can be part guerrilla marketing. This type of marketing works well to reach college
students and other young adults.

Viral marketing is another form of guerrilla marketing that has rapidly caught on with large or small
firms.

SPONSORSHIPS

Relationship in which an organization provides funds or in-kind resources to an event or activity in

exchange for a direct association with that event or activity.

TYPES OF ADVERTISING

 Product advertising is nonpersonal selling of a particular good or service.

 Institutional advertising – promotion of a concept, an idea, a philosophy, or the goodwill of an

industry, company, organization, person, geographic location or government agency.

OBJECTIVES OF ADVERTISING

 Informative advertising – promotion that seeks to develop initial demand for a good, service,
organization, person, place, idea or cause.

 Persuasive advertising – Promotion that attempts to increase demand for an existing good,
service, organization, person, place, idea, or cause.

 Reminder advertising – Advertising that reinforces previous promotional activity by keeping the
name or a good, service, organization, person, place, idea, or cause before the public.