CHAPTER 4 Careers for Entrepreneurs Market Your Business LRMR LeBron James is not content with just being a star on the basketball court. He also wants to become a leader in the global business world. He formed a sports marketing agency, LRMR Innovative Marketing and Branding, with three of his high school friends.1 The Value of Marketing to turning James into a global icon, LRMR wants to “change the sports marketing prism through leveraging of sports, celebrity, and 4.2 Create the Marketing Plan corporate infusion partnerships.” James wants to build a new financial model for the 21st-century athlete.3 Identify Your Competition formed King James, Inc., a holding company, to contract with endorsement partners and reduce tax liability. Guiding principles that James has used in 4.4 The Marketing Mix—Product starting his business include and Price • Don’t be afraid to ask for business advice • Focus on unity rather than the individual • Surround yourself with the best people 4.5 The Marketing Mix— • Diversify income streams Distribution and Promotion • Remember that the brand is bigger than the man Think Critically 1.
What do you think contributes to the success of LRMR? 2. Identify trends that you think could influence the success of LRMR. 86 PROJECT Marketing Your Business Project Objectives ©thumb, 2009/ Used under license from • Analyze information about potential customers and competitors of your business • Write the marketing plan for your business Getting Started Shutterstock.com Read the Project Process below. Make a list of any materials you will need.
• Think about your business idea. If you were to start this business, who do you think your customers and competitors would be? • As you develop a marketing plan, carefully analyze your marketing goals. Where do you see this business in one year? five years? ten years? Project Process 4.1 Identify your target market and market segments. Use secondary data sources that could help you assess demand for your product or service.
Develop a customer profile for your business.2 Conduct primary data research. Define the question—what it is that you want to learn from your research. Develop a survey and have at least 30 people in your target market fill it out. Analyze your results, and determine if your idea is feasible or if you need to make changes to it.3 Determine your competitors, both direct and indirect.
Prepare a chart and analyze each competitor in terms of price, location, facility, strength, and weakness. Develop a customer loyalty plan.5 Write your marketing plan for the product, price, distribution, and promotion elements of the marketing mix. Chapter Review Project Wrap-up Using a word processing program, key all the information ©Chin-Hong, Cheah, 2009/ Used under license that you have prepared in an attractive format. Add this to your business plan.1 THE VALUE OF MARKETING GOALS JUMP START Explain the importance of Cheryl had always dreamed of having her own day spa business.
She marketing a business enrolled in the cosmetology program in high school, completed her training Identify a target market at the local technical college, and then got a job at a spa. After working by analyzing the needs of for ten years, she told her friend Sergio about her idea of starting her own your customers business. Sergio was very interested and told Cheryl that he and several Describe how to conduct of their coworkers would be interested in joining her. Cheryl realized that market research most of her clients would follow her to the new spa, but she didn’t know if that would be enough to support the new business.
She believed the KEY TERMS spa would appeal to women and men between the ages of 23 and 50. 88 They would be people who are concerned about their appearance, willing marketing mix, p. 89 to pay extra for quality service, and have an average income of $35,000. 89 She wanted to locate the spa in her community but was not certain there market research, p.
92 would be enough demand there. Why do you think it is important for Cheryl to know exactly who her customers are? ©Stephen Coburn, 2009/ Used under license from Shutterstock.com What Is Marketing? As defined by the American Marketing Association, marketing is “an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.” To simplify this definition, marketing is all of the processes—planning, pricing, promoting, distributing, and selling—used to determine and satisfy the needs of customers and the company. This definition demonstrates the importance of the customer. 88 Chapter 4 • MARKET YOUR BUSINESS It is important to conduct market research to discover what products or services customers want to buy.
Using data that is gathered through market research helps entrepreneurs develop a marketing concept for the business. The marketing concept uses the needs of customers as the primary focus during the planning, production, distribution, and promotion of a product or service. To use the marketing concept successfully, businesses must be able to • Identify what will satisfy the customers’ needs and wants • Develop and market products or services that customers consider better than other choices • Operate profitably An important part of implementing the marketing concept is developing a marketing mix that helps meet customer needs and enables the business to earn a profit. The marketing mix is a blending of the product, price, distribution, and promotion used to reach a target market.
For example, once you have determined what product or service meets customers’ needs, you must determine the right price for it, make it available to the customers in the right places, and then let your target market know about it. CheckPOINT How does the marketing mix for consumer products help meet consumer needs? TEAMWORK Target Market Working with team members, look through As an entrepreneur, you will need to estimate the demand for your products or magazines for an services by identifying your primary customers. The target market includes the advertisement of a individuals or companies that are interested in a particular product or service new product. Based on and are willing and able to pay for it.
Identifying your target market helps the type of publication you reach the people to whom you most want to sell. Target customers are and the material the customers you would most like to attract. A car dealer selling moderately contained in the advertisement, answer priced minivans would target middle-class families with children. A car dealer the eight questions that offers expensive sports cars might target single people with high incomes.
starting on this page To identify the target market for your product or service, you will need to about identifying a answer the following questions. Who are my customers: individuals or companies? you determine who the target market is for the 2. If my customers are individuals, how old are they? How much money do product? they earn? Where do they live? How do they spend their time and money? 4.1 The Value of Marketing 89 3. If my customers are companies, what industries are they in? Where are those industries located? 4.
What needs or wants will my product or service satisfy? 5. How many potential customers live in the area in which I want to operate? 6. Where do these potential customers currently buy the products or services I want to sell them? 7. What price are they willing to pay for my products or services? 8.
What can I do for my customers that other companies are not already doing for them? Understand the Competition Knowing a lot about your competition will help you define your target market. Businesses enter into areas where there is competition all the time. However, they have to identify some special customer need or want that is not being met. Customers may be happy with the products or services being offered, but they may be unhappy with the prices being charged.
Customers might be willing to pay more for better quality. In either case, a customer need is going unmet by a competitor, indicating a possible opportunity for an entrepreneur. Market Segments To further define your target market, you need to identify market segments. Market segments are groups of customers who share common characteristics.
Segmenting, or dividing your target market into several small groups, can help you develop a product or service that will meet customer needs. Market research can be used to identify market segments. The process of market segmentation is important because most products and services only appeal to a small portion of the population. The leisure services market is a large market that includes many segments, such as outdoor adventurers, people who vacation frequently, and couples who eat at restaurants.
Targeting the entire leisure market would not make sense. You would never be able to meet the needs of the entire market. Creating a customer profile can be very useful in market segmentation. A customer profile is a description of the SAMPLE CUSTOMER PROFILE FOR characteristics of the person A SPORTING GOODS STORE or company that is likely to • Individual 23 to 52 years of age purchase a product or service.
• Participates in sports A customer profile can help • Wants good-quality sport equipment you meet customer demand. Customers may be profiled • Looks for good prices based on many types of data, • Lives in city of Blanchester including demographics, • Average household income of $42,000 per psychographics, use-based year data, and geographic data. 90 Chapter 4 • MARKET YOUR BUSINESS ©Nicholas Moore, 2009/ Used under license from Shutterstock.com What kind of customer profile could you create from this group of people? Demographics Data that describe a group of people in terms of their age, marital status, family size, ethnicity, gender, profession, education, and income are called demographics. An example of a market segment based on demographic data is women business owners between the ages of 25 and 40 who earn at least $50,000 per year.
Psychographics Data that describe a group of people in terms of their tastes, opinions, attitudes, personality traits, and lifestyle habits are called psychographics. An example of a market segment based on psychographic data is people who prefer to live in a downtown setting and whose musical preference is jazz. Use-Based Data Data that help you determine how often potential customers use a particular service are called use-based data. If you were starting a travel agency, you would want to know how often potential customers travel.
Geographic Data Data that help you determine where your potential customers live and how far they will travel to do business are called geographic data. If you were thinking of opening a coffee shop, it would be important for you to know that people are not willing to drive more than one mile for coffee. CheckPOINT How can creating a customer profile help entrepreneurs identify their target markets? 4.1 The Value of Marketing 91 Role of Market Research For your business to succeed, you need to find out who your customers are, what they want or need, and how much they are willing to pay for your product or service. To collect this information, you will perform market research.
Market research is a system for collecting, recording, and analyzing information about customers, competitors, goods, and services. You will draw on secondary data and primary data as you gather your information. Both types will help you identify ways to meet customer needs. Secondary Data Entrepreneurs usually begin research of their target market by using secondary data.
Secondary data is data found in already published sources. Information on population, family size, household income, economic trends, industry forecasts, and other information can be found in secondary data resources. Places to find secondary data include 1. Publications issued by government and community organizations, such as the U.
Census, the Small Business ©David Gilder, 2009/ Used under license from Shutterstock.com Administration, and the Chamber of Commerce 2.