MPU 32092 ASAS PEMBUDAYAAN KEUSAHAWANAN CHAPTER 5

CHAPTER 5

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5.1 INTRODUCTION

Marketing is essential for any business venture. The concepts and practices of marketing in
entrepreneurial ventures are vital, especially with limited resources. This includes considerations of
marketing new technologies in situations of high market uncertainty, the relationship between
marketing and the commercialisation process, marketing as co-creation of value with the customers,
and the linkages between marketing, entrepreneurship and culture. In order to create successful
company, entrepreneurs must implement a solid marketing strategy. This entails knowledge of the
industry, the different products offered, and a genuine understanding of current customers. It also
encompasses familiarity of any major competitors, market projections, and obtaining the necessary
resources to continually yield customers to the new business.

5.2 WHAT IS MARKETING?

What is marketing? Many people think of marketing as only selling and advertising. Today, marketing
must be understood not in the old sense of making a sale-“telling and selling”-but in the new sense
of satisfying customer needs. If the marketer engages consumers effectively, understands their
needs, develops products that provide superior customer value, and prices, distributes, and promotes
them well, these products will sell easily. In fact, according to management guru Peter Drucker, “The
aim of marketing is to make selling unnecessary.” Selling and advertising are only part of a larger
marketing mix-a set of marketing tools that work together to satisfy customer needs and build
customer relationships.

Figure 5.1: Selling and Marketing Concept Contrasted

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5.3 IMPORTANT CONCEPTS IN MARKETING

5.3.1 Customer Needs, Wants & Demands

It is essential for an entrepreneur to understand the most basic underlying marketing concepts which
are customer needs, wants and demands.

Figure 5.2: Customer Needs, Wants & Demands

5.3.2 Market Offerings-Products, Services and Experiences

The customer’s needs and wants are fulfilled through marketing offer, i.e. the combination of
products, services, information or experiences offered to satisfy the needs and wants. Marketing
offers are not limited to physical products only; they also include services, activities or benefits offered
for sale.

5.3.3 Customer Value & Satisfaction

Consumers usually face a broad array of products and services that might satisfy a given need. How
do they choose among these many market offerings? Customers form expectations about the value
and satisfaction that various market offerings will deliver and buy accordingly. Satisfied customers
buy again and tell others about their good experiences. Dissatisfied customers often switch to
competitors and disparage the product to others.

Marketers must be careful to set the right level of expectations. If they set expectations too low, they
may satisfy those who buy but fail to attract enough buyers. If they set expectations too high, buyers
will be disappointed. Customer value and customer satisfaction are key building blocks for developing
and managing customer relationships.

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5.3.4 Exchanges and Relationships

Marketing occurs when people decide to satisfy their needs and wants through exchange
relationships. Exchange is the act of obtaining a desired object from someone by offering something
in return. In the broadest sense, the marketer tries to bring about a response to some market offering.
The response may be more than simply buying or trading products and services. A political candidate,
for instance, wants votes; a church wants membership; an orchestra wants an audience; and a social
action group wants idea acceptance.

Marketing consists of actions taken to create, maintain, and grow desirable exchange relationships
with target audiences involving a product, service, idea, or other object. Companies want to build
strong relationships by consistently delivering superior customer value.

5.3.5 Markets

A market is the set of actual and potential buyers of a product or service. These buyers share a
particular need or want that can be satisfied through exchange relationships. Marketing means
managing markets to bring about profitable customer relationships. However, creating these
relationships takes work. Sellers must search for buyers, identify their needs, design good market
offerings, set prices for them, promote them, and store and deliver them. Activities such as consumer
research, product development, communication, distribution, pricing, and service are core marketing
activities.

5.4 MARKETING STRATEGY AND THE MARKETING MIX

Customers are at the centre of every organization’s business, and the organization’s goal is to create
value for those customers and to build profitable relationships with them. Next comes marketing
strategy—the marketing logic by which the company hopes to create this customer value and achieve
these profitable relationships. The company decides which customers it will serve (segmentation and
targeting) and how (differentiation and positioning). It identifies the total market, then divides it into
smaller segments, selects the most promising segments, and focuses on serving and satisfying the
customers in these segments.

5.4.1 Customer-Driven Marketing Strategy

Companies know that they cannot profitably serve all customers in all markets—at least, not in the
same way. There are too many different kinds of customers—both individual consumers and business

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customers—with too many different kinds of needs. And most companies are in a position to serve
some segments better than others. Thus, each company must divide up the total market, choose the
best segments, and design strategies for profitably serving chosen segments. This process involves
market segmentation, market targeting, differentiation, and positioning.

5.4.1.1 Market Segmentation

The process of dividing a market into distinct groups of buyers who have different needs,
characteristics, or behaviours and who might require separate products or marketing programs is
called market segmentation. Market segmentation can be divided into 4 segments.

Figure 5.3: Market Segmentation

1. Demographic Segmentation. Demographic segmentation divides the market into

segments based on variables such as age, gender, family size, life cycle, household income
(HHI), occupation, education, ethnic or cultural group, and generation. Demographic factors
are the most popular bases for segmenting customer groups. One reason is that consumer
needs, wants, and usage rates often vary closely with demographic variables.

2. Geographic Segmentation. Geographic segmentation calls for dividing a market into

different geographical units, such as global regions, countries, regions within a country,
provinces, cities, or even neighbourhoods. A company may decide to operate in one or a few
geographical areas or to operate in all areas but pay attention to geographical differences in
needs and wants.

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3. Psychographic Segmentation. Psychographic segmentation divides buyers into different

segments based on social class, lifestyle, or personality characteristics. People in the same
demographic group can have very different psychographic makeups.

4. Behavioural Segmentation. Behavioural segmentation divides buyers into segments based

on their knowledge, attitudes, uses, or responses to a product. Many marketers believe that
behaviour variables are the best starting point for building market segments.

5.4.1.2 Market Targeting

After a company has defined market segments, it can enter one or many of these segments. Market
targeting involves evaluating each market segment’s attractiveness and selecting one or more
segments to enter. A company should target segments in which it can profitably generate the greatest
customer value and sustain it over time.

5.4.1.3 Differentiation & Positioning

After a company has decided which market segments to enter, it must decide how it will differentiate
its market offering for each targeted segment and what positions it wants to occupy in those
segments. A product’s position is the place the product occupies relative to competitors’ products in
consumers’ minds. Marketers must develop a positioning strategy that makes it clear to the market
what differentiates their brand from the competition.

Positioning defines where your product (item or service) stands in relation to others offering similar
products and services in the marketplace as well as the mind of the consumer. A good positioning
makes a product unique and makes the users consider using it as a distinct benefit to them.

Effective positioning begins with differentiation—actually differentiating the company’s market

offering so that it gives consumers more value. Once the company has chosen a desired position, it
must take strong steps to deliver and communicate that position to target consumers. The company’s
entire marketing program should support the chosen positioning strategy.

5.4.2 Developing an Integrated Marketing Mix

After deciding on its overall marketing strategy, the company is ready to begin planning the details
of the marketing mix, one of the major concepts in modern marketing. The marketing mix is the
set of controllable, tactical marketing tools that the firm blends to produce the response it wants in

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the target market. The marketing mix consists of everything the firm can do to influence the demand
for its product. The many possibilities can be collected into four groups of variables known as “the
four Ps”: product, price, place, and promotion.

Figure 5.4: Marketing Mix

5.4.2.1 Product

A product can be physical or virtual. Physical products include durable goods (such as cars, furniture,
and computers) and nondurable goods (such as food and beverages). Virtual products are offerings
of services or experiences (such as education and software). A product may be a hybrid and include
both physical and virtual elements. Hybrid products are becoming more common, as traditionally
analogue products are incorporating digital technology as a way to better reach and serve customers.

Software can be considered both a product and a service. You can purchase a physical version of the
software and install it on-premises, which is what was traditionally done. This simply means that the
software is installed on the user’s computer, versus a remote server or in the cloud. Many software
products today are sold virtually. This where the term software-as-a-service (SaaS) originates. This
approach uses a web-based delivery model and customers pay a monthly or annual subscription fee
to access the software.

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For example, a Ford Escape is a product that comes in different colours and different model variations.
It also has optional features that a consumer may choose to purchase. The car comes fully serviced
and with a comprehensive warranty, which is also part of the product. And many Ford dealerships
also include service centres to keep the Escape running smoothly.

5.4.2.2 Place

In the marketing mix, the process of moving products from the producer to the intended user is
called place. In other words, it is how your product is bought and where it is bought. This movement
could be through a combination of intermediaries such as distributors, wholesalers and retailers. In
addition, a newer method is the internet which itself is a marketplace now.

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Through the use of the right place, a company can increase sales and maintain these over a longer
period of time. In turn, this would mean a greater share of the market and increased revenues and
profits. Correct placement is a vital activity that is focused on reaching the right target audience at
the right time. It focuses on where the business is located, where the target market is placed, how
best to connect these two, how to store goods in the interim and how to eventually transport them.

5.4.2.3 Price

Price is the amount of money customers must pay to obtain the product. This requires the company
to analyze the product’s value for the target customer. Examples of price include:

 The price of a used college textbook in the campus bookstore

 Promotional pricing such as Sonic Drive-In’s half-price cheeseburgers on Tuesdays
 Discounts to trade customers, such as furniture discounts for interior designers

Marketing professionals must analyze what buyers are willing to pay, what competitors are charging,
and what the price means to the target customer when calculating the product’s value. Determining
price is almost always a complicated analysis that brings together many variables.

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5.4.2.4 Promotion

In the marketing mix, the term “promotion” refers to the communications that occur between the
company and the customer. Promotion includes both the messages sent by the company and
messages that customers send to the public about their experience. Examples of promotion include:

 An advertisement in Cooking Light magazine

 A customer’s review of the product on Tumblr
 A newspaper article in the local paper quoting a company employee as an expert
 A test message sent to a list of customers or prospects

Marketing professionals have an increasingly difficult job influencing promotions that cannot be
controlled by the company. The company’s formal messages and advertising are only one part of
promotions.

REFERENCES
1. https://present5.com/prezentaciya-marketing-concept-and-environment-addition-1
2. https://www.aha.io/roadmapping/guide/product-management/what-is-a-product
3. https://courses.lumenlearning.com/ivytech-introbusiness/chapter/reading-components-of-the-
marketing-mix/

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