MARKETING

Engineering Entrepreneurship
Second Semester of A.Y. 2014/2015
International Program
Civil Engineering Department
Faculty of Engineering
Universitas Atma Jaya Yogyakarta

INTRODUCTION
Marketing is much more important
than capital
If you already have a market, be an
entrepreneur
Many innovators are afraid of being
an entrepreneur due to uncertainty
in marketing

PRODUCT of MARKETING
first
Product & production oriented have been
long left now: market oriented
Marketing before the product:
Who are my customers? Man, woman, unisex?
Is the product related to age?
Is the product for certain area or anywhere?

If you want to sell anything you will sell

nothing.
If you say that your product can be
used/worn by anyone, then no one will buy.

PRODUCT or MARKETING
first
Next questions:
Is the product/service really needed?
How to change need to be demand?
How much would the customers like to
pay?
What is the size of the product?
How many will the production be?

Made by order, e.g. house,

apartment, ship, airplane, vehicle

MARKETING STRATEGY
Guide the entrepreneur reaching the
goals under controlled cost and
optimum result
Market determines product
specification, need, price negotiation;
market is always in front of
production
Anomaly: customer likes the product
in the test but the product is not at
all saleable & business has to be

ANECDOT
If you can sell product needed by
customer, its brand is popular, you are a
class 3 salesman
If you can sell product which is not needed
by customer, its brand is popular, you are
a class 2 salesman
If you can sell product which is not needed
by customer, its brand is not popular or
even without any brand, you are a class 1
salesman

 Marketing is not just concept, it has

to be moved, flown its soul, managed
together with salesmen
Marketing has to have strategy &
incentive
In New York: someone packs cows
dung into a ceramic bottle with cow
picture & writing: Bullshit! It is liked
so much by tourists.

American Marketing Association

(benchmark institution in marketing)

Marketing is a process of planning,

concept execution, price setting,
promotion, distribution of idea,
product, & service to create
exchange that satisfy individuals
& organizations goal

Kotler & Lane (2007)

Marketing is a social process in which
individuals & groups obtain what
they need & want, by creating,
offering, & freely exchange valuable
product with other parties

Drucker (1954)
Marketing is not extension of selling
Marketing is not a special activity but
an overall business seen from angle
of final target, i.e. customer
In any business, only marketing &
innovation that create value,
others only create cost
How about labor value or cost?

APPLICATION of
MARKETING
Consumer goods (final customer), e.g. shoes, food,
watch, clothes. The company is involved in consumer
marketing.
Industrial goods (to be used by company or
organization producing other product), e.g.
construction material, raw material, chemical material.
The company is involved in industrial marketing.
Service (intangible product), e.g. time, skill,
restaurant, beauty salon, spa, travel agent most are
not pure service but combination with physical product
Idea, e.g. community service commercial/advertising

MARKETING STRATEGY
Strategy: a way to achieve goal need to know
current position & what goal to achieve
Strategy helps entrepreneur to achieve goal
more effectively based on mature assessments
& thought, being different from common
entrepreneur who owns business just to live
Entrepreneur uses strategy to grow significantly
& sustainable, achieve prosperous goal
Strategy is required to create excellence of
competitiveness

MARKETING STRATEGY
New entrepreneur: do not spend long in
thinking about strategy, immediately start,
face reality, keep asking customers & think
about their feeling, think about what makes
them come back & repeat order & even
recommend their friend to buy your product
McCharty et al. (1998): customer satisfaction
oriented
Human is satisfied when he/she gets perceived
value while exact value cannot be measured

MARKETING STRATEGY
Perceived value = perceived benefit
perceived cost
Increase value by:
Increase benefit or
Reduce cost

Increase benefit by:

Provide quality product
Money back guarantee Good service
Options availability
Ready stock
friendly staff

- Complete features
Touching design
Good taste
Good voice
Psychological aspects:

MARKETING STRATEGY
Reduce cost by:
Right location
Efficient production cost
Easy access
No long queue
Competence staff
Certain price (not easily change)
Wide available information

TECHNICAL STRATEGY
Who will
be
customer

How to
build
brand

Objective

Segmentin
g
& targeting

Branding
Differentiati
ng
Positioning

Customer
satisfacti
on

Market
penetrati
on

Market
developme
nt

Product
development

TECHNICAL STRATEGY
Looking for pathway to achieve objective,
e.g.
Self development: branch or franchise
Sell commodity or brand

Some strategies (Zimmerer &

Scarborough, 2002):
Market penetration
Market development
Product development
Market segmentation

MARKET PENETRATION
Increase selling of same (old) product
in current market (or location) through
selling & advertising measures

MARKET DEVELOPMENT
Increase selling by introducing same
(old) product or service to new
market/segment

PRODUCT DEVELOPMENT
Increase selling by adding new product
or service to current market/segment
New product can be a change of
current product or completely new
product

MARKET SEGMENTATION
A strategy to sort out mass market into some more
homogeneous groups
It is a mapping of market into several categories by
unifying similar behavior into a segment
Requirements of segment for effective segmentation

Measureable

Accessible

Large enough/beneficial enough

Differentiable

Executable

MARKETING STRATEGY
(Sudharsan, 1995)
Result achieve by
entrepreneur

f (excellence of competitiveness)

Excellence of
competitiveness

f (marketing strategy, business

implementation, facing context)

Marketing strategy

Marketing relationship * marketing

mix * timing * resources allocation

Marketing relationship

Customer relation (segmentation &

relation), network

Marketing mix

Product, price, place, promotion

Timing

Starting time, finishing time

Implementation

Leadership, marketing, production,

finance, human resource

Context

Economic, habits, competition,

regulation

Kotler & Lane (2007)

Category of market segmentation
Geography: country, state, region, province,
city, household
Demography (most measureable) = who:
age, gender, family size, family life cycle,
income, social economic class
Psychography = why: life style, personality,
adopted values
Behavioral = how: knowledge, attitude, use,
response
Individual:

Geography

Jakarta, Bandung, Yogyakarta,

Surabaya, Medan, Balikpapan, etc
Area size
< 5,000; 5,000-20,000; 20,00050,000; 50,000-100,000 so forth
Density
Urban, sub-urban, rural
Demograph < 6, 6-11, 12-19, 20-34, 35-49, 50-64
y
so forth
Sex
Male, female, unisex
Income
< 1M, 1-3 M, > 3M
Occupation Manager, officer, farmer, pensioner,
teacher, etc
Education
SD, SMP, SMA, S1, S2, S3, etc
Religion
Islam, Catholic, Protestant, Jews,
Hindu, etc

Social class

Lower, moderate, upper

Life style

Conventional, relax

Personality

Compulsive, friendly, obedience

Event
behavior

Common event, special event

Benefit

Quality, service, economic, speed

User status

Non-user, ex-user, potential user, first time

user, regular user

Level of use

Light, moderate, heavy

Loyalty status None, moderate, strong, absolute

Readiness to
buy

Conscious, unconscious, know, interested,

want, intent, annoyed

Attitude
toward
product

Enthusiastic, positive, ignorance, negative,

hate

TARGETING
Choose one or more market segment
to be target market

POSITIONING
Bond with customer
To communicate product & brand into customers
mind
It is a position occupied by a product in the markets
mind
It is used to face competition, e.g. Konimex uses
Paramex for adult male, Feminax for adult female
compare to other unspecified analgesic that say can
cure any pain
Brand positioning eases customers memory to
locate your brand in the top of their mind & become
loyal by mentioning your brand firstly in shopping

OPERATIONAL TACTIC

Branding
Differentiating
Positioning
Marketing mix
Selling

BRANDING
Naming of brand differently from
competitors brands
More than name, needs image,
grows loyalty or even emotion
Inside: brand association, e.g.
Mercedes luxury & classic

DIFFERENTIATING
Positive difference from competitors in
customers view
Main sources: product, service, people,
image
Difference has to be real & unique, it should
not just be perception, it has to be really
different in content, context, infrastructure
Good product is always copied without
differentiation your product will become
commodity (product without name)

price
&
profit
margi
n

people
touch
differentiati
on

impressi
on
experien
ce
service

brand
commodit
y
commoditizat
ion
quality, service
value

MARKETING MIX
By Jerome McCarthy
Known as 4P: Product, Price,
Place, Promotion like car with 4
wheels will not work when 1 wheel is
not working
4P is combination of marketing tools
for influencing & keeping customer
Each element of 4P has to be
designed for meeting customer
benefit

PRODUCT
Product Life Cycle
Sales

growth

maturity

introductio
n

decline

Time
Source:
www.learnmarketing.net

Characteri
stics

Introducti
on

Growth

Maturity

Decline

Selling

Low

Increase fast

Peak

Decrease

Cost

High

Average

Low

Low

Profit

Negative

Increase

High

Decrease

Customer

Innovator

Early user

Middle
majority

Late user

Competitor

Few

Increase
number

Stable
number to
decrease

Decrease
number

Marketing
objective

Create
awareness
&
willingness
to try
product

Maximize
market

Maximize
profit while
keep market

Reduce
expense &
branding

Strategy

Introducti
on

Growth

Maturity

Decline

Product

Offer basic
product

Offer
extension of
product,
service,
guarantee

Diversificati
on of brand
& model

Release
weak
product

Price

Increase
plus-cost

Price to
penetrate
market

Same price
or better
price than
competitors

Decrease
price

Distribution

Build
selective
distribution

Build
intensive
distribution

Build more
intensive
distribution

Be
selective:
release
unprofitabl
e store

Build
awareness &
interest in
mass market

Emphasis
brand
difference &
benefit

Decrease
up to
necessary
level to
keep loyal
users

Advertising

PRICE
Tool to communicate product value
to market
Price setting has direct & clear
impact to market acceptance
Price is flexible tool: stable in certain
time, but suddenly increase or
decrease
Price is the only element to get
income from selling

PRICE SETTING
ALTERNATIVES
Cost-based pricing
Cost-plus-pricing
Break even analysis & target profit
pricing

Value-based pricing
Competition-based pricing
Going-rate pricing

Griffin & Ebert (2002)

Determine price setting for
distributed products:
Price is set higher than market price of
similar product
Price is set lower than market price of
similar product
Price is set equal or close to average
market price of similar product
market pricing

Griffin & Ebert (2002)

Determine price setting for new
products:
Floating price setting: convince
customer that product is significantly
different from other product in market
Penetrating price setting: attract
customer with low price to push initial
selling, gradually increase price to avoid
withdrawal of customer

PLACE
Known as distribution
There is intermediary:
wholesaler
retailer

Distribution channel:
Channel 1: direct distribution of consumer goods
(producer user)
Channel 2: retail distribution of consumer goods
(producer retailer customer)
Channel 3: wholesale distribution of consumer
goods (producer wholesaler retailer customer)
Channel 4: distribution through selling agent or
broker (producer agent/broker wholesaler retailer
customer)

PROMOTION
Communication technique to stimulate customer to
buy product: aware, know further, persuade to like,
persuade to buy
Final goal of promotion: increase selling
Also: improve value perception & control selling
volume
Mixed promotion:
Advertising: non-personal
Personal selling
Sales promotion: (1) get out of the crowd (2) message
connector (3) trial purchase
Public relations: publicity, build good reputation

SELLING
A tactic used for creating long relationship
with customer through product
Selling integrates company, customers, &
relation
Level:
Feature selling
Benefit selling
Solution selling

Selling can be used as benchmark for

effectiveness of other marketing activities