School of Mechanical And

Industrial Engineering
Engineering Entrepreneurship
(MEng5392)

Lecture Four
Marketing in Business Environment
Prepared by: Fekadu B.
February: 2024
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 Part Four:
Marketing in Business Environment
1) Business Operation
2) Strategic planning for marketing
3) The Marketing Definition, in the Market Perspective
4) Marketing Mix-product, price, place, and
promotion,
5) Marketing strategy
6) Marketing segmentation and market research
7) Factors affecting the Business Environment

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 Introduction
Business operations
Business operations are those activities involved in the
running of a business for the purpose of producing value for
the stakeholder.
 The outcome of business operations is the harvesting of
value from assets owned by a business.
 Business operations: include three fundamental
management imperatives that aims to maximize value
harvested from business assets,
 Generating /recurring income
 Increase the value of the business assets
 Secure the income and value of the business
 Those the three imperatives are interdependent.
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 Business operations
Generally business operations lay their foundation on
management functions.
The most important management functions are:
 Planning & decision making: is concerned with 'what',„ how, and
'when' activities will be done, development of strategies and courses
of actions to be followed for the achievement of objectives.
 Organizing & Staffing:
 Organizing: combining and integrating human, physical and
financial resources in productive interrelationships for the
achievement of enterprise objectives.
 Staffing: determination of the number and the kind of personnel
required, Placement, induction and orientation, recruitment for
attracting adequate number of potential employees to seek jobs in
the enterprise.
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 Business operations
 Directing: is leading the employees to:
Perform efficiently, and
Contribute their optimum to the achievement of organizational
objectives.
 Controlling: Measurement of performance against
predetermined
Goals
Identification of deviations from these goals
Corrective action to rectify deviations.

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 Business physical operations
Business operations includes:
The location of the business and
 The processes the business,
Resources the business, and
Other tools you will need to transform inputs (raw
materials, labor, and capital) into outputs (goods or
services).
 To maximize your outputs for profitability, you must
organize your inputs.
As a business owner, it is essential to make certain that all
operations function well and integrate with one another
effectively.
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 Location and Facility
Which of the following physical operations do you need to
consider for your business?
Should I lease or buy my physical facility?
Should I build a new facility or buy an existing one?
Where should I locate my business to reach the greatest number of
customers and to provide efficient access to employees and vendors?
When making the decision, consider your goals and the
desired end result.
Would it be better to lease (or rent) an existing facility so you would
not be tied to a location and move as your business expands?
would you want to find a facility large enough to house your existing
business, with room to expand in the future?
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 Production Equipment and Maintenance
Should I lease or buy my office equipment?
If I do lease, should I lease all of the equipment or only certain
pieces?
Along with the equipment, how should I manage the maintenance?
Which is more cost effective? – buying or leasing?
What are the advantages and disadvantages of each?
Employees
 If I need employees, how many and in what job functions?
 Should I hire the employees full-time, part-time, or on an as needed
basis?
 Do I need a sales force?
 What are the advantages and disadvantages of the various options?
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 Professional assistance:
E.g.
Do you need help with accounting and bookkeeping?
Have you identified an attorney to work with?
Business regulations and guidelines:
The regulatory requirements exist at multiple levels, local, state
and federal.
Business formation
Business Registration, Sales tax license, Permits and health
permits or environmental approvals to operate
Taxes:
determines what taxes you must pay and how you pay them
(income tax, self-employment tax, employment tax/payroll taxes,
sales tax/VAT, and excise tax)
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 Strategic planning
 Planning is the process of setting objectives for the future and
developing courses of action to accomplish those objectives.
 Planning is the process by which managers set objectives, to
assess the future and develop courses of action to accomplish
these objectives.
 Its purpose is to facilitate programs and improve performance.
 Planning must be based on careful, discreet, practical forecasts
and reasonable premise.
Planning is deciding in advance:
 What to do,
 How to do it,
 When to do it and
 Who to do it
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 Strategic planning
Everyone who starts an entrepreneurial venture wants to be
successful.
However, success does not happen overnight, and it is not
guaranteed. A major theme throughout the series of business
operations is making the right decisions for your business.
A strategic plan is a virtual necessity, it may not be a recipe for
success, but without it a business is much more likely to fail.
 Strategic plan should:
Serve as a framework for decisions or for securing support/approval.
Provide a basis for more detailed planning
Explain the business to others in order to inform, motivate & involve.
Assist benchmarking & performance monitoring.
11 Stimulate change and become building block for next plan
 Strategic planning
A strategic plan should not be confused with a business plan.
 A strategic plan a very short document whereas
 A business plan is usually a much more substantial and detailed
document.
A strategic plan can provide the foundation and frame work for
a business plan.
A strategic plan is not the same thing as an operational plan.
 Strategic plan should be visionary, conceptual and directional
 An operational plan which is shorter term, tactical, focused,
implementable and measurable.
For example: Process of planning a vacation (where, when,
duration, budget, who goes, how travel are all strategic issues)
with the final preparations (tasks, deadlines, funding, weather,
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packing, transport and so on are all operational issues).
 Marketing operations
Definition of Market:
Market is: a group of potential customers having needs, the
ability to buy & willingness to pay in order to satisfy these needs.
A total system of business activities designed to plan, price,
promote and distribute, goods and services to present and
potential customers
Market: is all the activities involved in the transfer of goods
from the producer to the consumer
Market is A social & managerial process by which individuals
& groups obtain what they need & want through creating &
exchanging products & value with others.
Marketing further implies that marketing starts early before
13 production & continues after selling.
 Cont…
 Small business marketing consists of those business
activities that relate directly to:
Analyzing marketing opportunities
Selecting target markets
Developing the marketing mix
Managing the marketing effort
 The main concepts of marketing
Marketing activities are integrated
Organizations are market oriented
Marketing focuses on selected markets
Customer satisfaction is the core of marketing
Marketing starts early before production.
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 THE MARKETING MIX
 Marketing mix: is the term used to describe the
combination of the four inputs which constitute the core of a
company's marketing system:

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 THE MARKETING MIX
 A marketing organization has to concentrate on four
important aspects known as the 4P’s of marketing.
 The marketing manager has to combine these 4 P‟s;
 product,
 price,
 promotion and
 place
 Combination provides satisfaction to the customer and
profit to the manufacturer.
 When these elements (4 P‟s) are combined together they are
called as “The Marketing Mix”.
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 Cont…
1.The product mix: Includes:
Product planning and development
Branding, Packaging , Labeling
2.The price mix: Includes
 Price polices
Skimming pricing (Pricing above the market)
Penetration pricing (Pricing below the market)
Premium pricing (Pricing with the market)
Discounts
 Quantity discount.  Trade discount
 Seasonal discount  Cash discount
Credits sales; paid at a later
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 Cont…
3. Place mix (Physical distribution mix):
 Channels of distribution
 Transportation
 Warehousing
4. Promotion mix: Includes
 Advertising
 Personal selling
 Sales promotion
 Publicity

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 I. THE PRODUCT MIX
Product: is any commodity that satisfies the needs & wants
of customer.
Product: is a bundle of tangible & intangible attributes, which
satisfy the needs, & wants of customers.
In todays market, a product can be,
A person (soccer players),
Organization (privatized firms),
 Places (leased land),
Objects (items),
Idea (business plans or project proposal),
Services (medication or barber), or mixes of these
elements.
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 I. THE PRODUCT MIX
1. Product planning and development
Product Planning: is the process of identifying and
articulating market requirements that define a product's
feature set.
It serves as the basis for decision-making about price,
distribution and promotion.
Product planning includes three major types of
decisions:
Development and introduction of new products
Modifications of existing products in keeping with the
changing tastes and preferences of the target customers and
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Elimination of unprofitable or obsolete products
 I. THE PRODUCT MIX
2. Branding
A brand is a name, term, symbol, sign, design or combination
of these, used to identify the products of a firm and differentiate
them from those of competitors.
It can be of four forms
 Brand name: The part of a brand, which consists of word, letters
and/or numbers, which can be vocalized. E.g. OMO, Dettol
Brand mark: The part of a brand that can appear in the form of
symbol, design, and distinctive coloring or lettering.
 It can be recognized but it is not utter able.
Trade Name: Trade name is the name of the business organization.
 A trade name may also be used as a brand name. In such a case it
performs a dual function. It gives identification to the product as
21 well as the manufacturer
 I. THE PRODUCT MIX
 Trade mark: A brand or part of a brand that has been given legal
protection so that the owner has exclusive rights to its use. After
companies identify their trademark, they entail a term “™” or “®”
Importance of a brand
 The brand makes it easier for the seller to process ,orders and track
down problems.
 The seller’s brand name and trademark provide legal protection of
unique product features.
 Branding gives the seller the opportunity to attract a loyal
profitable set of customers and helps to increase the control and
share of the market.
 Branding helps the seller to segment markets and expand the
22 product mix.
 I. THE PRODUCT MIX
Good brand help to build the corporate image because it advertises
the quality and size of the company.
Brands make it easy for customers to identify products or services.

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 I. THE PRODUCT MIX
Requirements of a good brand
Be easy to pronounce, recognize and remember
 Be distinctive.
 Suggest something about the product’s benefits or
characteristics
 Suggest about the product qualities such as action or use.
 Be large enough to be applicable to new products that may be
added to the product line.
 Have a possibility of registration and legal protection.

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 I. THE PRODUCT MIX
 Brand Elements

Brand
names
Slogans URLs

Brand
Elements
Characters Logos

Symbols
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 I. THE PRODUCT MIX
 Qualities of a good brand
Memorable
Meaningful
Likeability
Transferable
Adaptable
Protectable

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 I. THE PRODUCT MIX
3. Packaging
Packaging is a marketing process concerned with the design
and production of the container or wrapper for a product.
The container or wrapper or covering is called the package.
Importance of packaging
Packaging serves several safety and utilitarian purposes
Packaging may implement a company‟s marketing program.
Well-packaged products may increase profit possibilities in
that it stimulates customers to pay more just to get the special
package.

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 I. THE PRODUCT MIX
4. Labeling
 Brand label: simply the brand alone applied to the product or
to the package.
 Grade label: a label, which identifies the quality with, a
letter, number or word.
 Descriptive label: it gives objective information about the
use, construction, care, performance or other features of the
product.
 Sometimes it is called informative label.
E.g. medicines

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 II. THE PRICE MIX
WHAT IS PRICE?
 PRICE; is the amount of money consumers have to pay to
obtain the product.
 Price: one of the most important element determining
market share and profitability.
 Price has operated as the major determinant of user choice
traditionally.
 Although non-price factors have become more important in
recent decades.
Different companies set the price haphazardly as based on cost.
PRICE = Cost + Profit

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 II. THE PRICE MIX
 Methods of Pricing
1.Cost plus pricing /Mark Up pricing/
 Adds a standard mark up to the product’s cost
2. Skimming pricing
 A company favors setting high prices to “skim” the
market.
 The following conditions should be satisfied
1. A sufficient number of buyers have a high current demand.
2. The high initial prices do not attract more competition to the
market.
3. The high price communicates the image of a superior product.
3. Penetration pricing: below market price
 Setting lower prices for winning large number of consumers

4. Premium pricing: with market

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 II. THE PRICE MIX
 The price could be too high or too low,
 Compared your products to your competitors and
 Customer is willing to pay for your product.
 The major objectives of pricing are:
Achievement of target return
Maximization of profit
Increase of sales volume
Maintenance or increase of market share
Stabilization of prices and
Meeting competition

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 III. PLACE MIX
 Place: Includes company activities that make the product
available to target consumers.
 Physical distribution, includes:
 Channels of distribution
 Transportation
 Warehousing /storing goods/
 Definition of Marketing Channels
The marketing (or distribution) channels refer to the
activities, parties and channel structure required to transfer a
product from its point of production to its point of
consumption by the end customer

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 III. PLACE MIX
 Direct channel
1. Door-to-door selling
2. Manufacturers‟ sales branches
3. Direct mail
 Indirect channel
1. Merchant Middlemen:-
 Whole seller:- E.g. Petram PLC and East Africa Trading are
wholesalers of consumer products.
 Retailer:- E.g. Hadiya supermarket, and several Kiosks are
found closer to sell the items to residential houses.
2. Agent Middlemen
 Commission agent, Brokers, Selling agents,
E.g. -Sony Glorious, is an agent to Sony Electronics products,
33 -Equatorial business is agent to Samsung.
 III. PLACE MIX
 Channel levels
Zero-level One-level Two-level Three-level
Manufacturer Manufacturer Manufacturer Manufacturer

Agent

Wholesaler
Wholesaler

Retailer Retailer Retailer

Consumer Consumer Consumer Consumer

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 IV. PROMOTION MIX
 Is sometimes known as marketing communication.
 Means activities that communicate the merits of the product &
persuade target customers to buy it.
 Promotional objectives:
 Informing the product, Increasing sales
 Stabilizing sales / profit, Positioning the product
 The promotional mix consists of four major tools
 Advertising: such as
 informative Ad, Persuasive Ad and Reminder Ad
 Personal selling - Oral presentation in conversation with
one / more consumers for the purpose of making sale
 Sales promotion - Includes: gifts, games, sampling,
35 coupons, and window displays.
 IV. PROMOTION MIX
Publicity- Any information about the organization, its
personnel or its products that appears in any medium on a
non-paid basis.
How companies inform, educate, persuade and remind
consumers of their product benefits.
 Approaches:
 Conventional media
 print, radio
 online,
 television
 Very specific & Focused on target customer
 Sales promotions
 Public relations
 Personal selling
36  Direct marketing
 IV. PROMOTION MIX
 Most Business Promotion
i. Advertising ii. Personal Selling
iii. Sales Promotion iv. Public Relations
 Advertising
 Advertising aims to:
Make business and product name familiar to the public
Create goodwill and build a favorable image
Educate and inform the public
Offer specific products or services
Attract customers to find out more about your product or
service

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 IV. PROMOTION MIX
 Personal selling
 It means selling products personally.
 Thus a sales person plays three different roles
-Be persuasive
-A service provider
-Be informative
 Public relations
 It is the deliberate, planned and sustained effort to establish
and maintain mutual understanding between an
organization and its public.

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 Marketing Strategy
 Marketing strategy: a process that can allow an organization
to concentrate its resources on the optimal opportunities to
increasing sales and achieving a sustainable competitive
advantage.
 Marketing strategy: includes all basic and long-term
activities in the field of marketing that deal with the analysis of
the strategic initial situation of a company.
Marketing Strategy Focus on:
 Identify new markets that you can successfully target
 Making sure that the products and services meet customers
needs and developing long-term and profitable relationships
with those customers.
 Communicate the benefits of your business offerings to your
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target market
 MARKET SEGMENTATION
 Market segmentation is a marketing term that refers to
aggregating prospective buyers into groups or segments with
common needs and who respond similarly to a marketing
action.
Market segment is a group of individuals or organizations
within a market that share one or more common characteristics.
 Generally the process of dividing a market in to groups is
called market segmentation.
Companies can generally use three criteria to identify different
market segments:
 Homogeneity, or common needs within a segment
 Distinction, or being unique from other groups
 Reaction, or a similar response to the market
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 Cont…
Bases for market segmentation
Geographic segmentation:- Region Urban, Suburban, Rural,
Market density, Climate, Terrain (land, topography), City size,
Country size, State size
Demographic segmentation:- Age, Gender, Race, Ethnicity,
Income, Education, Occupation, Family size, Family life cycle,
Religion, Social class
 Psycho graphic segmentation:- Personality, Attributes, Motives,
Lifestyles
Behavioral segmentation:- Volume usage, End use, Benefit,
Expectations, Brand loyalty, Price sensitivity
 For a new venture, it's very essential to define clearly the
specific group of potential customers whose needs the enterprise
41 aims to fulfill.
 Market Research
 Marketing research: is the systematic studding / recording and
analysis of data about problems relating to marketing.
/American Marketing Association/
 Marketing research: is the application of scientific method for
the solution of marketing problems./Luck, Wales, Taylor/
 Market research: is any set of techniques used to gather
information and better understand a company's target market.
Businesses use market research information to design;
Better Products,
Improve User Experience, and
Craft A Marketing Message that attracts quality leads and improves
conversion rates.
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 Factors Affecting The Business Environment
 It is useful to classify these forces into two:
 The macro environment and
 The micro environment
1. The macro environment (far environment)
 Consists of a number of broadly forces that affect not only the
company but also the other factors in the microenvironment.
 These can be grouped under;
 Economic,
 social,
 legal and political, and
43  technological forces.
 Factors Affecting the Business Environment
I. Economic forces
 The three major economic influences on the marketing
environment of companies are the following:
A. Rising income
B. Inflation
general rise in prices resulting in decreased purchasing
power
C. Recession
is period of economic activity when, income, production,
and employment tend to fall.
all of which reduce demand

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 Factors Affecting The Business Environment
II. Social forces
A. Demographic forces
i. Population growth
ii Age distribution
iii.Two income households
B. Cultural forces
C. The consumer movement
III. Legal and political factors
 It includes:
A. Federal and state laws
B. The development of regional markets
C.The creation and expansion of the global market
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 Factors Affecting The Business Environment
IV. Technological forces


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 Factors Affecting The Business Environment
2. The microenvironment (The near environment)
 Those are competitions in an industry arises;
i.The power of buyers
ii.The power of suppliers
iii.The threat of new entrants
iv.The threat of substitutes
v.The intensity of rivalry

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 Factors Affecting The Business Environment
 Porter claims that five forces determine competitiveness.

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 Factors Affecting The Business Environment

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