International

Marketing Plan

Lesson 1: Basics of marketing and economics (I)

What is marketing?
Marketing is the management process responsible for identifying, anticipating, and
satisfying customer requirements profitably.

The ultimate goals of marketing in an organization are:

1. Attract new customers by offering value.
2. Keep and grow current customers by delivering satisfaction.

Marketing Management
Marketing Management identifies market opportunities and comes out with appropriate
strategies for exploring those opportunities profitably.

Responsibilities
1. The setting of marketing goals and objectives
2. Developing the marketing plan
3. Organizing the marketing team
4. Putting the marketing plan into action
5. Controlling the marketing process

Marketing managers must consider the following, to ensure a successful marketing

strategy:
1. What customers will we serve?
What is our target market?
2. How can we best serve these customers?
What is our value proposition?

Value proposition
Value Proposition is the set of benefits or values a company promises to deliver to
consumers to satisfy their needs.

Value propositions dictate how firms will differentiate and position their brands in the
marketplace.

A. You are out of the market; your business idea or

marketing plan is out of the market because what you
are offering is out of the needs.
B. There is an opportunity because there is a need in
the market, there are no competitors so your strategy
would be different.
C. You need to find differentiation because companies
are offering the same, you are not satisfying the market,
so you are out of there.
 D. You have competition but you are in the market because you are analyzing what
the companies need, it is a normal situation. Important to differentiate from the
rest.

Customer perceived value

“Customer Perceived Value is the customer’s evaluation of the difference between all of
the benefits and
all of the costs of a
marketing
offer relative to
those of competing
offers.”

The perception gap

Ideally the customer’s perception of your brand should align with your company’s
Value Proposition.

The mismatch between Customer Perception and Value proposition is known as the
Perception Gap.

Two possible reasons for the mismatch:

o You do not get the message across to your customers since your distribution and
marketing channels are too weak or
o You do not fulfil the value proposition you offer with the business model you
have.

Marketing Strategy
1. Analyze Needs
2. Predict Wants
3. Estimate Demand
4. Predict When
5. Determine Where
6. Estimate Price
7. Decide Promotion
8. Estimate Competition
9. Provide Service

Requires careful customer analysis. To be successful, firms must engage in:

o Market segmentation
o Market targeting
o Differentiation
 o Positioning

Marketing Mix
The set of controllable, tactical marketing tools that the firm blends to produce the
response it wants in the target market.
o Product: Variety, features, brand name, quality, design, packaging, and services.
o Price: List price, discounts, allowances, payment period, and credit terms.
o Place: Distribution channels, coverage, logistics, locations, transportation,
assortments, and inventory.
o Promotion: Advertising, sales promotion, public relations, and personal selling.

Consumer Decision-Making Stages

Consumers go through several steps when deciding on a purchase.
o Recognize a need
o Identify alternatives
o Evaluate choices
o Make a decision
o Assess satisfaction

Recognize a need
The first step of the consumer decision-making process is recognizing the need for a
service or product.

Need recognition, whether prompted internally or externally, results in the same

response: a want.

When businesses can determine when their target market starts developing these needs or
wants, they can avail the ideal opportunity to show expertise or advertise their brands.

Examples:
o Drinks vending machine in a Gym
o Cookwear advertisement in food blog
o Food samples in a supermarket

Information Search
The 2nd phase consists in looking for alternatives or more information.
o When researching their options, consumers rely on internal and external
factors, as well as past interactions with a product or brand, both positive and
negative.
o Your job as a brand is to give the potential customer access to the information
they want, with the hopes that they decide to purchase your product or service.
Present yourself as a trustworthy source of knowledge and information.
o Another important strategy is word of mouth. Since consumers trust each other
more than they do businesses, make sure to include consumer-generated
content, such as customer reviews or video testimonials, on your website.

Evaluate Alternatives
In the 3rd phase prospective buyers have developed criteria for what they want in a
product. Now they weigh their prospective choices against comparable alternatives.
 o Alternatives may present themselves in the form of lower prices, additional
product benefits, product availability, or something as personal as color or
style options.
o As a brand be ready to be compared to other brands. Highlight your features vs
others. Write FAQs and expect customer question through your website or social
media.

Purchase Decision
This is the moment the consumer has been waiting for: the actual purchase. Once they
have gathered all the facts, including feedback from previous customers, consumers
should arrive at a logical conclusion on the product or service to purchase.
o They may begin a negotiation process, but nothing is certain until they close and
convert.
o As a brand be ready to offer extra benefits that may help the buying decision and
make the process flawless.
Example. Popup on website that detects a potential customer leaving and offers a 10%
discount for 1st time purchasers

Post-Purchase Evolution
Now your customers move into the Retention phase of the customer lifecycle. In the early
stages, they begin to understand how to use the product-service mix to realize the value.
This part of the consumer decision-making process involves reflection from both the
consumer and the seller. As a seller, you should try to gauge the following:
o Did the purchase meet the need the consumer identified?
o Is the customer happy with the purchase?
o How can you continue to engage with this customer?
You must continually work to remind them that you can help them use your product or
service to ensure they reap the benefits.

Production Marketing
Marketing à Makes sure right goods and services are produced à
Production à Making goods, performing services à Creates customer satisfaction

Common Marketing Challenges

How can we identify and choose profitable market segments?
How can differentiate our offer from our competition?
How should we react to competitors?
How can we satisfy our customers and build brand loyalty?
How can we measure the effectiveness of an ad campaign, of public relations, of a
promotion, etc…?

Lesson 1: Basics of marketing and economics (II)

Macroeconomics vs Microeconomics
Microeconomics is the study of individuals and business decisions
o Individual Markets
o Effect on price of a good
o Individual Labour Market
o Individual Consumer Behaviour
 o Supply of Good
Macroeconomics looks at the decisions of countries and governments
o Whole Economy (GDP)
o Inflation (general price level)
o Employment / Unemployment
o Aggregate Demand (AD)
o Productive Capacity of Economy

Interdependence
Micro Economic analysis and Macro Economic analysis are complementary to each
other:
o The basic goal of both is the maximization of the material welfare of the nation
o From the microeconomic point of view, the nation’s material welfare will be
maximized by achieving optimal allocation of resources
o From the macroeconomic point of view, the nation’s material welfare will be
maximized by achieving full utilization of productive resources of the economy

Growth of World Merchandise Trade and GDP

The net result of these factors?
o Increased interdependence of countries/economies
o Increased competitiveness
o Need for firms to keep a constant watch on the international economic
environment.

Globalization
Globalization, or the increased interconnectedness and interdependence of peoples and
countries, is generally understood to include two inter-related elements: the opening of
international borders to increasingly fast flows of goods, services, finance, people,
and ideas; and the changes in institutions and policies at national and international
levels that facilitate or promote such flows.

Globalization has the potential for both positive and negative effects on development and
health.

Why is it happening?

Pros and Cons for Globalization in Business

Pros:
o Economic Growth
o Increased Global Cooperation
o Lower cost of production
o Increased Cross-Border Investment
o Encourages Innovation and Specialization
Cons:
o Increased Competition
o Moves jobs from richer to poorer countries
o Disproportionate Growth
o Free trade can harm small business networks
o Environmental Concerns

Lesson 2: Basics of an International Marketing Plan

What is a marketing plan?

A marketing plan is a written document that summarizes what the marketer has learned
about the marketplace and indicates how the firm plans to reach its marketing objectives.
- Plhilip Kotler

The marketing plan operates at two levels: strategic and tactical.

o The strategic marketing plan lays out the target markets and the value proposition.
o The tactical marketing plan specifies the product, price, channel and
communication

The Marketing Plan should answer 3 Simple Questions

o Where are we now?
o Where do we want to be in the future?
o How are we going to get there?

Marketing Process

Analysis
Analysis DESTEP
Macro environment: DESTEP Model

Demographic Forces in the Macro Environment

Demography = study of human populations.
o Size
o Density
o Age
o Gender
o Occupation
o other statistics.
People are the driving force for the development of markets, and hence businesses.
The large and diverse demographics both offer opportunities but also challenges for
businesses.
Changing demographics mean changing markets. Further, changing markets mean a need
for adjusted marketing strategies.
Some of the most important demographic trends that affect markets are:
o World population growth
o The world population is growing at an explosive rate. Already in 2011, it reached
7 Billion, while being expected to reach 8 billion by the year 2030.
o By the end of the century, it is likely to double.
o However, the strongest growth occurs where wealth and stability is mostly absent.
o More than 70% of the expected world population growth in the next 40 years is
expected to take place outside of the 20 richest nations on earth.
o This changes requirements for effective marketing strategies and should be kept
in mind.
o Changing age structure. In the future, there will be countries with far more
favourable age structures than others.
o For example, India has one of the youngest populations on earth and is expected
to keep that status.
o In contrast, the countries of the European Union and the USA have to face an
aging population already today. This may lead to harmful reductions in dynamism
and challenges regarding the supply of young workers who, at the same time, have
to support a growing population of elderly people
o Changing family structures
o Also, families are changing which means that the marketing strategies aimed at
them must undergo an adjustment. For example, new household formats start
emerging in many countries.
o While in traditional western countries a typical household consisted of husband,
wife and children, nowadays there are more married couples without children, as
well as single parent and single households.
o Another factor comes from the growing number of women working full time,
particularly in European nations. Together with further forces, changing family
structures require the marketing strategy to be changed.
o Geographic shifts in population. One – and the most important – element of
geographic shifts is migration.
o By 2050, global migration is expected to double. This has a major impact on both
the location and the nature of demand for products and services.
o The reason is that the place people can be reached has changed, as have their needs
because of the new situations.
o Other important factors are the ethnic diversity that provides new opportunities,
as well as urbanization.

Economic forces in the Macro Environment

The Economic forces relate to factors that affect consumer purchasing power and
spending patterns.

For instance, a company should never start exporting to a country before having examined
how much people will be able to spend.

Important criteria are:

o GDP, GDP real growth rate, GNI
o Import Duty rate
o Sales tax/ VAT
o Unemployment
 o Inflation
o Disposable personal income
o Spending patterns

Socio-Cultural forces in the Macro Environment

The Socio-Cultural forces link to factors that affect society’s

o Standards & Values
o Communication
o Behavior
o Lifestyle
o Social Trends

The basis for these factors is formed by the fact that people are part of a society and
cultural group that shape their beliefs and values.

Many cultural blunders occur due to the failure of businesses in understanding foreign
cultures.

To understand the socio-cultural

forces, Hofstede’s cultural dimensions or other models
can be used: Power Distance, Individualism versus
Collectivism, Masculinity versus Femininity, Uncertainty
Avoidance etc.

If you decide to follow that model, how do these scores

affect your business?

Technological forces in the Macro Environment

Technological forces form a crucial influence in the Macro Environment. They relate to
factors that create new technologies and thereby create new product and market
opportunities.

A technological force everybody can think of nowadays is the development of wireless

communication techniques, smartphones, tablets and so further.

This may mean the emerge of opportunities for a business but watch out: every new
technology replaces an older one. Thus, marketers must watch the technological
environment closely and adapt in order to keep up.

Otherwise, the products will soon be outdated, and the company will miss new product
and market opportunities.

Ecological forces in the Macro Environment

Ecological, or natural forces in the Macro Environment are important since they are about
the natural resources which are needed as inputs by marketers or which are affected by
their marketing activities.

Also, environmental concerns have grown strongly in recent years, which makes the
ecological force a crucial factor to consider.
For instance, world, air and water pollution are headlines every marketer should be aware
of. In other words, you should keep track of the trends in the ecological environment.

Important trends in the ecological environment are the growing shortage of raw materials
and the care for renewable resources.

In addition, increased pollution, but also increased intervention of government in natural

resource management is an issue.

Companies more than ever before need to consider and implement environmental
sustainability.

Political forces in the Macro Environment

Every business is limited by the political environment. This involves laws, government
agencies and pressure groups.

These influence and restrict organisations and individuals in a society.

Therefore, marketing decisions are strongly influenced and affected by developments in

the political environment.

Before entering a new market in a foreign country, the company should know everything
about the legal and political environment.
o How will the legislation affect the business?
o What rules does it need to obey?
o What laws may limit the company’s ability to be successful?

For example, laws covering issues such as environmental protection, product safety
regulations, competition, pricing etc. might require the firm to adapt certain aspects and
strategies to the new market.

Three Frameworks that work together

3 Frameworks that help us identify the attractiveness of a market for a company, based
on the company itself, the macro environment and the level of competition in the region.

The SWOT analysis is a framework for

analysing your organization's strengths,
weaknesses, opportunities, and threats. It helps a
company to build on what it does well, to fix
what it is lacking, to minimize risks, and to take
advantage of potential success paths.

The DESTEP model gives us an insight into the macro forces that exist in the region a
company operates in or wants to operate in. It helps identifying opportunities and threats
caused by the landscape wherein a business operates (or wants to operate).
Porter’s Five Forces analysis is a framework that helps analysing the level of
competition within a certain industry. It depends on 5 basic forces: threat of new entrants,
bargaining power of suppliers, bargaining power of buyers, threat of substitutes, and
existing industry rivalry. The collective strength of these forces determines the profit
potential of an industry and thus its attractiveness.

SWOT Analysis
Developing Strategies Based On The Swot Analysis

Just investigating strengths, weaknesses, opportunities and threats apart from each other
does not help too much.

Only when internal factors are combined with external factors, the SWOT analysis can
be used to full advantage.
o Combine strengths and opportunities to gain maximum advantage.
o Eliminate or overcome weaknesses and guard against or minimize threats.

We can identify 4 basic strategies to meet the four elements of the SWOT analysis. To
find them, each element is combined with each of the other ones.

Assumptions:
o Strengths are internal positive factors. Thus, they should be maintained, built upon
or leveraged.
o Weaknesses are internal negative factors. Consequently, they should be remedied,
changed or stopped.
o Opportunities are external positive factors. The company cannot control them, so
they should be prioritized, captured, built on and thereby optimized.
o Threats are external negative factors, which the company has no control over
either. Thus, they should be either countered, avoided or minimized and managed.

Strength meets Opportunity – Offensive Strategy

If a strength meets an opportunity, the most favorable situation occurs:
o A positive internal factor can be combined with a favorable external factor.
o This reveals the needed strategy: Offensive.
o This indicates that the company should make the most of this favorable situation.
o An example: if the company has low costs and can therefore maintain low prices,
and the market demands low-priced products, make the most of this situation:
penetrate the market.
Weakness meets Opportunity – Defensive Strategy
o In case of a weakness meeting an opportunity, careful consideration is required.
o The situation presents a risk, against which the company should defend itself. It
involves watching competition closely.
o By doing that, it can assure that its weakness does not hinder its success in the
future.
o For instance, if the firm has high costs and must therefore maintain a high price
level relative to competition, but the market’s demographics offer a high wealth
in terms of disposable income etc., the company should better defend against this
potentially dangerous situation.
o Although it may not be a problem in the first place, it could become one if it is
not taken care of appropriately.

Strength meets Threat – Adjust Strategy

o If a strength meets a threat, a positive internal factor meets a negative factor in the
environment.
o The result is the strategy Adjust, which means that the company must make full
use of its strengths in order to be able to overcome and neutralize the threat.
o For example, a company may have a high pricing power. This means that people
will keep buying its products regardless of changes in the price.
o However, the market’s wealth could be decreasing. This must be considered a
threat for high-priced products. Thus, the company should fully use its strength to
overcome the threat. How can it play with its prices to outrun the danger?

Weakness meets Threat – Survive Strategy

o This is the worst-case scenario.
o It means that a negative internal factor is met by a negative external factor.
o The resulting strategy is to Survive.
o This means that the company has to spend utmost attention on carefully managing
the situation. If needed, turn around and adapt in order to prevent a potential
disaster.
o An example are the high prices of a company that cannot be varied due to fixed
costs etc. If this is met by a market that does not accept high prices but only seeks
low-cost products, there is only one way: turn around.
o This could be done by either exiting the market and focusing on another one or by
redesigning the internal processes to be able to offer lower costs.

Porter’s 5 Forces
Porter's Five Forces is a powerful tool for understanding the competitiveness of your
business environment, and for identifying your strategy's potential profitability.

It studies 5 competitive forces.

The stronger competitive forces in the industry are the less profitable it is.

An industry with low barriers to enter, having few buyers and suppliers but many
substitute products and competitors will be seen as very competitive and thus, not so
attractive due to its low profitability.
Marketing Strategy – Where do we want to
be in the future?

Variables For Market Segmentation

What segments should we target

In targeting we evaluate the potential and commercial attractiveness of each segment.

Size: The market must be large enough to justify segmenting. If the market is small, it
may make it smaller.

Money: Anticipated profits must exceed the costs of additional marketing plans and other
changes.

Accessible: Each segment must be accessible to your team and the segment must be able
to receive your marketing messages

Different benefits: Different segments must need different benefits.

Market Targeting Strategies

Differentiation
In order to achieve a strong
position in the segment the
company has chosen, it has to
find ways to set itself apart. But how do we do this?

Differentiation and Positioning are strongly related to

each other. By differentiating the product, the
company can achieve the position it wants to achieve
in consumers’ minds.

The differentiation process consists of two steps:

o Identifying a set of differentiating competitive advantages on which to build a
position
o Choosing the right competitive advantages

Positioning
Positioning – occupy the right position in
consumers’ minds compared to your competition.

Marketing Mix – How are we going to get there?

Product
The product is the most important element of a company’s marketing program.

Global marketers face the challenge of formulating coherent product and brand strategies
on a worldwide basis.

A product can be viewed as a collection of tangible and intangible attributes that

collectively provide benefits to a buyer or user.
A brand is a complex bundle of images and experiences in the mind of the customer.

In most countries, local brands compete with international brands and global brands.

A local product is available in a single country; an international product is available in

several countries; a global product meets the wants and needs of a global market.

Standarization vs Adaptation
Environmental factors influencing the balance between standardization and adaptation
 Standardization and adaptation of the international
marketing mix

When adapting an existing product or service to a new international market, ask yourself
o What does the client want from the service or product?
o How will the customer use it?
o Where will the client use it?
o What features must the product have to meet the client’s needs?
o Are there any necessary features that the product doesn’t have?
o Does it have features that are not needed by the client?
o How is the product different from the products of your competitors?
o What products should be added, removed, or modified for the product line in each
of the countries in which the company operates?
o What does the product look like?
o What are the sizes or colors available? Do they make sense in the new country?
o How should the product be packaged and serviced?
o Is the name of the product adequate in the new country (language, trademarks)?
o Does it have a catchy name in the new language?

Global Brands
A global brand has the same name and a similar image and positioning in most parts of
the world.

Promotion
To promote your products and your company you must consider a number of major
decissions:
o Overall communication message for each target segment and its positioning
o "Pull" or "Push" approach
o Type of promotion (personal selling, point-of-sale promotions, direct mail, online,
email, etc.)
 o Media to be used (radio, television, print, web, social media, etc.)
o Dealer incentives
o Trade shows, conferences, etc.
o Must the specific advertising message and media strategy be changed from region
to region or country to country? What are the arguments for each?
o Global Choices with respect to advertising messages

Push marketing is a strategy focused on “pushing” products to a specific audience. The

goal is to bring what you offer to customers in your marketing. Also known as direct
marketing, push marketing is a form of general advertising.
Pull marketing, also known as inbound marketing, is about making your product or
service visible to prospects so they find you when they realize they have an interest or
need for a product or service and search for answers. It consists of newer marketing
channels like websites, search engine optimization (SEO), search engine marketing, email
nurturing, and social media marketing.
Pull marketing works to draw consumers into your brand by offering up valuable content:
how-to videos, infographics, a step-by-step blog, or a webinar all work to put the
consumer's needs first.

Major decisions in advertising Elements of the international communication process

Budget

Place
The marketing mix place strategy is about how an organisation will distribute their
product or service to the end user.

The organisation must distribute the product to the user at the right place at the right time.

Customer
characteristics
Size, geographic distribution, shopping habits, outlet preferences and usage patterns of
customer groups.
Shopping habits, outlet preferences and usage patterns vary considerably from country to
country and are strongly influenced by sociocultural factors.

Nature of product
For low-priced, high-turnover convenience products, the requirement is an intensive
distribution network.
It is not necessary or even desirable for a prestigious product to have wide distribution.
In this situation a manufacturer can shorten and narrow its distribution channel.
Consumers are likely to do some comparison shopping and will actively seek information
about all brands under consideration. In such cases, limited product exposure is not an
impediment to market success.

Transportation and warehousing costs, the product’s durability, ease of adulteration,

amount and type of customer service required, unit costs and special handling
requirements (such as cold storage) are also significant factors.

Nature of demand/location
The perceptions that the target customers hold about particular products can force
modification of distribution channels. Product perceptions are influenced by the
customer’s income and product experience, the product’s end use, its life cycle position
and the country’s stage of economic development. The geography of a country and the
development of its transportation infrastructure can also affect the channel decision.

Competition
The channels used by competing products and close substitutes are important because
channel arrangements that seek to serve the same market often compete with one another.
Consumers generally expect to find particular products in particular outlets.
In addition, local and global competitors may have agreements with the major
wholesalers in a foreign country that effectively create barriers and exclude the company
from key channels.

A number of distribution options are likely to be available to your company. You will
need to assess the distribution (and production) options in accordance with the
opportunities available and the resources of the company. These may include:
o Direct export of branded products •Indirect export of branded products
o Joint venture with a local partner with a shared market development
responsibility, and possibly a shared manufacturing responsibility
o License technology to a company already established in the market
(Manufacturing Under License)
o Establish market franchises
o Purchase or establish your own means of distribution in the targeted country

Three strategies for market coverage

Factors influencing channel width

Price
International Pricing Framework

Firm-Level Factors
International pricing is influenced by past and current corporate philosophy, organization
and managerial policies.

The short-term tactical use of pricing in the form of discounts, product offers and
reductions is often emphasized by managers at the expense of its strategic role.

Country of origin (COO) is also a major factor that consumers consider when they make
a decision about the maximum price they are willing to pay for a branded product.
Managers can use this information in their pricing decisions.
If their brand originates and is produced in a country with a good reputation and image,
the implementation of a premium pricing strategy will be easier, because consumers’
willingness to pay is also likely to be higher

Product Factors
Key product factors include the unique and innovative features of the product and the
availability of substitutes. These factors will have a major impact on the stage of the
product life cycle, which will also depend on the market environment in target markets.

Whether the product is a service or a manufactured or commodity good sold into

consumer or industrial markets is also significant.

The extent to which the organization has had to adapt or modify the product or service,
and the level to which the market requires service around the core product, will also affect
cost and thereby have some influence on pricing.

Added to the above is the intermediary cost, which depends on channel length,
intermediary factors and logistical costs.

Environmental Factors
The environmental factors are external to the firm and thus uncontrollable variables in
the foreign market.

The national government control of exports and imports is usually based on political and
strategic considerations. Import controls are designed to limit imports in order to protect
domestic producers or reduce the outflow of foreign exchange.

Direct restrictions commonly take the form of tariffs, quotas and various non-tariff
barriers. Tariffs directly increase the price of imports unless the exporter or importer is
willing to absorb the tax and accept lower profit margins.

Government regulations on pricing can also affect the firm’s pricing strategy. Many
governments tend to have price controls on specific products related to health, education,
food and other essential items. Another major environmental factor is fluctuation in the
exchange rate.

Market Factors
When considering how customers will respond to a given price strategy, Nagle (1987)
has suggested nine factors that influence the sensitivity of customers to prices:
1. more distinctive product.
2. greater perceived quality of products.
3. consumers are less aware of substitutes in the market.
4. difficulty in making comparisons (e.g. in the quality of services such as
consultancy or accountancy);
5. the price of a product represents a small proportion of total expenditure of the
customer.
6. the perceived benefit for the customer increases.
7. the product is used in association with a product bought previously, so that, for
example, components and replacements are usually extremely highly priced.
8. costs are shared with other parties.
9. the product or service cannot be stored.
Price sensitivity is reduced in all these nine cases.

Basic Pricing Strategies

Other Pricing Strategies
Product Line pricing, freemium, Product–
service bundle pricing, Subscription-based
pricing, Cost Plus Pricing

Skimming
In this strategy a high price is charged to ‘skim the cream’ from the top end of the market,
with the objective of achieving the highest possible contribution in a short time. The
product must be unique, and some segments of the market must be willing to pay the high
price.

Potential problems:
 o Having a high price but a small market share makes the firm vulnerable to
aggressive local competition.
o Maintenance of a high-quality product requires a lot of resources (promotion,
after-sales service) and a visible local presence, which may be difficult in distant
markets.
o If the product is sold more cheaply at home or in another country, grey marketing
(parallel importing) is likely.

Market Pricing (Competitive Pricing)

If similar products already exist in the target market, market pricing may be used. The
final customer price is based on competitive prices.

Premium Pricing
Pricing your company’s product higher than your immediate competition. The purpose
of pricing your product at a premium is to cultivate a sense in the market of your product
being just that bit higher in quality than the rest. It works best alongside a coordinated
marketing strategy designed to enhance that perception.

Pros
o Higher profit margins for your company, if successful.
o improves brand value and the perception of your company.
o If successful, it can raise barriers to entry in your industry.

Cons
o It depends on price-inelastic customer demand—without a good USP (unique
o selling proposition), you can’t justify the higher price of your product.
o It limits your ability to sell your product to a mass market.
o It leaves you vulnerable to undercutting tactics from competitors, particularly if
o your field is crowded. Your premium price can work against you if a competitor
comes along that sells an equivalent product/service more cheaply.

Discount Pricing
Businesses use discount pricing to sell low-priced products in high volumes. With this
strategy, it is important to decrease costs and stay competitive. Generally, there is little or
no differentiation with the competition

Penetration Pricing
A penetration pricing policy is used to stimulate market growth and capture market shares
by deliberately offering products at low prices.
This approach requires mass markets, price-sensitive customers and reduction in unit
costs through economies of scale and experience curve effects.

Pros
o High adoption and diffusion: gets a product or service quickly accepted and
adopted
o Marketplace dominance: Competitors are typically caught off guard by a
penetration pricing strategy and are afforded little time to react. The company is
able to utilize the opportunity to switch over as many customers as possible.
o Economies of scale: The pricing strategy generates a high sales quantity that
enables a firm to realize economies of scale and lower its marginal cost.
 o Increased goodwill: Customers that are able to find a bargain in a product or
service are likely to return to the firm in the future. In addition, this increased
goodwill creates positive word of mouth. •High inventory turnover: making
vertical supply chain partners, such as retailers and distributors, happy.

Cons
o Prices might be set so low that they are not credible to consumers. There are
confidence levels for prices below which consumers lose faith in the product’s
quality.
o Pricing expectation: When a firm uses a penetration pricing strategy, customers
often expect permanently low prices. If prices gradually increase, customers may
become dissatisfied and may stop purchasing the product.
o Low customer loyalty: Penetration pricing typically attracts bargain hunters or
those with low customer loyalty. Said customers are likely to switch to
competitors if they find a better deal.
o Damage brand image: Low prices may affect the brand image, causing
customers to perceive the brand as cheap or poor quality.
o Price war: A price penetration strategy may trigger a price war. This decreases
overall profitability in the market, and the only companies strong enough to
survive a protracted price war are usually not the new entrant .
o Inefficient long-term strategy: Price penetration is not a viable long-term pricing
strategy. It is usually a better idea to approach the marketplace with a pricing
strategy that your company can live with, long-term.

Lesson 3: Entry Models

Introduction
There is no ideal market entry strategy, and different market entry methods might be
adopted by different firms entering the same market and/or by the same firm in different
markets.

There are many market entry modes, but they can be classified in export modes,
intermediate modes and hierarchical modes.
Factors influencing the entry mode decision
A firm’s choice of its entry mode for a given product/target country is the net result of
several, often conflicting, forces. The need to anticipate the strength and direction of
these forces makes the entry mode decision a complex process with numerous trade-
offs among alternative entry modes.
o Internal Factors
o Product Factors
o External Factors
o Desired Mode
Characteristics
o Transaction-Specific
Factors
Generally speaking, the
choice of entry mode should
be based on the expected
contribution to profit. This
may be easier said than done,
particularly for those foreign markets where relevant data are lacking.

Internal Factors affecting the entry mode decision

Company Size
Size is an indicator of the firm’s resource availability; increasing resource availability
provides the basis for increased international involvement over time.

Although Small and Medium Companies would desire a high level of control over
international operations and wish to make heavy resource commitments to foreign
markets, they are more likely to enter foreign markets using export modes because they
do not have the resources necessary to achieve a high degree of control or to make these
resource commitments.

International Experience
International experience reduces the cost and uncertainty of serving a market, and in
turn increases the probability of firms committing resources to foreign markets, which
favors direct investment in the form of wholly owned subsidiaries (hierarchical modes).

Product Factors affecting the entry mode decision

Product Complexity
The physical characteristics of the product or service, such as its value/weight ratio,
perishability and composition, are important in determining where production is
located.

The technical nature of a product (high

complexity) may require service both before
and after sale. In many foreign market areas,
marketing intermediaries may not be able to
handle such work. Instead, firms will use one
of the hierarchical models.
Product Differentiation Advantage
Product differentiation advantages give firms the option of raising prices to exceed
costs by more than normal profits

They also allow firms to limit competition through the development of entry barriers,
which are fundamental in the competitive strategy of the firm, as well as serving customer
needs better and thereby strengthening the competitive position of the firm compared to
other firms.

Firms seek to protect their competitive advantages from dissemination using hierarchical
modes of entry.

External Factors affecting the entry mode decision

Sociocultural Distance Between Home Country and Host Country

Socioculturally similar countries are those that have similar business and industrial
practices, a common or similar language, and comparable educational levels and
cultural characteristics.

Sociocultural differences between a firm’s home country and its host country can create
internal uncertainty for the firm, which influences the mode of entry desired by that firm.
The greater the perceived distance between the home and host country in terms of
culture, economic systems and business practices, the more likely it is that the firm will
shy away from direct investment in favor of joint venture agreements or even low-
risk entry modes like agents or an importer.

Other issues, such as differences in religion, degree of democracy, industrial

development and so on, have a much greater impact on the management’s entry mode
choice.

Country Risk/Demand Uncertainty

Foreign markets are usually perceived as riskier than the domestic markets.

The amount of risk the firm faces is a function not only of the market itself but also of its
method of involvement there.
Risks:
o Investment risk
o Inventories and receivables
o Exchange rate risk
o Political risks.
Other things being equal, when country risk is high, firms will favor entry modes that
involve relatively low resource commitments, i.e. export modes

Market Size and Growth

Country size and rate of market growth are key parameters in determining the mode of
entry.

The larger the country and the size of its market, and the higher the growth rate, the
more likely management will be to commit resources to its development, and to consider
establishing a wholly owned sales subsidiary or to participate in a majority- owned
joint venture.
Retaining control over operations provides management with direct contact and allows it
to plan and direct market development more effectively.

Small markets, especially if they are geographically isolated and cannot be serviced
efficiently from a neighboring country, may not warrant significant attention or resources.
Consequently, they may be best supplied via exporting or a licensing agreement.

Direct and Indirect Trade Barriers

Tariffs on the import of foreign goods and components favor the establishment of local
production or assembly operations (hierarchical modes).

Product or trade regulations and standards, as well as preferences for local suppliers,
also have an impact on mode of entry and operation decisions.

Preferences for local suppliers, or tendencies to ‘buy national’, often encourage a

company to consider a joint venture or other contractual arrangements with a local
company (intermediate modes).

The local partner helps in developing local contacts, negotiating sales and establishing
distribution channels, as well as in diffusing the foreign image.

When product regulations and standards need significant adaptation and modification,
the firm may establish local production, assembly or finishing facilities (hierarchical
modes).

Intensity of Competition
When the intensity of competition is high in a host market, firms will do well to avoid
internalization, as such markets tend to be less profitable and therefore do not justify
heavy resource commitments.

Other things being equal, the greater the intensity of competition in the host market, the
more the firm will favor entry modes (export modes) that involve low resource
commitments.

Small Number of Relevant Export Intermediaries Available

Highly concentrated markets lead to ‘small number bargaining’, which may be
executed by the few export intermediaries if they realize that they are in a kind of
‘monopolistic situation’.

In such a case, the market field is subject to the opportunistic behavior of the few export
intermediaries, and this will favor the use of hierarchical modes in order to reduce the
scope for opportunistic behavior..

Desired Mode Characteristics

Risk-averse
If decision-makers are risk-averse they will prefer export modes (e.g. indirect and direct
exporting) or licensing (an intermediate mode), because these typically entail low levels
of financial and management resource commitment.
Control
The degree of control that management requires over operations in international markets.
Control is often closely linked to the level of resource commitment.
Modes of entry with minimal resource commitment, such as indirect exporting, provide
little or no control over the conditions under which the product or service is marketed
abroad. Licensing and contract manufacturing, management needs to ensure that
production meets its quality standards. Joint ventures also limit the degree of management
control over international operations Wholly owned subsidiaries (hierarchical mode)
provide the most control

Flexibility
Export modes provide the company with higher flexibility,
The hierarchical modes (involving substantial equity investment) are typically the least
flexible and most difficult to change in the short run.

Export entry modes

With export entry modes a firm’s products are manufactured in the domestic market or a
third country and then transferred either directly or indirectly to the host market.
Exporting is typically used in initial entry and gradually evolves towards foreign-
based operations.

In establishing export channels, a firm has to decide which functions will be the
responsibility of external agents and which will be handled by the firm itself. This leads
to three major exporting types:

1. Indirect export. This is when the manufacturing firm does not take direct care of
exporting activities. Instead, another domestic company, such as an export house
or trading company, performs these activities, often without the manufacturing
firm’s involvement in the foreign sales of its products.
2. Direct export. This usually occurs when the producing firm takes care of
exporting activities and is in direct contact with the first intermediary in the
foreign target market. The firm is typically involved in handling documentation,
physical delivery and pricing policies, with the product being sold to agents and
distributors.
3. Cooperative export. This involves collaborative agreements with other firms
(export marketing groups) concerning the performance of exporting functions.

A, A1, A2 and A3 are manufacturers of products/services; B is an independent

intermediary (agent); C is the customer.

Distributor
A distributor is an
entity that acts as a
mediator between a manufacturer and another entity within the supply chain.
o B2B
o Involved in Sales and Marketing
o Build Relationships with Manufacturers
o Go beyond fulfilling and delivering orders
o Study the market actively

Wholesaler
A wholesaler is a merchant or a firm that purchases and stores a large quantity of products
from manufacturers and vendors before reselling them to retailers, commercial users and
other merchants.
o B2B
o Fulfill retail orders
o Focus only on storage and delivery goods
o Buys from distributors or manufacturers
o Resell goods in bulk

Retailer
A retailer, also called a merchant, is a person or an entity that purchases and sells products
directly to end consumers using different types of distribution channels (stores or online)
o B2C
o Outlets to purchase products
o Sell in stores and/or online
o Buys from distributors or wholesaler

Distributors
As with all others forms of market entry, an entrepreneur who is considering exporting
should do plenty of research and planning before committing to a market or a distributor.
The following indicators should be used when selecting a distributor:
o Does the distributor have established connections in the targeted industries?
o Is the distributor familiar with the type of products manufactured by the
company?
o Does the distributor have experience working with European companies?
o What are the distributor’s size, current product lineup and revenues?
o Does the distributor work with some of your competitors?
o Will the distributor allow the company to conduct independent marketing and
sales within the country?

Introduction
Intermediate entry modes are distinguished from export modes because they are
primarily vehicles for the transfer of knowledge and skills between partners, in order
to create foreign sales.

They are distinguished from the hierarchical entry modes in that there is no full
ownership (by the parent firm) involved, but ownership and control can be shared
between the parent firm and a local partner. This is the case with the (equity) joint venture.

Generally speaking, contractual arrangements take place when firms possessing some
sort of competitive advantage are unable to exploit this advantage because of resource
constraints, for instance, but are able to transfer the advantage to another party.
The arrangements often entail long-term relationships between partner firms and are
typically designed to transfer intermediate goods, such as knowledge and/or skills,
between firms in different countries.

Most relevant intermediate modes

Contractual Agreements
Contractual agreements are long-term associations between a company and another in a
foreign market.

Contractual agreements generally involve the transfer of technology, processes,

trademarks, or human skills

Contractual forms of market entry include:

1. Licensing: A means of establishing a foothold in foreign markets without
large capital investment is licensing of patent rights, trademark rights, and
the rights to use technological
2. Franchising: In licensing the franchisor provides a standard package of
products, systems, and management services, and the franchisee provides
market knowledge, capital, and personal involvement in management

International licensing is the process of transferring the rights to a firm’s products to

an overseas company for the purpose of producing or selling it there.

Benefits:
o Appealing to small companies that lack resources
o Faster access to the market
o Rapid penetration of the global markets

Disadvantages:
o Other entry mode choices may be affected
o Licensee may not be committed
o Lack of enthusiasm on the part of a licensee
o Biggest danger is the risk of opportunism
 o Licensee may become a future competitor

Contractual Agreements. Franchising

Franchising is an arrangement where franchisor (one party) grants or licenses some rights
and authorities to franchisee (another party). Franchising is a well-known marketing
strategy for business expansion.

A contractual agreement takes place between Franchisor and Franchisee.

Franchisor authorizes franchisee to sell their products, goods, services and give rights to
use their trademark and brand name. And these franchisee acts like a dealer.

In return, the franchisee pays a one-time fee or commission to franchisor and some share
of revenue.

International franchising gives more control to the franchisor company over the
franchisee who has licensed the company’s trademarks, products and/or services, and
production and/or operation processes.

Benefits:
o Overseas expansion with a minimum investment
o Franchisees’ profits tied to their efforts

Disadvantages:
o Revenues may not be adequate
o Limited franchising opportunities overseas •Lack of control over the franchisees’
operations
o Problem in performance standards
o Cultural problems
o Physical proximity

Strategic Alliances
Strategic alliances have grown in importance over the last few decades as a competitive
strategy in global marketing management.

A strategic international alliance (SIA) is a business relationship established by two or

more companies to cooperate out of mutual need and to share risk in achieving a common
objective.

SIAs are sought to diminish weaknesses and increase competitive strengths

SIAs offer opportunities for rapid expansion into new markets, access to new
technology, more efficient production and marketing costs
An example of SIAs in the airlines industry is that of the Oneworld alliance partners made
up of American Airlines, Cathay Pacific, British Airways, Iberia, Canadian Airlines, Aer
Lingus, and Qantas

International Joint Ventures

International joint ventures (IJVs) have been increasingly used since 1970s
IJVs are used as a means of lessening political and economic risks by the amount of
the
partner’s contribution to the venture

JVs provide a less risky way to enter markets that pose legal and cultural barriers than
would be the case in an acquisition of an existing company

A joint venture is different from strategic alliances or collaborative relationships in that a

joint venture is a partnership of two or more participating companies that have
joined forces to create a separate legal entity

Four factors are associated with joint ventures:

o JVs are established, separate, legal entities;
o they acknowledge intent by the partners to share in the management of the JV;
o they are partnerships between companies and not between individuals;
o equity positions are held by each of the partners

Pros of Joint Ventures

o Combined expertise (marketing, local market, manufacturing...)
o Better resources (capital, human or equipment)
o No long-term commitments. IJVs are temporary agreements between different
entities
o Shared profit and risk
o A joint venture allows all parties involved to share the profit earned. Similarly,
the risk involved is also shared.
o Financial benefits
o Growth

Cons of Joint Ventures

o May be expensive and time-consuming. You must find a partnership where you
can trust. Thus, proper planning and research are required for a joint venture.
o Conflict. Different goals of individuals with varying plans. No clear hierarchy.
o Commitment issues
o Vague objectives. Coming from different backgrounds, two companies of
individuals may find it difficult to work
o together and find common ground.
o Jurisdiction
o Language and Culture
o Proper planning and research

Direct Foreign Investment

The firm completely owns and controls the foreign entry mode. Here it is a question
of where the control in the firm lies.
The degree of control that head office can exert on the subsidiary will depend on how
many and which value chain functions can be transferred to the market. This again
depends on the allocation of responsibility and competence between head office and the
subsidiary, and how the firm wants to develop this on an international level.

If a producer wants greater influence and control over local marketing than export modes
can give, it is natural to consider creating its own companies in the foreign markets.
However, this shift involves an investment, except in the case of the firm having its own
sales force, which is considered an operating cost.

Companies may manufacture locally to capitalize on low-cost labor, to avoid high

import taxes, to reduce the high costs of transportation to market, to gain access to
raw materials, or as a means of gaining market entry.

Firms may either invest in or buy local companies or establish new operations
facilities.

Lesson 4: International Marketing Plan

Executive Summary
The executive summary should summarize the key points of the report. It should restate
the purpose of the marketing plan, highlight the major points of the report, and describe
any results, conclusions, or recommendations from the report.

Often the reason for having an executive summary is that the recipient of the marketing
plan will only read that part of the report.

However a good executive summary should make the reader want to read the full
marketing plan.

Research Methodology
You should provide details of the type of methodology you employed for this report.
Ideally, you should conduct extensive secondary research and then obtain further, more
tailored/specific information from primary sources.
The primary data can be analyzed using either quantitative or qualitative methodology or
a combination of both

Process of Researching Foreign Market Potentials

Situational Analysis
Company Analysis
Briefly detail how the company is structured:
o Publicly or privately owned
o Main shareholders Associated organizations
o Key departments and their relationships
o Number of employees

What are the financial resources of the company?

Does it have the funds available to support an effective market entry/expansion
programme overseas?
Where are the funds coming from and when will they be available?
How accessible are the funds and would they be available for an export initiative?
What are the company’s limits on funding overseas initiatives?

Organization’s Assets and Skills (Internal Analysis)

o Competitive advantage of the company - Value proposition
o How is your product differentiated? What strengths/advantages does it have?
What is the company’s
o cost position (is it a low cost producer)?
 o Do you offer superior service/support to end-users and channel intermediaries?
o What is the company’s image/reputation in the marketplace?
o What production or operating advantages does the company have?
o What is the state of production facilities?
o Are the equipment/manufacturing methods used state-of-the-art?

Market Analysis DESTEP Analysis

Competitor Analysis
o Is the country a net importer or a net exporter of this product group? Which
countries are the major foreign suppliers to the market? What is their market
share?
o Who are the major competitive manufacturers/suppliers (overseas and locally
based) of these products?
o Is the competitive environment fragmented or concentrated? What is the number
of competitors ?
o Identify and rank in terms of market share the major local and overseas
manufacturers/suppliers.
o Assess the relative threat that your company represents to these competitors.
o What will be their likely retaliatory reaction to your market entry?
o What substitute products are in use and which companies supply them?

Five Porter’s Forces

Opportunity and Issue Analysis
The data obtained in the Situation Analysis
must be analyzed in order to assess the
market opportunities in relation to the
likely barriers to market entry or
expansion.

Study the information in the SWOT

analysis and discuss the implications for
your company in the new market

Objectives
Why is the company seeking to expand internationally?
o Seeks growth via international business
o Will improve cost position through economies of scale
o Market diversification?
o Others?
The company can also define its objectives in terms of how its market share after a given
time will compare to its competitors, for example:
o Market leader
o Market challenger
o Market follower
A key consideration is where can the company’s marketing effort yield the greatest
return?
The company should define its market objectives, in line with the key issues for
international expansion, as identified in the Situation Analysis.

Often, objectives will be defined in terms of quantity (volume of units) or value (€) of
goods sold over a given time period.

A number of profit analyses can be used:

o Contribution analysis
o Break-even analysis
o ROI analysis, etc.
All of these analyses (quantity/value objectives, profitability objectives) should have a
time frame:
o Short-term (1 - 3 years)
o Long-term (4 - 5 years and longer)
Objectives should be measurable wherever possible.

Target Markets Identification and Segmentation Strategy / Market Positioning

Market Entry Strategy

Marketing Mix Strategies and Tactics

Break each of the 4 Ps into Strategy and Tactical Plan elaboration. You need to provide
a lot of detail, particularly in the Tactics component. The marketing mix strategies and
tactics must be integrated and consistent to achieving company objectives.

Your Targeting, Positioning and Entry Mode(s) will have a great impact on your
Marketing Mix.

Differing strategies and market tactics may

be required for various target segments. For
a given target segment, alternative strategies
and programs should be formulated and
evaluated as to the effectiveness of each in
achieving company objectives.

Budget Planning
Planning Assumptions
Assumptions are estimates of future operating conditions for your marketing plan.
Explain and justify your assumptions.

Forecasts
o All analyses and forecasts should be based on a multi-year format, usually
covering a three to five year time-frame.
o Forecasts should be presented in the form of Profit and Loss Statements for each
year of the Plan.
o The Profit and Loss Statements should include Break-Even Analysis.

Sensitivity/Scenario Analysis
Three scenarios - a "best-case" and "worst-case" scenario, and a "Most-Likely" scenario.

Implementation and Control

As the market process is based on implementation, it is necessary to state the way in
which the marketing activities will be monitored and their outcomes measured. This will
indicate whether the marketing objectives are being achieved.

You will need to:

o Establish standards
 o Measure performances against standards
o Correct deviations from standards

Formal Project Plan for Implementation of Recommendations

o Activity or action
o Key people/groups responsible for each activity
o Estimated commencement and completion dates
o Estimated costs

Monitoring of Action Plan

A review process should be formulated and presented and incorporated into the project.

Formal Contingency Plans

Contingency Plans should be included, clearly identifying contingency events and actions
required to respond to these events. These plans may be in discussion form or in the same
form as the Action Plan

Lesson 5: The Financial Plan

Introduction
Financial planning is a highly necessary long-term roadmap to intelligently managing
the money and the overall growth and success of your business.

If you fail to plan, you plan to fail

It is the process of estimating or forecasting the capital required and creating the
financial policies needed in an enterprise, in relation to investment and administration of
funds.

Financial plans simply provide a guide for direction, action, and decision-making. It
establishes goals, creates a realistic strategy to reach them, and tracks progress towards
success.

Objectives
Give investors what they ask for
o Yes, but why do they want it?
Determine profitability of a venture
o Impossible to predict future accurately
o FP input for current valuation and/or future exit value
Assess viability of venture
o What assumptions required for venture to be feasible?
o Breakeven analysis
o Scenario analysis
Determine financial needs
o How much funding is required?
o For what?
o When do I need it?
o How long will it last?
Develop deeper understanding of business
o FP reflect entrepreneur’s perspective on industry
 o Comparison with industry averages revealing
o Define operating metrics and business milestones
o Scenario analysis (again)

Note: FP spreadsheets are not suitable as an accounting system

Why do we do financial planning?

o To show investors you are profitable (or to forecast profitability)
o To identify areas where the company could improve and identify potential
problems
o To show investors you are efficient
o To show customers and suppliers you will still be around next year!
o It may be required by law!

What do we expect?
o Sales forecast
o Expenses Budget
o Three years of projected financial statements
à Cash Flow
à Profit and Loss (Income Statement)
à Balance sheet
o A break-even analysis – how well do you need to do before you make a profit?
o Estimation of costs and how much money you would ask from investors

Variable Cost
Variable cost is a corporate expense that varies directly
with output – when output is zero, variable costs will be zero
but as production increases, total variable costs will rise.

Examples: raw materials, packaging, sales commissions,

shipping expenses, the wages of part-time staff or employees
paid by the hour

Average variable cost

(AVC) = total variable costs (TVC) /output (Q)

Variable Cost Example

A mobile phone manufacturing company purchases speakers
from another company at a cost of $2 per speaker.

The speaker is a direct materials cost for mobile phone

manufacturing company. One speaker is used to complete a
mobile phone.

Fixed Cost
o Fixed cost (Overhead) are costs that do not change directly with sales. They do
not have to be the same every month.
o Examples: Utilities, rent, salaries, advertising, office
supplies and telephone
 o Fixed cost do not change as the level of production varies in the short run
o Fixed costs have to be paid, whatever the level of sales achieved
o The higher of fixed costs in a business, the higher must be the output in order to
break-even

Fixed Cost Example

If the mobile phone manufacturing company rents a
building for its factory for $5,000 per month, it will have to
pay $5,000 for every month even no mobile phone is
produced.

Total fixed cost does not change with the change in activity
but per unit fixed cost changes with the rise and fall in the
level of activity.

There is an inverse relationship between per unit fixed cost and activity.

If production increases, per unit fixed cost

decreases and if production decreases, per unit
fixed cost increases. Using the above example:

Notice that average fixed cost (last column) decreases as

the production of mobile phones increases.

Total Cost (TC)

Total cost = fixed costs + variable costs

Average Total Cost (ATC)

Average total cost is the cost per unit produced Average total cost
= total cost (TC) / output (Q)

Is It Better for a Company to Have Fixed or Variable Costs?

o It is not necessarily better or worse for a company to have either fixed costs or
variable costs. In fact, most companies have a combination of fixed costs and
variable costs.
o A company with a larger number of variable costs when compared to fixed costs
shows a more consistent per-unit cost and therefore a more consistent gross
margin, operating margin and profit margin.
o A company with a larger number of fixed costs when compared to variable costs
may achieve higher margins as production increases, since revenues increase but
costs won't, but it can also result in lower margins if production decreases.

Example
Jan is a home-based designer who makes dresses. Her
capacity is no more than 15 dresses per week. She has
calculated the variable cost for each dress to be $50 per dress.
It costs Jan $3,000 per week to run her business, including her
wage. The cost per dress, when we include the $3,000 per week in fixed costs, changes
depending on the number of dresses produced each week.
This is calculated in the table following.

Marginal Cost
o The marginal cost is the change in total production cost that comes from making
or producing one additional unit.
o To calculate marginal cost, divide the change in production costs by the change
in quantity.
o Calculating the marginal cost allows companies to see how volume output
influences cost and hence, ultimately, profits.
o A change in fixed costs does not affect the marginal cost.

For example, if there are only fixed costs associated with producing goods, the marginal
cost of production is zero.

If the fixed costs were to double, the marginal cost of production is still zero.

The change in the total cost is always equal to zero when there is an absence of variable
costs.

The marginal cost of production measures the change in total cost with respect to a change
in production levels and fixed costs do not change with production levels.

Example
o For example, suppose the fixed costs for a computer manufacturer are $100, and
the cost of producing computers is variable.
o The total cost of production for 20 computers is $1,100.
o The total cost for producing 21 computers is $1,120.
o Therefore, the marginal cost of producing computer 21 is $20.
o The business experiences economies of scale because there is a cost advantage
for producing a higher level of output.
o As opposed to paying $55 per computer for 20 computers, the business can cut
costs by paying $53.33 per computer for 21 computers.

Break-Even
The break-even point in your business is the point at which your sales revenue equals
your total expenses. At that point you neither make money, nor do you lose any. It
provides a good indication of the viability of a
business project.

Break-even in units. It can be measured in units

of production, billable hours, or sales volume.
To calculate it we use the formula:

Fixed Costs/(Unit Price - Unit Cost) = Break-

even in Units

Revenue Projections
o Revenues = Price * Volume
 o Price determination
à Strategy
à Competitive forces
à Industry price dynamics
o Four approaches for estimating volume
à Top-down
à Bottom-up
à Copy-cat
à More-of-the-same
o In practice, use combination
à E.g. Top-down for where you are going (5 years ahead) but bottom-up for
where you are (year 1)

Top-Down Revenue Projections

o Define relevant market segment
à Detailed segmentation key
o Existing markets:
à Look up current market revenues
à Project market growth rate
à Estimate obtainable market share
o (Hopefully) Emerging markets:
à Estimate potential market size
à Estimate market adoption curve (S-curve)
à Estimate obtainable market share
o Classical mistakes:
à “Everybody in China will buy our product”
à “We only need 1% of a $1Billion market”

Recipe:
Use two pounds of fresh primary market research
Mix in a cup of secondary market data
Lightly sprinkle some theoretical reasoning
Decorate subtly with wishful thinking
Serve hot

The S Curve

Bottom-Up Revenue Projections

 o Basic idea:
à Define basic unit of product / service
à Estimate customers purchasing units
à Multiply by average price
à Estimate customer growth over time
o Focuses on ability to deliver
à Assumes customers available
o Top-down focused outside & demand driven
o Bottom-up is focused inside & supply driven
o Combination of top-down and bottom more powerful

Primary Financial Statements

Primary financial statements answer basic questions including:
o What is the company’s current financial status?
o What was the company’s operating results for the period?
o How did the company obtain and use cash during the period?

The Balance Sheet

The Balance Sheet is a snapshot of the business
at any point in time. In the case of a business
start-up, it is often the starting balance sheet. A
balance sheet is made up of three parts:
o Assets: Things a business owns
o Liabilities: Debts a business owes
o Equity: The owners’ investment in the
business (or investors)
Therefore, we get the following formula:

Assets = Liabilities + Equity

This is extremely important as it gives the reader a picture of how the business is being
financed through the owners’ money (equity), investors (equity) or through the creditors’
money (liabilities). In a business start-up you should look at the assets required to get the
business started – and then ask yourself how you will finance that start-up. If you do not
have the money to invest into the business, you will have to borrow the remainder.

The start-
up balance sheet is simple. You need to make two lists to get started. The first list is your
list of Current Assets. These are assets (things your business owns) which will be used
up within the first year of doing business. Typically, they include cash, inventory and pre-
paid expenses (such as pre-paid insurance).

The second list is the Capital Assets. These are items you purchase with the intention of
keeping them and using them to run the business. For example, if you purchase a vehicle
to use in the business, it is a capital asset.

Forecasting Your Assets

A: Determine and Budget your Current Assets

o Starting Cash $__

o Starting Inventory $__
o Pre-Paid Expenses (Usually Insurance) $__
o Other Current Assets $__
o Total Current Assets (A) $__

Forecasting your Liabilities and Equity

Now that you have an estimate of how much you need to get started, you must determine
how best to finance your business start-up. There are only two places this money comes
from when you are starting up – loans or investment.

Starting Balance Sheet

Note that Total Assets (A+B) are equal to Total Liabilities + Equity (C+D+E)

The Income Statement

The purpose of the Income Statement Forecast is to project the revenues and expenses of
your business over a given period of time – usually one year. There are three things that
need to be predicted to forecast your income statement: the sales projection (revenues),
the cost of goods projection and the overhead projection (expenses).

Revenues
o Assets created through business operations
o Expenses
o Assets consumed through business operations
o Net Income or (Net Loss)
o Revenues - Expenses
The sales forecast is probably the most difficult part of the business to forecast, especially
for a starting business. Sometimes, the break-even can provide a starting point for creating
the sales forecast. A sales forecast is a goal you set for the business that you proactively
try to achieve.

Price per unit × Number of Units sold = Revenue

The Income Statement Forecast

The cost of goods forecast relates directly to the sales forecast. The cost of producing
goods
varies directly with the level of sales.

Unit Costing Method

This method is exactly like the unit sales forecast, except instead of using price, you use
cost per unit.

Cost of goods = Number of units sold x Cost per unit

Just as in the unit forecast, you must do this for each unit sold. The sum of the cost of
goods is then part of the income statement.

The overheads forecast is an estimate of your expenses for the year. This list should be
like the list developed for the fixed costs of your break-even analysis.

Typical overhead expenses include:

o Advertising and Promotion
o Automobile
o Bank and Finance Charges
o Communications
o Depreciation
o Insurance
o Entertainment and Meals
o Mail and Office Supplies
o Travel and Accommodations
o Other

The Cash Flow Forecast

A Cash Flow Forecast is probably

your most important financial tool. It
is your cash flow that shows you if,
and when, you will run out of cash
essential to run your business.

For example, suppose a business

purchases $100,000 worth of e-bikes
at the beginning of the month. They
take one month to sell the product for $150,000 and one-month to collect their cash from
their customer.
We have to put out $100,000 at the beginning, but do not collect $150,000 for two months.
We still need to pay the overhead expenses in the interim. Without cash, or access to
credit, we can go bankrupt before collection. Then we need to worry about selling the
product in a timely manner and collecting in a timely manner. Failing to understand this
part of business is one of the reasons that many experts in entrepreneurship and small
business consider poor cash planning the single biggest
cause of business failure.

Why do a Cash Flow Forecast?

Too often business owners do a cash flow forecast in their head. Putting the cash flow
forecast on paper, however, will give you the following:
o A format for planning the most effective use of your cash (cash management).
o A schedule of anticipated cash receipts – follow through to see that you achieve
it!
o A schedule of priorities for the payment of accounts – stick to it!
o A measure of the significance of unexpected changes in circumstances; e.g.,
reduction of sales, strikes, tight money situations, etc.
o An estimate of the amount of money you need to borrow in order to finance your
day-to-day operations. This is perhaps the most important aspect of a completed
cash flow forecast.
o An outline to show you and the lender that you have enough cash to make your
loan payments on time.

For business start-ups only

It is helpful to separate start-up costs from ongoing costs, so the reader can quickly see
why you may have large deficits in the early stages of business development. Detailing
Start-up expenses makes your cash flow easier to understand.

Part One – Revenue

Forecast your sales on a monthly basis. This must match the annual revenue forecast from
the pro-forma income statement. It is not sufficient to simply divide by 12 and forecast
the same level of sales in each month, rather you must base the monthly forecast on the
seasonal nature of the business and the growth of the business.

Part Two – Expenses

Forecast your variable costs or purchases on a monthly basis. This involves pre-planning
your purchases of inventory. Sometimes you simply replace the inventory you have used
during the previous month. Sometimes you will plan to build up your inventory prior to
busy sales periods. Once this forecast has been made, forecast your disbursement in this
area. If you pay cash for these purchases, the disbursement is equal to the purchase. If
you have credit terms from the suppliers, then the purchase in one month becomes a
disbursement from accounts payable the following month. (For example, a purchase in
January becomes a disbursement in February.)

Forecast your overhead expenses on a monthly basis. These are usually forecast in one of
three ways:
o Evenly throughout the year.
 o As a percentage of sales. Advertising is often disbursed this way.
o Manually, when you know a payment is due.

Part 3 - The Cash Flow Calculation

The cash flow calculation measures the end of the month cash balance with the following
formula:

cash balance + cash in- cash out= end of month cash balance

The end of month cash balance becomes the starting cash balance of the next month.
Repeat this calculation for every month.

Financial Statements Together

How long, How often, Hond detailed?

Length
o Minimum 1-2 years; typical 3-5 years; maximum ???
o Depends on industry and development cycle
à Retail: a few months
à Software: a few years
à Biotech / Cleantech: a few decades
Frequency
o Monthly: “only the paranoid survive”
o Quarterly: “balanced approach”; still captures seasonality
o Yearly: “big picture”
Detail
o In a presentation only shows highlights
à Revenue projections
à Investment / Costs highlights
à Income / cash flows (“The ubiquitous hockey stick”)
o Be ready for justifying each number!

A final word on your Financial Plan

A common mistake made by many businesses is developing a financial plan for an
investor, and then promptly putting it away and forgetting all about it. Your financial plan
should be reviewed every month. Check your plan against the actual. This will help you
anticipate problems before they arise.

After completing your financial plan, you should re-examine the entire business concept
in light of the results. Ask yourself if this is a good investment of your money and your
time. Is the financial reward worth the lifestyle change? These are personal questions,
which should be asked before we start. It is easy to quit a job, it is difficult to quit a
business! The completed financial plan spells out the financial risks and rewards required
for your new business. Only you can determine if it is worth the risk.

Basic Ratios
Debt Ratio and its purpose
o Measure of leverage
o Varies from industry to industry, but should be around 50%
o = total liabilities / total assets

Asset Turnover and its purpose

o Measure of company efficiency
o The higher the asset turnover ratio, the more efficient the company is using its
assets to generate sales.
o = sales / total assets

Return on Sales and its purpose

o Measure of the amount of profit earned per dollar of sales.
o Evaluated within the appropriate industry.
o = net income / sales

Lesson 6: Digital Marketing Strategy

Business Models based on Seller and Buyer types

Business-to-Consumer - B2C
Businesses whose customers are individual consumers, rather than professional buyers.
While it applies to any type of direct-to- consumer selling, it has come to be associated
with online selling, also known as ecommerce or etailing.

Business-to-Business - B2B
A B2B model focuses on providing products from one business to another.
B2B companies offer the raw materials, finished parts, services or consultation that other
businesses need to operate, grow and profit.

Consumer-to-Consumer – C2C
Consumer to Consumer websites serves as a mediators between the clients and gives an
opportunity to sell or purchase goods directly.

Through C2C web-service consumers can sell their assets like cars, or rent a room by
publishing their information on the website. One customer may buy a product of another
consumer by viewing the description on the website.
The C2C business usually take a small commission.

Consumer-to-Business – C2B
This type of online commerce business is when the consumer sells goods or services to
businesses, and is roughly equivalent to a sole proprietorship serving a larger business.

B2B vs. B2C

Different Business Types in

B2B and B2C
o E-Commerce
o Services
o Saas
o Marketplaces
o Local Businesses

Overall buyer experience

E – Commerce B2B vs B2C characteristics
o B2B buyers are professionals that are buying because it’s required for their job.
o Your product is fulfilling a specific company need.
o The buying decision won’t be impulsive but instead planned for.
o In B2B decisions are more based on logic, facts,
and finding the best product for the best price.
o B2B buying schedules are often synced up with
departmental needs.
o In B2C stores the customer experience is much
different.
o They will be buying because your product fulfils an
emotional need.
o B2C purchases are going to be driven by desire
and motivation.
o With B2C your website needs to be streamlined to reduce any points of buyer
friction, such as difficulty in adding products to the cart or having a lengthy
checkout process.
o B2B customers will go through a different purchasing methodology.

Group vs. individual decision making

E – Commerce B2B vs B2C characteristics
 o Most B2B orders are placed via a committee or a team. It’s rare to be dealing
with a single decision maker when selling B2B. Usually, you’ll have multiple
people who need to approve the sale.
o With B2B you’ll typically also have the ability to create multiple customer
accounts within a single business. So, you’ll have a management account that can
review the order before it’s placed, along with a purchaser account to actually
choose the products from your store.
o With B2C the purchasing approval process isn’t something you’ll have to worry
about. You’re dealing with a one-on-one customer decision.
o This can make the B2C sales process much faster.

Long or short buyer lifecycle

E – Commerce B2B vs B2C characteristics
o Most B2B buyers will buy from you for a very long time.
o Once they’ve found a supplier that fills their business need there’s really no need
to switch unless new advancements come into the field, or you happen to get
undercut by a competitor.
o The customer acquisition process will take longer
in B2B than in B2C.
o B2B orders are typically much higher than B2C.
o B2B buyers are looking for lifetime partnerships,
compared to B2C buyer relationships which are
often one-off or sporadic in nature. This makes the
lifetime value of a B2B buyer much higher than a
B2C buyer.
o Repeat orders are also a necessary feature in B2B
eCommerce. Your customers should be able to easily
login and place (and re-place) orders time and time again.
o With B2C eCommerce, you won’t get as many repeat or bulk orders. But, still
having a user account with past orders will be important regardless of your store
type.

Feature or benefit based marketing

E – Commerce B2B vs B2C characteristics
o With B2B, the core focus will be on what your product does and the tangible need
it solves. You’ll be leaning heavily towards the features of the product, instead
of the benefits, the business will receive.
o In order for a B2B buyer to make a purchase they’ll
need to see how ordering from you will help their
bottom line, while fulfilling a need.
o The B2B market in most occasions has a financial
interest. What will the ROI be? How will it save
them time and money? Why is your product the best
financial investment for their business?
o B2C markets are more emotional in nature, so your
marketing will cater more towards the benefits of
the product. Your product’s message must be
simple, clear, and easy to understand.
o In B2C you’ll be focusing more on the end result of your product, on what your
prospects life will look and feel like with your product.
 o With B2C you’ll take the time-tested approach to marketing, which is appealing
to benefits, not features.

Price discrepancies
E – Commerce B2B vs B2C characteristics
o In B2B markets it’s common practice for prices to be hidden until a user creates
an account.
o Prices are also generally more negotiable and based upon an agreement. B2B
customers will receive different prices for the products based upon future
purchase agreements, past buying history, and more.
o With B2C eCommerce the prices are always shown clearly, what you see is
what you get.
o Now, you may offer customer discounts for loyal customers, or coupons when
you’re running sitewide specials. But, there isn’t any built-in negotiation for
the price of the products you’re selling.
o This can make B2B pricing a little more complex, as it’s customer specific and
based on a tangible relationship with the buyer. Not priced just to move the most
products.

B2C E-Commerce Strategy

It is very common that the goals for a B2C e-com Brand are
o Brand Awareness
o Increase Revenue
à Increase # Orders From New Customers
à Increase Life Time Value (Ltv)
§ Increase Average Order Value
§ Increase # Orders Per Customer

Brand Awareness Strategy

Why Brand Awareness?
o Unless you are a large and well established Brand, It is unlikely that a customer
stumbles upon you exactly when they are decided to buy a product in your
category.
o Even if they do, it is even more unlikely for them to buy your product if they have
never heard from you before.
o Your traget is to become top-of-mind when the consumers are ready to research
and make a purchase.
à BA builds trust with your target audience
à BA creates associations (coffee = starbucks)
à BA builds brand equity (brand value)

How to Establish Brand Awareness

Be a Person, not a Company
To leave an impact with your audience, you’ve got to define yourself as more than a
company that sells stuff.
o How would you define your brand?
o What words would you use if you had to introduce your brand to a new friend?

Tell a Narrative
 o Storytelling is an incredibly powerful marketing tactic, whether you’re marketing
products or promoting your brand.
o Why? Because it gives something real for your audience to latch onto.
o Crafting a narrative around your brand humanizes it and gives it depth.
o Weaving this narrative into your marketing inherently markets your brand
alongside your products or services.
o What should your narrative be about? Anything, as long as it’s true. It can be
the narrative of your founder, the tale of how your business had its first product
idea, how ones life improves by using your product...
o People like hearing stories about each other. Authenticity is impactful, and it can
lead to a big boost in brand awareness.

Become an authority
o Create useful content that is not a sales pitch.
o Whatever you sell, create unique information that people who are interested in
your category of products will find useful.
o When done right, your brand will be in people’s mind when they think about the
category.

Be Social
o If you only attempt to connect with others when trying to make a sale or get
support, you won’t be known as anything beyond a business with a singular
intention (and the same goes for a person).
o To raise awareness of your brand, you’ve got to be social.
o Post on social media about things unrelated to your product or services.
o Interact with your audience by asking questions, commenting on posts, or
retweeting or sharing content you like.
o Treat your social accounts as if you were a person trying to make friends, not
a business trying to make money.

Brand Awareness Growth Tactics

Blogging
o It is important for brands to run their own blogs and build owned audiences, but
the reach is limited.
o This is where guest blogging comes in to play. This is the process of writing and
pitching blog posts for other publications with the intention is to draw people to
your own web/social media; show your or your brands expertice; and/or promote
your brand/product/service
o Create memorable, valuable content and you’ll be introduced to new audiences
and make a lasting impression.

SEO
o Plan your content carefully, knowing what people search for on the internet.
o Understanding keywords and how to position your content will help increase the
brand awareness of your brand in niche related topics.
o SEO is not something that happens fast. Have a content strategy in place.

Shareable Content
o Video tutorials
o Whitepapers (B2B)
 o Infographics
o Memes
o How-Tos

Social Media Contests

o Social media contests are a proven way to create awareess
à Like and/or comment to win. Tag a friend. ...
à Photo caption contest. ...
à Create a best comment competition. ...
à Share a photo...
à Vote to win. ...
à Follow to win. ...
à Follow and share to enter. ...
o Careful: if you don’t get enough participants, it could look bad.
o Caution: Make the prize meaningful for your targeted audience. Money or an
iphone appeals people outsides your target too
o Tip: You may want to quick start it with the help of some friends☺Use your
personal networks for some quick engagement

Podcast
o Starting your own industry podcast where you interview industry experts is a great
way to build your brand while also developing relationships with others in your
field.
o Some industries, like marketing, already have a hefty number of podcasts that
would be tough for a beginner to compete against.
o In this case promote yourself as an expert in your field to get invited to other
podcasts.
o You could also advertise in a podcast in your niche

Google and Social Media Advertising

• Google Ads (AdWords) helps you being at the top of google searches
• Facebook, Instagram, Twitter, Linkedin and Pinterest allow you to target groups
of people by interests. You can promote your informative content to new
audiences

Influencer Marketing
o Pick influencers whose followers are in your target audience.
o Make sure their engagement rate is decent, and their followers are real.
o Often micro influencers (10k followers or less with high engagement) are a good
place to start.
o Always measure the results.

Sponsor Events
o It can get your brand in front of 1000s of potential customers.
o Make sure your targeting and positioning is right
o Encourage Social Media sharing
o Can be expensive

Social Causes
 o In order to succeed in taking part in social causes as a marketing method, you need
to first identify the social issue that the target population is facing.
o You then work on the best means to solve the problem.
o This will help you in gaining the trust and loyalty of the target market.
o Do it for real. Believe in it.
o Be careful, don’t mix social causes with product advertisement.

Goal: increase revenue

Ecommerce Sales Funnel
o Build an e-commerce sales funnel to map the buyer’s journey and identify what
you need to do at each stage.

Awareness Stage
o The awareness stage is the first point of contact you have with your prospects.
o Buyers at this stage are discovering the existence of your brand. They may or may
not be ready to buy.
o Your goal, is to draw as many users into this stage as possible.
o You need visitors who
o are interested in your products so that you can more easily move them to the next
stage.

Interest Stage
o Buyers at this stage are interested in your brand’s story or the pain point you may
be solving. They’re “considering” your product.
o One common goal at this stage is to get the customer to add items to the basket.

Purchase Stage
o Buyers in this stage are ready to buy, but aren’t sure if you’re the best company
to buy from.
o You need to save prospects at this stage from possible interruptions and give them
a gentle nudge to complete the purchase.

Customer ACQ Tactics

Make the buying process EASY
o All previous stages of the sales funnel are aligned to acquire new customers in the
Purchase stage.
o Use similar tactics as before (content, authority...) to reduce friction
o Make your website fast and the purchase process hassle free

Easy and Clear Returns

Easy Return Procedures elevate the trust level.
Understand your costs

Testimonials and Reviews

o We usually ask for testimonials to known customers. It is often up to you to
publish them or not.
o Reviews on the other hand are often not under our control

AOV Increasing Tactics

Free Shipping Treshold
 o Understand your current Average Order Value
o Add 20%/30%
o Make that your free shipping treshold
o Experiment
o Customize by Region

Discounts to Increase AOV

o Even though you sell for cheaper the AOV may increase
o When possible include a minimum spend treshold
o Understand your financials to see if it is worth it

Bundle Offers
o Often called cross selling
o You give your customers the opportunity to purchase your products at a lower
price than buying them individually.
o Program bundles individually to include related products
o Amazon is extremely good at this, thanks to their agregated data

Offer a Free Gift

o Instead of a discount offer a free gift that could be interesting for your tagreted
segments
o You can make it exclusive (not shopable)
o Set a minimum order treshold.
o Understand your financials
o Limit the number of items to increase sense of urgency

Provide Financing Options

o Especially useful for more expensive purchases
o This often allows for buying a premium product instad of the regular one
o It may increase impulse buying, as you are making the decission really easy

Offer Product Customization

o If it is for free, it helps customer acquisition
o If the customer has to pay, we increase the AOV
o Understand your supply chain and costs

Repeat Customer Stage

o Buyers in this stage have already bought from you at least once.
o You need to delight them with your product, your customer service and make
them become your promoters.

Repeat Customer Tactics

Good Customer Service
o Make it easy for the customer to contact you.
o Don’t make them wait
o Give them meaningful support make their life easier)
o Admit your faults
o Sometime you have to take a loss

Customized Email Marketing

 o Keep in touch with your customers
o Understand their buying cycles
o Identify different segments (At risk, High value, etc)
o Create email sequences for each.

Lesson 7: Strategy

Align your digital strategy with your company´s goals and values
o Zoom out
o Map your company´s top-level goals
o How can you use social media to get there?
o Where is you targeted audience?
o Don´t be on sm just because everyone else is
o Have a plan

Identify your company´s goals:

o Improve customer satisfaction
o Penetrate new markets
o Launch new products
o Generate new sources of revenue
o Increase brand awareness
o Change brand perception
o Increase brand loyalty
o Increase revenue

Design a Digital strategy to meet your goals

Cheat sheet
o Mision (What) Why the company exists. This element is transversal and
perennial.
o Goal: (Where to) What you hope to accomplish this year.
o Objective: (Where to) The goal, using SMART criteria
o KPI (How much) The Key indicators for measuring the success of your objectives.
o Strategy: (How) How will you achieve your objective
o Tactic: (What) The concrete, the implementation, the action.
o Metric: (How Much) Indicators to measure the success of your tactics.

Example: Online Dating

TINDER Goals in 2012

o Launch new product
 o Create awareness of their brand
o Grow user base

What does Tinder have in common with Airbnb, ebay, Uber?

Supply and demand: the Chicken and egg problem.
A marketplace consists of two sides: Supply and Demand
When you are starting, how do you fill one side without having the other one?
Convince the supplier to use the platform.

TINDER created a pitch-team consisting of "pretty/cool/successful women“ and sent

them to pitch Tinder to college sororities and make all the cool girls at the meetings install
the app.
Then they said that I fpeople wanted to access Greek Parties, they had to install tinder.

How tinder makes money:

o Freemium model
à Plus/Gold members
à Boost
à Swipe life /+Super life
o Sponsored posts

Actual insights
o 50 M daily active users (2014)
o 4.3M paying subscribers (Dec 2019)
o Matches all time 20B, daily 26M
o Daily swipes 1.6B
o Number of dates per week 1.5M
o People log into the app 11 times a day
o Women spend 8.5 minutes swiping left and right during a single session; men
spend 7.2 minutes

Strategy
Strategy is just a plan of action to achieve a desired goal, or multiple goals. ALIGN your
digital strategy to your company goals.

Goals, Target persona, Postitioning à deliver the right content, to the right people, in the
right context.
Outbound Marketing
o The marketer just sells
o Mostly ads
o Very expensive
o Little feedback
o It is interruptive
o Limited interaction with the audience

Inbound Marketing
o The marketer educates
o Mostly content
o Not necesarely expensive
o Data driven
o The customer looks for it
o Continuous interaction with the audience
We are looking to earn the trust of the audience, by becoming an authority in our niche.
When the buyer decides to buy, they will come to us

The Digital marketing Trifecta

Owned media
Any web property that you can control and is unique to your brand
o Websites: The website is the central hub where:
à The brand controls the message
à The brand shows USPs
à The brand displays their products
à Visitors shop for products
o Blogs: Blog that doesn’t always talk directly about products, but addresses the
needs and curiosity of the target personas
à Drives people to the website
à Increases trust
à Increase brand awareness
à Helps with SEO / positioning
o Social Media channels (Organic. Facebook, Instagram, pinterest)
à Promote blog post content to potential buyers
à Promote other content o Videos o Photos o Stories
à Promote products
à Engage with potential customers
 o Apps
✓ The more owned media you have, the more chances you have to extend your brand
presence in the digital sphere.

Paid media
Paid media is a good way to promote content in order to drive earned media, as well as
direct traffic to owned media properties
o Google Ad words: People´s buying intention is much higher on google than on
facebook. It is great to understand how interesting your offer/product is. If you
pay enough you can be sure you are going to be #1 in google.
o Facebook Ads: Facebook allows very precise targeting. Unlike google people are
not looking for your product, but through targeting and facebook´s algorithm your
ads are displayed in people´s feeds.
à Retargetting
à Promoted Tweets
à Linkedin Ads
à Podcast Sponsorship

Earned Media
Earned media is an essentially online word of mouth
o ‘viral’ tendencies, mentions
o Shares
o Reposts
o Reviews
o Recommendations
o Content picked up by 3rd party sites.
o Blogs, magazines, hashtags, news
o You are not in control of earned media. Anyone can say what he wants about you
o You can actively work on getting more earned media
o Contact bloggers
o Send free samples
o Promote hashtags

Zarely´s strategy
1. Goals
2. Increase awareness
3. Increase sales

Zarely´s strategy
1. Create great blog content targeted at the right audienc
2. Promote it on social media and through 3rd partie
3. Capture their email addresses with great content and sales offer
4. Retarget them with more conten
5. Elevate trust with good email conten
6. Make Sales through email and other channels

Zarely´s Sub-strategy
1. Good Content helps SEO/Positionin
2. Good content makes you become an authorit
3. Good Content + engagement reduces Customer Acquisition Cos
4. Better Positioning helps get more Visitors organical
5. More Organic Visitors makes you less dependant on ad
6. Less Ads brings the CAC down again