Chapter 3 & 4

Marketing in Business
By the end of this module, learners will be able to:
Define marketing concepts.
Analyze marketing philosophies.
Describe the role of marketing in achieving the goals of a
business enterprise.
Assist in conducting marketing research.
Make competitive analysis of the level,
Implement marketing intelligence in their organization,
Apply the various marketing mixes and strategies in their
businesses.
Understand and implement selling and customer service skills.
Describe the Concept of Product and Services;
List Product/Service Development Process; and
Discuss the Intellectual Property Protection.
Do you agree?

Customer is a king!
A customer is always right!
Some quotes on marketing
An Introduction
Marketing, more than any other business function, deals
with customers.

In its simplest sense marketing is engaging customers

and managing profitable customer relationships.

The twofold goal of marketing is to attract new

customers by promising superior value and to keep and
grow current customers by delivering value and
satisfaction
An introduction…
Many people think of marketing as only selling and
advertising.
However, selling and advertising are only the tip of the
marketing iceberg. Today, marketing must be
understood not in the old sense of making a sale
—“telling and selling”—but in the new sense of
satisfying customer needs.
If the marketer engages consumers effectively,
understands their needs, develops products that
provide superior customer value, and prices,
distributes, and promotes them well, these products
will sell easily.
Meaning and Definitions of Marketing
Marketing is a social and managerial process by which an
individual or group obtain what they need and want
through creating, offering and exchanging of product of
values with others (Philip Kotler,2012).
Marketing management is the process of planning and
executing, the conception, pricing, promoting and
distributing of ideas, goods and services to create an
exchange that satisfy individual or group objectives
(American marketing Association, 2015).
 Marketing is the effort to identify and satisfy customers’
needs and wants.
It involves finding out who your customers are, what
they need and want, the prices, the level of competition.
It involves the knowledge and all the processes you
undertake to sell your product.
Marketing answers the following questions:

Who are my customers?

What are my customer’s needs and wants?
How can I satisfy my customers’?
 How do I make a profit as I satisfy my customers?
Who are your customers?

• Customers are people or other businesses that want your

products/ services and are willing to pay for them.
• They include;
People who are buying from you now.
 People you hope will buy from you in the future.
People who stopped buying from you but you hope to
get them back
How can I satisfy my customers’?

• You need to find out;

 Products/services your customers want.
 Price your customers are willing to pay.
Location of your business in-order to reach your
customers (Place).
Promotion to use to inform your customers and attract
them to buy your products or services
Core Concepts of Marketing
Needs, Products
wants, and
and demands Services

Core
Marketing
Concepts
Markets
Value, satisfaction,
Exchange, and quality
transactions,
and relationships
a). Customer needs, wants and demands

Need: - Human Need is a state of deprivation of some basic

satisfaction. People require food, clothing, shelter, safety
and belonging and esteem.
The most basic concept underlying marketing is that of human
needs.
Needs are not affected by culture of a society.
While marketers may stimulate these needs, they do not
create them for they are a basic part of human makeup
Maslow's Need Hierarchy
Wants: - Wants are desires for specific satisfiers of needs.
Human wants are continually shaped and reshaped by social
forces and institutions including churches, schools, families and
business cooperation.
• Eg. A person needs food but wants spaghetti
• Wants are described in terms of objects that will satisfy needs.
 Demands: - Demands are wants for specific products that are
backed by ability and willingness to buy them.
 Wants become demand when supported by purchasing
power.
 Companies must therefore measure not only how many
people want their product but, more importantly how
many would actually be willing and able to buy it.
Quiz one(15marks)
1. List any five qualities of a successful entrepreneur
2. Write the rewards of being an entrepreneur
3. list any three possible risks assumed by
entrepreneurs
4. List four of the users of a business plan.
b. Product
Product is anything that can be offered to satisfy a need or want.
Products are broadly classified as tangible and intangible
products.
Tangible products are called goods or physical products that can
be seen, felt, touched, sensed, etc.
Intangible products are services— activities or benefits offered
for sale that are essentially intangible and do not result in the
ownership of anything.
Examples include:
• banking, airline, hotel, retailing, and home repair services.
Note:
• Many sellers make the mistake of paying more attention to the
specific products they offer than to the benefits and
experiences produced by these products. These sellers suffer
from marketing myopia. They are so taken with their products
that they focus only on existing wants and lose sight of
underlying customer needs.
Examples
• We buy food not to look at, but because it satisfies our
hunger.
• We buy a microwave not to admire its utility, but because it
defrosts or cooks our food.
c). Customer value and satisfaction

• Value:
is the consumer’s estimate of the products overall
capacity to satisfy his or her needs.
is a measure of the usefulness of a product.
is also defined as a ratio between what the customer
gets and what he gives.
It is the difference between the "get" component and
the "give" component.
Satisfaction
is the extent to which a product’s perceived performance matches
with customer’s expectation
Customer satisfaction depends on the product’s perceived
performance relative to a buyer’s expectations.
If the product’s performance falls short of expectations, the
customer is dissatisfied.
If performance matches expectations, the customer is satisfied.
If performance exceeds expectations, the customer is highly
satisfied or delighted.
Core concepts contn’d…
• If:
(Performance) = (expectation) satisfaction

Performance<expectation dissatisfaction

Performance > expectation over satisfaction

Satisfied customers buy again and tell others about their

good experiences.
Dissatisfied customers often switch to competitors and
disparage the original product to others.
d) Exchanges, transactions and relationships

Exchange: is the act of obtaining a desired product from someone

by offering something in return.
Transaction: is the trade of values between two parties.
 Market: consists of all the potential customers sharing a particular
need or want who might be willing and able to engage in exchange
to satisfy their need or want.
Relationship marketing is a strategy that focuses on keeping and
improving relationships with current customers.
It assumes that many consumers and business customers prefer
to have an ongoing relationship with one organization rather
than switch continually among providers in their search for
value.
Marketing Management
Orientations
• What philosophy should guide our marketing efforts? What
weight should be given to the interests of the organization, the
customers and the society?
• There are five alternative concepts under which organizations
may conduct their marketing activities:
1) Production concept
2) Product concept
3) Selling concept
4) Marketing concept and
5) Societal marketing concept.
1) The production concept
Holds that consumers will favor products that are widely available
and highly affordable (cheap).
Therefore, management should focus on improving production and
distribution efficiency.
 focuses on the internal capabilities of the firm rather than on the desires and
needs of the marketplace.
 Requires management to assess its resources and asks these questions:
o “What can we do best?”
o “What can our engineers design?”
o “What is easy to produce, given our equipment?”
o “What services are most convenient for the firm to offer?”
and
o “Where do our talents lie?
• A production orientation falls short because it does not
consider whether the goods and services that the firm
produces most efficiently also meet the needs of the
marketplace.
2) The Product Concept

holds that consumers will favor products that offer the most in
quality, performance, and innovative features.
Under this concept, marketing strategy focuses on making
continuous product improvements.
Product quality and improvement are important parts of most
marketing strategies. However, focusing only on the company’s
products can also lead to marketing myopia.
The product concept can also lead to marketing
myopia.
For instance, railways management once thought that
users wanted trains, rather than transportation, and
overlooked the growing challenge from airlines, buses,
trucks and cars.
3) The selling concept
holds that consumers will not buy enough of the firm’s
products unless the firm undertakes a large-scale
selling and promotion effort.
The selling concept is typically practiced with unsought
goods – those that buyers do not normally think of
buying, such as insurance.
The aim often is to sell what the company makes,
rather than making what the market wants.
4) The Marketing Concept
Holds that achieving organizational goals depends on
determining the needs and wants of target markets and
delivering the desired satisfaction more effectively and
efficiently than competitors do.
It states that the social and economic justification for an
organization's existence is the satisfaction of customer
wants and needs while meeting organizational
objectives.
The difference between
Selling & Marketing concept
The selling concept takes an inside-out perspective. It
starts with the factory, focuses on the company’s existing
products, and calls for heavy selling and promotion to
obtain profitable sales.
o It focuses primarily on customer downfall– getting short-term
sales with little concern about who buys or why.
o In contrast, the marketing concept takes an outside-in
perspective.
The marketing concept starts with a well-defined market,
focuses on customer needs and integrates all the
marketing activities that affect customers. In turn, it yields
profits by creating lasting relationships with the right
customers based on customer value and satisfaction.
The difference between Selling & Marketing concept
5)the Societal Marketing Concept

Holds that marketing strategy should deliver value to customers in a

way that maintains or improves both the consumer’s and society’s
wellbeing.
This philosophy states that an organization exists not only to satisfy
customer wants and needs and to meet organizational objectives but
also to preserve or enhance individuals’ and society’s long-term best
interests.
Marketing Research
Marketing research is the systematic and objective identification,
collection, analysis, and dissemination of information for the
purpose of assisting management in decision making related to
the identification and solution of problems and opportunities in
marketing.

Marketing research is objective. It attempts to provide accurate,

impartial information. Accordingly, marketing research involves
the identification, collection, analysis, and dissemination of
information.
The Role (Significance) Of Marketing
Research In Decision Making

There are three Functional Roles of Marketing Research.

• Descriptive Function - the gathering and presentation of
statements of fact.
• Diagnostic (analytical) Function - The explanation of data.
• Predictive Function - Specification of how to use the
descriptive and diagnostic research to predict the result of a
planned marketing decision
Marketing Research Components
Marketing researchers deal with many aspects of a market including the
following:
• Market size: this deals with the number or value of units sold to a market
in a given period.
• Market Share: this one is about a specific corporation’s share of the
market size out of the whole market of a product or products of the same
purpose.
• Market penetration: this is a marketing strategy which is used to know
when a company enters/penetrates a market with current products to get
better market share by lowering the price of a product.
• Brand equity research – this research is conducted to know how favorably
consumers view the brand.
• Buyer decision processes research – this part of marketing research
activity is used to determine what motivates people to buy and what
decision-making process they use.
Marketing Research Process
Step 1: Define the research purpose or objectives
The following questions help to establish objectives:
Where potential customers buy the product?
Why they purchase there?
What is the size of the market?
How much of it can your business capture?
How does your business compare with competitors?
The impact of promotion on customers.
What types of products are desired by potential customers
Step 2: Research Design
Formulation
The research design is a blueprint for conducting the marketing
research. More formally, formulating the research design involves
the following steps:
Study period and place determination.
Methods of collecting data (survey, observation, and
experimentation).
Definition of the information needed.
 Questionnaire design.
Sampling process and sample size.
Plan of data analysis.
When to do what? How? Why? Where? etc
Step 3: Gather data
A. secondary data
A data which is originally collected by others for their own
purpose, but such data can be used by the researcher when it is
relevant to the current study. Secondary data:
• Is less expensive.
• Can be acquired within or outside the venture.
• But, may be outdated and less valid.
B. Gather Primary Data: Primary data collection techniques can
be categorized as;
• Observational techniques-do not involve contact with respondents.
• Focus groups.
• Experimentation-investigates cause and effect relationships.
• Survey techniques- generate data by asking people questions and
recording their responses.
The following are examples of survey techniques.
A. Mail questionnaires: The researcher may send the
questionnaires to research Participants.
B. Telephone interviews: Using the telephone numbers
from telephone directory, the researcher may ask
research participant via the telephone.
C. Personal interviews. The researcher may go to the
research participants’ address and may drop and pick
the questionnaire or may interview the research
participants.
Step 5: Data Processing and
Analysis
• Data processing includes the editing, coding,
transcription, and verification of data.
• And data analysis, guided by the plan of data
analysis, gives meaning to the data that have been
collected.
• Research results should be evaluated and
interpreted in response to the research objectives.
Step 6: Report Preparations and
Presentation
• At the end the research results will be written in a report
form and presented to the concerned parties. The report
includes:
The specific research questions identified,
Describes the research approach,
The research design,
The data collection methods, and sampling procedures,
The data processing and analysis procedures,
The major findings and suggestions for actions.
• In addition, an oral presentation should be made to
management using tables, figures, and graphs to enhance
clarity and impact
Marketing Intelligence
• Market intelligence is the systematic process of
gathering, analyzing, supplying and applying
information (both qualitative and quantitative)
about the external market environment.
• Intelligence is evaluated information.
• Marketing intelligence is used to determine:
• Current and future market needs,
• Changes in the business environment that may affect
the size and nature of the market in the future.
• Environment that may affect the size and nature of the
market in the future.
The Importance of Marketing
Intelligence

• Marketing intelligence provides the following benefits:

Market and customer orientation – promote external focus.
Identification of new opportunities.
Smart segmentation.
Early warning of competitor moves.
Minimizing investment risks.
Quicker, more efficient and cost-effective information.
Ways to Undertake Marketing
Intelligence

i. Unfocused scanning: Any information that may be useful is gathered

without any specific purpose in mind.
ii. Semi-focused scanning: no specific purpose. The manager is not in
search of particular pieces of information that he/she is actively
searching but does narrow the range of media that is scanned. For
instance, the manager may focus more on economic and business
publications, broadcasts etc. and pay less attention to political,
scientific or technological media.
iii. Informal search: - limited and unstructured attempt to obtain
information for a specific purpose. For example, entering the business
of importing frozen fish from a neighboring country may make
informal inquiries as to prices and demand levels of frozen and fresh
fish.
iv. Formal search: - this is a purposeful search for information in some
systematic way.
Competitive Analysis
• Competitive analysis refers to determining the
strengths and weaknesses of competitors and
designing ways to take opportunities or tackle threats
posed by competitors.
• Competitive analysis is a method of gathering data
about competitors from different sources. It should
answer the following questions:
Who are your competitors?
 What customer needs and preferences are you
competing to meet?
What are the similarities and differences between
their products/services and yours?
What are the strengths and weaknesses of each of
their products and services?
 How do their prices compared to yours? How are
they doing overall?
 How do you plan to compete? Offer better quality
services? Lower prices? More support? Easier access
to services? How are you uniquely suited to compete
with them?
Uses of Competitive Analysis
Competitive analysis is important for businesses since it
has the advantages stated as follow:
It helps management understand its competitive advantages/
disadvantages relative to competitors.
It generates understanding of competitors’ past, present (and
most importantly) future strategies.
It provides an informed basis to develop strategies to achieve
competitive advantage in the future (e.g. how will competitors
respond to a new product or pricing strategy?)
It helps forecast the returns that may be made from future
investments
Steps of Competitive Analysis
• Competition is defined as any business that provides a similar
service or product in the same market, region or industry.
• A strategic business owner not only knows who its competitor is
but also understands the best way to position ahead of its
competitor.
The following provides a step-by-step process in creating your
competitive analysis.
1) Identify your competitors: Determine both local and
international competitors. Be sure to define the competitive
landscape broadly. Your competitor includes anything that could
draw customers away from your business.
2) Gather information about competitors: At this stage you need
to know; what markets or market segments your competitors
serve; what benefits your competitors offer; why customers buy
from them; and as much as possible about their products and/or
services, pricing, and promotion strategies.
3) Gathering Information on Competitors To gather
information about your competitor you can go either
to your competitors’ company site or to the
company's Web site (if any) using which you can
learn about; promotion strategies by visiting their
business site; prices; your competitors’ customers;
vendors or suppliers, and their employees; trade
shows; and publicly available information - from
Newspapers, magazines, press releases and online
publications.
4) Analyzing the Competition
After studying the information you have gathered about
each of your competitors, ask yourself these primary
questions:
How are you going to compete with that company?
Is there a particular segment of the market that your
competitor has overlooked?
Is there a service that customers or clients want that
your competitors do not supply?
5) Develop a pricing:
• The last step in the process is to develop a pricing model
that represents what you are offering the market and the
value you bring to your target buyers.
• Do not immediately think you have to price your
products below your competition, people appreciate the
value in your product and set your price accordingly.
• The goal of your competitive analysis is to identify and
expand upon your competitive advantage.
• To make your competitive analysis effective, transfer the
weaknesses of your competitors into potential strengths
for your business.
The Marketing Mix and Marketing Strategies
The 4 P’s Of Marketing/The Marketing Mix

Product
Price
Place/distribution
promotion
1. Product:
refers to goods/services produced for sale and they should relate to
the needs and wants of the customers.
• Some important questions you need to ask yourself include:
a) What products/services do I sell?
b) Why did I decide to sell these products?
c) Do I have the products customers want?
d) Do any of my products not sell well?
e) Do I stock products that do not sell well?
Always listen to what your customers like and don’t like. When their
needs change, change your products and services to satisfy the new
needs.
• Do more market research in order to provide those products or
services and increase your sales.
• If your product is not selling well, think of new ideas like finding new
customers
2. Pricing
• refers to the process of setting a price for a
product/service.
• Price is the sum of all the values that a customer gives
up to gain the benefits of having or using a product or
service
• Price is the monetary value of a product or service
To set your price you need to:
 Know your costs.
Know how much customers are willing to pay.
 Know your competitors price.
Know how to make your prices more attractive
3. Place:

• means the different ways of getting your products or

services to your customers. It is also referred to as
distribution.
• You can distribute your products to your customers
through:
• Selling directly to the consumers of the products.
• Retail distribution and wholesale distribution.
4. Promotion

• Refers to informing your customers of your

products and services and attracting them to buy.
• Promotion includes advertising, sales promotion,
publicity (non-paid promotion) and personal selling.
Marketing Strategy
1. Pricing Strategy
Price is the value placed on what is exchanged.
Something of value is exchanged for satisfaction and
utility, includes tangible (functional) and intangible
(prestige) factors.
Price is often the only element the marketer can
change quickly in response to demand shifts.
Some of the pricing strategies include:
i) Price Skimming:
this is a type of pricing strategy that firms use by charging the highest
possible price that buyers who most desire the product will pay.
• It attracts a market segment that is more interested in quality, status,
uniqueness etc.
• In this case, consumers’ demand must be inelastic.
ii) Penetration Pricing:
Involves setting low price compared to competitors’ price for the same
product to penetrate into markets and to increase sales.
• the quality of the product should not be lower as compared to other
competitors’ product.
• the cost of production should be lower to the extent that can enable
the firm to get the desired profit.
• This is appropriate when the demand is elastic.
iii) Cost-plus pricing: Any amount that is above unit cost may
be considered
iv). Competition Oriented Pricing: Considers competitors
prices primarily; but the market type matters.
v) Odd-even pricing: This is Psychological pricing method
based on the belief that certain prices or price ranges are
more appealing to buyers.
This method involves setting a price in odd numbers (just
under round even numbers) such as $49.95 instead of
$50.00.
Although not supported by any research findings, its
proponents claim that the consumers see a $49.95 price as
'just in the price range of $40’rather than in the $50
2. Promotion Strategies
The marketing communication mix (also called the promotion mix) consists
of the following major modes of communication.
Advertising: Any paid form of non-personal presentation and promotion of
ideas, goods or services by an identified sponsor.
 The message provides a reason or benefit to buy
Sales promotion: A variety of short-term incentives to encourage trial or
purchase of a product or service.
Public relations and publicity: A variety of programs designed to promote
and/or protect a company’s image or its individual products.
Personal selling: Face-to-face interaction with one or more prospective
purchasers for the purpose of making presentations answering questions,
and procuring orders.
Direct marketing: Use of mail, telephone, fax, e-mail, and other non
personal contact tools to communicate directly with or solicit a direct
response from specific customers and prospects.
3. Distribution Strategies
1. Direct channels: In this type of channel, producers and
end users directly interact.
a. Door-to-door selling
• The manufacturer employs its own salesmen to approach the
customers and convince them to buy the products.
b. Manufacturers’ Sales Branches
 Manufacturers open sales branches to sell their products
directly to customers.
C. Direct Mail
 This is a means of directly distribution products to customers by
dispatching them through the post.
2. Indirect channels: In this type of channel
intermediaries are inserted between seller and
buyer. Intermediaries include Merchant Wholesalers,
retailers, dealers, agents, brokers; and
manufacturer’s branches and offices.
Terms Used for Marketing channels
PRODUCT/SERVICE DEVELOPMENT
What is a Product?

• It is anything that can be offered to the market for attention,

acquisition, use, or consumption and that might satisfy a
want or need. It includes physical objects, services, persons,
places, organizations, ideas or mixes of these entities.
• A product is a solution to customers’ problems.
• A product is a combination of the physical characteristic as
well as the way people think and feel about it.
Levels of a Product
• The Core Product : the fundamental service or benefit that the
customer is really buying.
Example: A hotel guest is buying “rest & sleep”, the purchaser of
a drill is buying “holes.” Marketers must see themselves as
benefit providers.
• The Actual Product - hotel room includes a bed, bathroom,
towels, desk, dresser, and closet. The actual product may have
as many as five characteristics that combine to deliver core
product benefits. They are:
• Quality level
• Features
• Design
• A brand name
• Packaging
• Expected Product -a set of attributes and conditions that buyers
normally expect and agree to when they purchase this product.
• For example, hotel guests expect a clean bed, fresh towels,
working lamps, and a relative degree of quiet.
• The Augmented Product - product that meets the customers’
desires beyond their expectations.
• The augmented product includes any additional consumer
services and benefits built around the core and actual product.

Example: A hotel can augment its product by including fresh

flowers, fine dining and room service, and so on.
• Potential Product-encompasses all the augmentations and
transformations that the product might ultimately undergo in
the future.
• While the augmented product describes what is included
in the product today, the potential product points to its
possible evolution.
• Here is where companies search aggressively for new ways
to satisfy customers and distinguish their offer.
• Services: are intangible, inseparable, variable and
perishable. As a result they normally require more
quality control, supplier credibility, and adaptability.
Product/Service Development Process
1. New Idea Generation
• The new product development process starts with
search for ideas. Companies have to encourage any
new idea coming.
• Some of the more fruitful sources of ideas for
entrepreneurs include consumers, existing products
and services, distribution channels, the federal
government, and research and development.
2. Idea Screening
• In the 2nd stage, the purpose is to lessen the number of ideas to few
vital/valuable ideas.

3. Concept Development and Testing

• Attractive ideas must be refined into fast able product concepts since people
do not purchase ideas but they buy concepts.
Any product idea can be turned into several product concepts. The questions
asked probably include:-
• Who will use the product?
• What benefits should the product provide?
• When will people consume the produced?
• Concept Testing: - calls for testing product concepts with an appropriate
group of target consumers/customers, and then getting the consumers’
reactions. At this stage, the concepts can be in words or picture description.
4. Marketing Strategy Development
• After testing the new product the concerned body must
develop a preliminary marketing strategy plan for
introducing the new product into the market.
• The marketing strategy will undergo further refinement in
subsequent stages. The marketing strategy plan consists
of three parts:
Market size, structure, behavior ;
Planned price, distribution strategy, and marketing budget of
the 1st year; and
Long run sales and profit goals, marketing mix strategy
5. Business Analysis
• After management develops product concept and marketing
strategy, it can evaluate the proposals’ business attractiveness.
• Management needs to prepare sales, cost and profit
projections to determine whether they satisfy the company's
objective or not.
• Estimated Total Sales: - Management needs to estimate
whether sales will be high enough to yield satisfactory profit.
• Estimating Cost and Profits: - After sales forecast the
management should estimate the expected cost and profit at
various levels of sales volume.
6. Product Development

• If product concept passes the business test, it moves

to R&D or engineering to be developed to one or
more physical version of the product concept.
• Its goal is to find a prototype that the
consumers/customers see as embodying the key
attribute described in the product concept statement.
• Sample produced
7. Market Testing
After management is satisfied with the products’ functional and
psychological performance, the product is ready to be dressed up
with the brand name.
The goals are to test the new product is more authentic to
consumer/customer settings and to learn how large the market is
and how consumers/customers and dealers react to handling,
using and repurchasing the actual product.
Most companies know that market testing can yield valuable
information about buyers, dealers, marketing program
effectiveness, market potential & other matters.
Test Marketing yields several benefits include more reliable
forecast of future sale, and pretesting of alternative of future sale
8. Commercialization

 Planning and launch strategy for introducing the

product to the marketplace.
 Timing of the introduction, the selection of a branding
strategy, and coordinating the marketing program
activities are all components of the launch strategy.
Product Protection (Intellectual Property)
What is Intellectual Property?
Intellectual property is a valuable asset for an
entrepreneur.
It consists of certain intellectual creations by
entrepreneurs or their staffs that have commercial value
and are given legal property rights.
Examples of such creations are a new product and its name, a
new method, a new process, a new promotional scheme, and a
new design.
The main forms of intellectual property rights are:

Copyright covers literary works (such as novels, poems and

plays), films, music, artistic works (e.g., drawings, paintings,
photographs and sculptures) and architectural design.
The right holder(s) of a work can authorize or prohibit:
its reproduction in all forms, including print form and sound
recording;
its public performance and communication to the public; its
broadcasting;
its translation into other languages; and
Its adaptation, such as from a novel to a screenplay for a film.
A patent
A patent is an exclusive right granted for an invention –a
product or process that provides a new way of doing
something, or that offers a new technical solution to a
problem.
A patent provides patent owners with protection for their
inventions. Protection is granted for a limited period,
generally 20 years.
Patent protection means an invention cannot be
commercially made, used, distributed or sold without the
patent owner’s consent.
An idea is patentable if it meets three criteria: novelty,
usefulness, and non-obviousness.

Novelty: Nothing essentially the same as the claimed

innovation exists; i.e., the invention must be new.

Usefulness: The invention must provide significant benefits to

society, although this requirement is generally more relaxed
than it sounds.

Nonobviousness: The invention must possess a new

characteristic that is not known in the field and must not be
obvious to a person with an average or ordinary knowledge of
the field at the time the application is filed.
A Trademark
A Trademark protects a symbol, word, or design, used
individually or in combination, to indicate the source of
goods and to distinguish them from goods produced by
others.
For example, Apple Computer uses a picture of an apple
with a bite out of it and the symbol (®) which means
registered trademark.
Trade secrets: consist of knowledge that is kept secret
in order to gain an advantage in business. “Customer
lists, sources of supply of scarce materials, or sources of
supply with faster delivery or lower prices may be trade
secrets,”
The End!
CHAPTER Five
FINANCING A NEW VENTURE
•  This chapter describes some common as well as
some not so common sources of capital and the
condition under which the money is obtained.
• Source of capital; Different sources of capital are
generally used at different times in the life of the
venture.
• Over all there are two types of financing available:
Internal and External
Internal Financing
• this refers to financing sources from entrepreneur
own sources.
• Internally generated fund can come from several
sources.
• Profit deployment: - this is usually when the profits
you generated from your firm is used back for new
venture financing.
• Selling assets that are currently idle. Given that the
firm expects more return than these assets
• Renting instead of owing assets. That is, by
spending low money on especially plant assets the
firm may finance its business.
• Reducing short term assets : cash, inventories,
receivables
• Keeping inventory at lower level. During the initial
period of its operation the firm need not be
luxurious in inventory
• By collecting bills more quickly.
External financing
• it refers to financing sources out side the
entrepreneur source.
• External financing may be further be classified into
two: debt financing and equity financing.
• Debt financing
• Equity financing
 Is a financing method involving an
interest bearing loan instrument i.e.  Does not require collateral and
expected fined payment what ever offers the investor some form of
happened to your business owner ship position in the
venture
 It requires that some assets be available
as collateral.  the investors share in the profit
of the
 No decision making right but may venture as well as any
provide a form of advise disposition of the assets on
 No ownership position appropriate basis.
How do Banks make lending decision?

• Character: this is the sum of mental and moral qualities.

• Capacity: it refers to earning power. The capacity to generate profit
over a period of time.
• Capital: refers to the borrower’s financial soundness or strength.
• Collateral: It is any thing of value pledge as additional security to
secure the performance or the discharge of an obligation.
• Conditions: banks do not look only at you but also look at your
environment example country, mkt, etc.
CHAPTER SIX
GROWTH STRATEGIES FOR SMALL FIRMS
New Venture (Growth) Expansion Strategies

Internal growth strategies.

The main internal strategies for growth are: intensive,
integrative and diversification,
Intensive Strategies
Intense growth can take place when current
products and current markets have the potential for
increasing sales.
Market penetration, market development, and
product development are sometimes referred to as
intensive strategies
Ansoff’s growth matrix
• Market Penetration strategy seeks to increase market
share for present products or services in present markets
through greater marketing efforts.
• Market development involves introducing present
products or services into new geographic areas.
• Product development is a strategy that seeks increased
sales by improving or modifying present products or
services
Integration Strategies

• Forward integration involves gaining ownership or increased

control over distributors or retailers.

• Backward integration is a strategy of seeking ownership or

increased control of a firm’s suppliers.

• Horizontal integration refers to a strategy of seeking ownership of

or increased control over a firm’s competitors.
Diversification Strategies

• Diversified growth occurs when new products are developed to

be sold in new markets.
• A diversification strategy, introduces a new product or service
to a market segment that currently is not served.
• Concentric/ Related Diversification
When a firm enters into some businesses, which is related with
its present business in terms of technology, marketing or both.

• Conglomerate (Unrelated) Diversification

conglomerate diversification—diversifying into an industry
unrelated to its current one.
External Growth Strategy

Joint Venture/Partnering
Joint venture is a popular strategy that occurs when two or more
companies form a temporary partnership or consortium for the purpose
of capitalizing on some opportunity
Merger
• A merger occurs when two organizations of about equal size unite to
form one enterprise.
Franchising
• Under a franchising agreement, the franchiser grants rights to another
company to open a retail store using the franchiser’s name and
operating system. In exchange, the franchisee pays the franchiser a
percentage of its sales as a royalty.
• Acquisitions (Buying an Existing Business)
• Relatively quick way to move into business is through
acquisitions purchasing another company already operating
in that area.