Definitions of Marketing
 Marketing is the social process by which individuals and
groups obtain what they need and want through creating
and exchanging products and value with others.
Kotler
 Marketing is the management process that identifies,
anticipates and satisfies customer requirements profitably.
The Chartered Institute of Marketing
 The right product, in the right place, at the right time, at the
right price.
Adcock et al.
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More Definitions of Marketing
 Marketing is essentially about marshalling the resources of an organization so
that they meet the changing needs of the customer on whom the organization
depends.
Palmer
 Marketing is not only much broader than selling, it is not a specialized activity
at all. It encompasses the entire business. It is the whole business seen from the
point of view of the final result, that is, from the customer’s point of view.
Concern and responsibility for marketing must therefore permeate all areas of
the enterprise.
Drucker
 This customer focused philosophy is known as the ‘marketing concept’. The
marketing concept is a philosophy, not a system of marketing or an
organizational structure. It is founded on the belief that profitable sales and
satisfactory returns on investment can only be achieved by identifying,
anticipating and satisfying customer needs and desires.
Barwell
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Marketing
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Creating the conditions in which people will
buy from you:
making (potential) customers aware of the
company and its productes;
creating the right company image including
unique selling points;
offering the right products or services;
may need to create a market.
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Market Research
 Identify your market.
 How big is it?
 What’s the competition?
 What do potential customers want that they haven’t
got?
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SWOT Analysis
Used to analyse the position of a company in its
market place:
Strengths: resources and capabilities that can be used to
create a competitive advantage.
Weaknesses: absence of some strengths may be a
weakness.
Opportunities: external factors that might allow the
company to expand profitably.
Threats: external factors that may threaten the company.
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Porter’s Five Forces
Used to analyse a market:
threat of entry
power of buyer
power of suppliers
threat of substitutes
competitive rivalry
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Porter’s Five Forces
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Threat of new entrants
 What is the cost of entering the market (e.g. of writing the
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necessary software)?
Are there significant economies of scale (which work
against new entrants)?
Do existing companies control distribution channels?
Can a new entrant gain an advantage through, e.g.,
specialised knowledge or personal contacts?
Will competitors retaliate?
How important is the ‘brand’?
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Power of Buyers
 high when it’s easy (cheap) to switch between
suppliers (e.g. the market for PCs);
 high where there are a lot of similar suppliers;
 high where there are only a few buyers, e.g. defence
systems.
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Power of Suppliers
 high where the switching costs are high e.g. switching
from one supplier of accounting software to another;
 high where the brand is powerful e.g. IBM, Microsoft;
 buyers are fragmented so they have little bargaining
power, e.g. private buyers of new cars.
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Threat of Substitutes
 product-for-product substitution e.g. DVD for
video cassette;
 substitution of need e.g. increased range of
packages reduces the demand for software
development services or availability of music for
download reduces demand for CDs;
 generic substitution (competing for your money or
your time) e.g. films on video or DVD competing
with books;
 things that may go out of fashion.
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Competitive Rivalry
High when:
 entry is easy;
 the market is profitable
 suppliers and buyers are struggling to control the
market;
 there is a threat from substitute products.
This is why it is always drawn in the centre of the
diagram.
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Marketing – Examples
 Systems for veterinary practices
 Web sites for SMEs in Ceredigion
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Veterinary Practice Software
 Tristan Veterinary Software (Aberdeen)
 Vetcom (Dechra Pharmaceuticals, UK)
 EzeVet (Australian)
 ImproMed (Wisconsin)
 VIA (Veterinary Information Assistant)
(Elinc)(Texas)
 DVMax (New York)
 Vetech Advantage (Illinois)
 Vetinfo (MDS, Arizona)
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Functionality
Core:
 Patient records
 Appointments
 Billing
Optional:
 Time recording
 Drugs database
 Stock control
 Interface to accounts package.
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Size of the market
 The RCVS statistics show some 11,800 vets in full-time
practice in the UK.
 This probably means between 3,000 and 4,000
practices.
 The RCVS will sell you a mailing list of practices.
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Market penetration
 How many practices have computer systems?
 What proportion of the market does each company
hold?
 What are the usual licensing arrangements and prices?
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Possible Unique Selling Points
 Provide a service, as an ASP.
 Provide help to new customers to switch to your
package, e.g. through good conversion utilities or a
conversion service.
 Emphasise that you have a British product aimed at a
British market.
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Analysis
 power of buyers low;
 entry into the market is difficult;
 power of existing suppliers is high.
No obvious risk from substitute products (but what
about an ASP operation?)
Competition?
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The Marketing Mix
 Advertisements in the trade press.
 Demonstrations/stalls at conferences.
 Papers at conferences.
 Mail shots.
 Send demonstration copies to the trade press for
review.
 A month’s trial free of charge.
 Persuade one or two practices to act as
demonstrators, possibly by offering them the
software free.
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Pricing policies
 Initial licence fee plus annual maintenance and
support charge.
 Annual licence fee, including maintenance and
support.
 Site licence, fee per seat or fee per transaction.
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Selling to vets practices
Ideal scenario:
 sales prospect identified by interest at conference
or returning slip from mail shot;
 write to prospect, with more information, and
saying you will telephone to arrange to visit;
 visit, with demonstration. You’ll probably have to
demonstrate to all the partners separately, so be
prepared to spend all day;
 follow up with formal offer and contract, which
practice accepts.
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Businesses in Ceredigion
 3600 VAT registered businesses.
 2500 SMEs received support from Objective 1
funding (but probably some double counting).
 Most probably same receiving Convergence Funds
fro EU
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Some ideas
 tourism
 high quality foods
 crafts.
However, most of the well-known ones already have
good web sites.
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The Marketing Mix
 Local development agencies.
 Reports in the local press and on local radio.
 Advertisements in the local press.
 Sponsorship of local events.
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Sales Management
 recruit and train sales staff;
 plan sales activities;
 ensure necessary support is available to the sales staff;
 manage the tension between technical staff and sales
staff;
 monitor performance of sales force;
 chasing sales situations.
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The Sales Force
 Sales people can only sell to people who want to
buy.
 Sales people need to be friendly, sympathetic and
not aggressive but they also need perseverance.
 Sales people need training.
 Selling is a lonely and stressful activity; it should
not be undertaken by anyone inclined to suffer
from depression.
 The bigger the value of the sale, the more
important the role of the sales force.
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Planning Sales Activities
 identify target customers;
 gather sales intelligence;
 find who to talk to;
 arrange visit;
 monitor results of visits and plan campaign;
 visit regularly.
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What tools does the sales force need?
 reference sells
 knowledge of what they are selling
 web site, brochures, annual reports, etc.
 ‘boiler-plate’ material
 support from appropriate technical staff
 costing information.
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Sales Metrics
 potential customers visited;
 existing customers visited;
 number of client phone calls;
 number of contacts;
 number of appointments set and number
conducted;
 number of new customers;
 value of order intake.
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The Sales Visit
Objectives:
 learn more about the company structure;
 identify the decision makers
 find out how you could help the company;
 find out who else in the company to visit;
 build a good relationship for the future, so that you
will always be invited to tender;
 gossip.
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Pricing – general factors
 cost
 how badly do we need the business?
 how desirable is the client?
 may be prepared to reduce the price to win a new and
prestigious contract
 how much does the competition charge?
 what is the customer’s budget?
 how much follow-on business will there be?
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Pricing
 software products
 need to balance price against sales volume
 services provided on a T & M basis
 prevailing price is important
 bespoke systems provided at a fixed price
 high risk.
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The Sales Package
 Total cost of ownership over a life time of five or seven years
may include:
 initial purchase,
 developing bespoke add-ons,
 installation,
 training,
 consultancy,
 maintenance,
 support.
 Some clients may only look at initial purchase price.
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Package Pricing Example
Year 1
Initial licence fee
Years 2+
50,000
Maintenance and support
10,000
Installation
4,000
Consultancy
6,000
3,000
Training
20,000
5,000
Totals
80,000
18,000
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Pricing – fixed price bespoke
 estimating is usually inaccurate;
 try also to estimate the risk;
 add at least 50% for contingency and to compensate
for the risk;
 may be able to justify a low initial price
 change payments for long term maintenance and
support.
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Miscellaneous
 Ask for the order.
 The role of the sales force does not stop once the sale
has been concluded.
 Cold calling.
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Elements of a software sales proposal
 summary;
 context of the proposal;
 clear statement of what is to be provided and how it meets
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the customer’s requirements;
contractual basis;
costs and time scales;
references;
company information;
CVs of key staff.
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Proposal Quality
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show evidence of having read and understood the ITT;
correct grammar and spelling, and appropriate style;
well produced;
addresses all the issues raised in the ITT.
If the proposal is full of careless errors, what will the
software be like?
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Producing the Proposal
 Typically, between 2% and 5% of the value of a
small contract is spent on producing a proposal,
rather less for larger contracts.
 Typically, the proposal is written by a team
involving sales staff, technical staff and a project
manager.
 Proposals should be:
 formally approved by the appropriate manager;
 subject to QA;
 archived for future reference.
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