Chapter 10: Marketing The Small Business PDF

CHAPTER 10 Marketing the Small Business Objectives:  Definition of Marketing and Marketing Concept  Devising a Marketing Strategy  Discussion of Market Strategy Planning To discuss the Importance of Marketing Research Identify and discuss the Types of Research Marketin...

CHAPTER 10 Marketing the Small Business Objectives:  Definition of Marketing and Marketing Concept  Devising a Marketing Strategy  Discussion of Market Strategy Planning To discuss the Importance of Marketing Research Identify and discuss the Types of Research Marketing is a function concerned with planning and implementing the conception, pricing, promotion, and distribution of products or services that will satisfy the firms objectives Marketing Concept  it provides a guide to small business. It indicates that a match must be made between its intended customers and the firm’s products or service offerings The following questions must be answered:  Who are my customers?  What products or services are needed by my customers?  At what price are the products or services required?  At what place are the identified products or services required?  At what time are the identified products or services required?  At what mode of delivery are the identified products or services required? To provide answers to these questions, the firm must undertake:  Devise a marketing strategy  Engage in Marketing Research  Develop a Marketing Mix  Identify the size of the target market Market Strategy  is the general guide the SBO will use to achieve the firm’s marketing goal. It is a plan for getting products and services into the hands of customers in a timely, cost-effective, and appropriate manner Applicable Marketing Strategy  can be devised after a systematic market strategy planning is undertaken Marketing Strategy Planning:  It is a small business activity which seeks to find attractive opportunities and develop profitable marketing strategies.  It also recognizes the strengths and weaknesses of the firm.  Must be followed by an analysis of the external environment which is useful in identifying attractive market opportunities. Output of Market Strategy Planning:  The Target Market  The Applicable Marketing Mix  The Size of the Market Area  The Marketing Mix The purpose of target marketing is to develop a marketing mix that is appropriate for the company. Marketing mix refers to the set of marketing tools that the firm uses to pursue its marketing objectives in the target market.  The controllable variables are the following: 1. Product offering (including the breadth of the product line, quality levels and customer services ); 2. Price 3. Promotion (advertising, sales promotion and salesforce decision); and 4. Place (distribution)  The Product Offering The products sold by the firm could be offered so that customers will prefer them over the competition.The products may involve a physical good, a service, or a combination of both.It also includes packaging, warranties and guarantees, associated services, installations and maintenance. The Price The price is what is charged for the products offered for sale.In setting the price, the primary consideration is profits, but it must be determined in relation to cost of production and marketing.The price of the competition must also be considered.  The Promotion Promotion refers to communicating information between the company and potential buyers to influence buying attitudes and behavior. Promotion takes the form of any or all of the following: 1. Personal selling – this involves direct communication between sellers and potential customers. 2. Advertising – this consists of any form of paid, nonpersonal presentation of ideas, goods, or services. 3. Sales promotion – this is a promotion activity that stimulates interest, trial, or purchase by final customers.Examples of sales promotion are the use of coupons, point-of-purchase display materials, samples, signs, catalogs, novelties, and circulars.  The Place The place refers to making products available in the right quantities and locations when customers want them. Market Research Marketing Research is any organized effort to gather information about markets or customers. It is a very important component of business strategy Market Research Market research is for discovering what people want, need, or believe. It can also involve discovering how they act. Once that research is completed, it can be used to determine how to market your product. Market Research Market research is a key factor to get advantage over competitors. Market research provides important information to identify and analyze the market need, market size and competition  Types of Market Research 1. Primary Research - consists of a collection of original primary data. It is often undertaken after the researcher has gained some insight into the issue by reviewing secondary research or by analyzing previously collected primary data 2. Secondary Research -involves the summary, collation and/or synthesis of existing research rather than primary research, where data is collected from, for example, research subjects or experiments Primary Research Methods:  Observation  Survey  Experimentation Observation  Involves collecting data by observing the actions of a person or a group of persons.  In this method, there is no direct interaction with the subject being studied Survey  Gathering data by interviewing people.  Personal Interview  Telephone survey  Mail  Internet Personal Interview The most expensive and time consuming method  Telephone Survey Requirement  1. A sound questionnaire  2. A representative sample group  3. Courteous telephone interviewers Internet Survey Questions are posted on the firm’s website or sent to a group of individuals Experimental Method Involves observing the results of changing one variable in a situation while holding all other conditions constant.  Advantages of Primary Research  Researcher can focus on both qualitative and quantitative issues.  Addresses specific research issues as the researcher controls the search design to fit their needs  Advantages of Primary Research  Great control; not only does primary research enable the marketer to focus on specific subjects, it also enables the researcher to have a higher control over how the information is collected. Taking this into account, the researcher can decide on such requirements as size of project, time frame and goal.  Disadvantages of Primary Research  Compared to secondary research, primary data may be very expensive in preparing and carrying out the research. Costs can be incurred in producing the paper for questionnaires or the equipment for an experiment of some sort.  Disadvantages of Primary Research  In order to be done properly, primary data collection requires the development and execution of a research plan. It takes longer to undertake primary research than to acquire secondary data.  Some research projects, while potentially offering information that could prove quite valuable, may not be within the reach of a researcher.  Disadvantages of Primary Research  By the time the research is complete it may be out of date.  Low response rate has to be expected. Secondary Research Possible Sources: 1. The company records 2. Libraries 3. Government Agencies Other sources:  1. Reports  2. Newspapers  3. Magazines  4. Journal Content  5. Government and NGO Statistics Company Records Important source of information. It includes sales report or clues on customer behavior. Library Collection of original studies, trade journals, business magazines and graduate thesis. 1. The Philippine Yearbook 2. The Top 1,000 Corporations 3. Profile of Philippine Industries Major Libraries:  National Library  University of the Philippines – Institute of Small Scale Industries Library  Development Academy of the Philippines Libraries Pasig City  Polytechnic University of the Philippines Library Sta. Mesa CHED  Commission on Higher Education  Provides basic data on the number of schools operating in specific areas, the courses offered, the number of students and others. DTI  Department of Trade and Industry  Information on the number of enterprises existing in an area Local Government  Listing of business establishments  Identify types of business Market Share Forecasting  Purpose of market research- is to determine the quality of sales the company can generate if it will concentrate on a certain market segment.  Market share- refers to the individual firm’s sales as a percentage of total sales in a specific market.  To determine the probable market share of the company the following must be undertaken:  Define the physical limits of the target market area  Determine the potential sales of the target considering its demographic characteristics.  Determine the purchasing power of the target market.  Determine the total sales revenue of the industry in the target market area.  Determine the percentage of the total sales that can be effectively served by the company.  The company’s market share can be computed by using the formula: CMS = CS/TIS Where: CMS = company’s market share CS = Company’s sales TIS =total industry sales  The Potential sales of target market refers to the total sales volume that all competitors could achieve in that particular market segment.  The sales potential of the company refers to the portion of the market potential that the company could expect to achieve under ideal conditions.  Company sales refers to the actual sales made by the company as opposed to the potential sales of the company.  Forecasting Company Sales 1. Market-factor Analysis- this is the sales forecasting method that assumes the future demand for a product is related to the behavior of certain market factors and as a result, involves determining what these factors are and then measuring their relationships to sales activity. 2. Survey of buyer intention- this is a sale forecasting method in which a company asks a sample of current or potential customers how much of a particular product they would buy at a given price during a specified period of time. 3. Test marketing- this is a method of sales forecasting in which a company markets its new product in a limited geographic area, measures the sales, and then from this sample, a projection is made for the company’s sales over a large area. 4. Past sales analysis- this is a method of sales forecasting that applies a flat percentage increase to the average volume achieved last year or to the other average volume of the past few years. 5. Trend analysis- this is a statistical method of forecasting sales over the long term by using regression analysis or over the short term using a seasonal index of sales. 6. Sales-force composite- this is a method of forecasting sales that consists of collecting from all sales people estimates of sales for territories assigned to them during the future period of interest.