Selecting the best product that meet the needs_pdf (1).pdf

SELECTING THE BEST PRODUCT THAT MEETS THE NEEDS. Entrepreneurship Week 6 Lesson Objectives At the end of the lesson, students will be able to: Understand the consumer Decision-Making Process- a step- by-step process used by consumers when Analyze Factors Determining...

SELECTING THE BEST PRODUCT THAT MEETS THE NEEDS. Entrepreneurship Week 6 Lesson Objectives At the end of the lesson, students will be able to: Understand the consumer Decision-Making Process- a step- by-step process used by consumers when Analyze Factors Determining the buying goods or services. Level of Consumer Involvement Distinguish the types of Consumer Buying Decisions and Factors Influencing Consumer Buying Decisions Apply the original “4Ps” of Marketing Mix in Product Presentation Choosing a product that has an enormous production capital requirement that the firm doesn’t have will put the business in jeopardy right from the very beginning. Offering a service that other businesses offered in Rodriguez further your city or municipality will expounded that “Your make your business barely products or services noticeable define your business. in the sea of competition. Your products are your business! If you want to turn your business into an income-generating machine, the first step is to choose the right product or services to sell.”  In finding what product or service will meet the market needs, Firms must first understand consumer behavior. Lamb, Hair and McDaniel define consumer behaviour as a process that a consumer uses to make purchase decisions. It includes factors that influence purchase decisions and the use of products.  The Consumer Decision-Making Process- a step- by-step process used by consumers when buying goods or services. 1. Need Recognition - It occur when are faced with an imbalance between actual and desired states. -Need recognition is triggered by either an internal or external stimulus. -According to Lamb, Hair and McDaniel “want exist when someone has unfulfilled need and has determined that a particular good or service will satisfy it.” A stimulus is defined as any unit of input affecting one or more of the five senses of sight, smell, taste, touch and hearing. 2. Information Search After the consumer recognized a need or want, thy will search for information about the different alternatives available. a. Internal Information search- process of recalling past information stored in the memory. b. External information search- process of seeking information in the outside environment. B1.Non-marketing information source-product information source that is not associated with advertising or promotion. B2.Marketing-controlled information source- product information source that originates with marketers promoting the product.  3. Evaluation of alternatives The consumer will use the information stored in their memory and from outside sources to develop a set of criteria. These standards will help the consumers evaluate and compare alternatives. 4. Purchase After evaluating the alternatives the consumer then decide purchasing the best option. He will then purchase the product that the consumer prefers based on the set criteria. 5. Post-purchase behavior- When consumers buy a product or avail of a service they expect certain outcomes. They will measure their satisfaction in purchasing a product or availing of a service base on their expectations. - As Entrepreneurs, we have to understand how our consumer decision making process to better deliver the products that they will need and want. - Recognizing the needs and wants of consumers and the process on how they decide will make it easier for us to provide the product or service that will meet the market need.  Factors Determining the Level of Consumer Involvement Factors Determining the Level of Consumer Involvement 1. Previous Experience 2. Interest-Involvement is directly related to consumer If the consumer has a Interest. If a consumer is previous experience in interested in cars or computers purchasing a good or definitely their involvement in availing of service their purchasing those level of involvement products is very high. decreases. After repeated Comparing the different product trials, consumers aspects, features, and specifications of every model learn to make quick that common consumers are choices. not even aware of. Factors Determining the Level of Consumer Involvement 3. Perceived Risk of negative 4. Situation consequences- The circumstances of a As the perceived risk in purchase like during the time purchasing a product increases of the pandemic, a low- the level of involvement also involvement purchase make increases. Perceived risk become a high-involvement includes financial-risk, social- one. risk and psychological-risk Factors Determining the Level of Consumer Involvement 5. Social visibility- Involvement increases when purchasing products that are socially visible. Clothing, cars, jewelry, and furniture are examples of products that make statements to the purchaser and therefore carry a social risk.  Types of Consumer Buying Decisions Types of Consumer Buying Decisions 1. Routine-Response Behavior- 3. Extensive-decision making- type of decision making exhibited by consumers The most complex type of consumer decision buying frequently purchased, low-cost goods making, used when buying an unfamiliar, and services; requires little search and decision expensive product or an infrequently bought time Ex. Toothpaste, bath soap, cooking oil item; requires the use of several criteria for evaluating options and much time for seeking information Ex. Water pump, generator 2. Limited-decision making -type of decision making that requires a moderate amount of time gathering information and deliberating about an unfamiliar brand in a familiar product category. Ex. A new brand of exfoliating agent , skin care or hair care.  Factors Influencing Consumer Buying Decisions  Marketing strategy varies depending on the level of involvement associated with the product. Low-involvement products can use a marketing campaign for the general public while high-involvement products must be marketed customized according to the specific needs of a very specialized market. Factors Influencing Consumer Buying Decisions 1. Cultural Factors – 2. Social Factors- It exerts the broadest and deepest influence Most consumers are likely to seek out the opinion of over a person’s consumer behavior and decision other people when purchasing products. They may also making. Marketers must understand the way a seek the opinion of their close associates as guidance person’s culture and its accompanying values whenever purchasing a new product or availing of a new before they come up with a marketing mix to service. The group in society that influences an position the product. Components of culture individual’s purchasing behavior is called the reference include Values, Language, Myths, Customs. group. Rituals, Laws and Material Artifacts Factors Influencing Consumer Buying Decisions 3. Individual Factors 4. Psychological Factors Personal Characteristics that are unique to each These are the factors that the consumers use to interact individual that affects an individual buying with the world and affect the individuals purchasing behavior.(Gender, Age, Family Life Cycle Stage, behavior. It includes perception, motivation, learning, Personality, Self- Concept and Life style) beliefs and attitude.  Understanding the different factors in Consumer Buying behaviour, will increase the chance of Entrepreneurs that they can provide the products and services that will met the market needs. George Rodriguez in his article in powerhomebiz.com entitled What to Sell; How to select the Right Product for your Business, gives guide questions in coming up with the products and services that will meet the Market Need. Guide Questions in coming up with the Products and Services that will meet the Market Need 1. What are your primary considerations for choosing a particular product? - Make a list of your selection criteria, and what you think is important to you in identifying what business to engage in. - There are myriad reasons for selecting a product, and these reasons can include: financial benefit to your business, relatively low investment requirements, positive return on investment, fit with present strategy, feasible to develop and produce, easy to source and procure relatively low risk, and time to see intended results. Guide Questions in coming up with the Products and Services that will meet the Market Need 2. Can you meet the needs of the customer and solve a specific problem? - Your product must address a need or an opportunity. You need to know how your products or services can assist customers. - It must have a real value that customers can recognize, want, and need. Include in your product information and sales materials how your products can benefit the customers, e.g. help reduce time, effort and expense. Guide Questions in coming up with the Products and Services that will meet the Market Need 3. How capable are you to produce the product? -Just as an athlete needs to know his physical condition before he enters a race, you must also know if you have the time, resources, and capability to produce your product. - Many entrepreneurs make the mistake of going forward with a business idea only to find that they cannot afford the manpower required, or do not have the resources to outsource the product development. - You must also evaluate at the onset how you can scale up the production if there is a strong demand for the product. Guide Questions in coming up with the Products and Services that will meet the Market Need 4. What is the size of your potential reachable market? -You need to at least get an idea of the size of your market. Know who are likely to use or benefit from your products. - If you are selling an information product on how to sell at eBay, define who will be the potential customers you think will be interested in your product. - Many small and home business entrepreneurs view market research as an unnecessary and expensive cost, but understanding who and how big your market can pay off in the long run. Guide Questions in coming up with the Products and Services that will meet the Market Need 5. Would you need to comply with government rules and regulations? -New laws or government rules and regulations can impact your product. Some products can be sold immediately without the need for government approval. - Others, however, require permits, licenses and approval from the government. Guide Questions in coming up with the Products and Services that will meet the Market Need 6. If a similar product exists, can your product be superior in its functionality, presentation or marketing? -This entails knowing and understanding your Unique Selling Proposition - Your unique selling proposition is the one thing that makes that your product different than any other. It’s the one reason they think consumers will buy the product even though it may seem no different from many others just like it. - It may be that the product has a lower price or more convenient packaging, or it may taste or smell better, or last longer. Guide Questions in coming up with the Products and Services that will meet the Market Need 7. What barriers must be overcome for a potential new product entry? -Barriers to entry include high research and development expenditure, high presence of startup or sunk costs, and international trade restrictions such as tariffs and quotas - Patents are likewise important barriers for many small and home-based businesses, where your competitor may hold legal protection for an integral component of your product and hence may prevent you from manufacturing your product. -Other barriers to entry include predatory pricing of competitors that will force you to operate at a loss, high advertising and marketing costs to compete with established brands in the industry, and the cost advantages enjoyed by your competitor that allows them to set lower prices. Guide Questions in coming up with the Products and Services that will meet the Market Need 8. What are the potential sales, growth, profits, and time for payback? -Before starting your business, run your numbers first. Get a clear idea of your cost structure, how many sales do you need to have to break even and post a profit, and what is your return on investment will be. Explain why entrepreneurs should understand consumer behavior? Identify the types of consumer buying decisions and discuss the significance of consumer involvement. As an Entrepreneur, How will use your knowledge on the Factors Influencing Consumer Buying Decisions in coming up with the best product that will met the market needs? The Original “4Ps” of Marketing Mix  PRODUCT The Original “4Ps” of Marketing Mix PLACE PRICE PROMOTION The Original “4Ps” of Marketing Mix - PRODUCT Product refers to the Entrepreneurs create The tangible good or products because of said products must intangible service an existing need or satisfy of the offered by the want. consumers better business to the than the other target consumers. competing products. Two basic entrepreneurial principles relative to product are: 1. The product is only produced once there is an existing need or want. 2. The product must satisfy the need or want better than the competing products.  Information about consumers’ tastes, preferences, perceptions, and priorities has significant contribution to the design of the product. This enables the entrepreneur to satisfy the needs and wants of the customers. Satisfied customers mean satisfactory sales and income for the entrepreneur.  In order to improve the marketing performance of the primary product, big businesses nowadays, adopt the concept of product mix where they make different products or services available to consumers on top of the primary product. Some experts in the field of marketing and entrepreneurship also call this product strategy as differentiation strategy. The Original “4Ps” of Marketing Mix - PLACE The term strategic place is The term place in the The entrepreneur must relative.Most entrepreneurs marketing mix refers to the establish his/her equate strategic place with a place where the target business product in the location or site where there consumers are. most strategic place or are plenty of people during a location. particular time. The basic concept relative to place in marketing mix is very simple and straightforward, that is putting your business where your consumers are 1. The nature of the business and the type of the product significantly determine the most appropriate place for the business. 2. There are businesses and types of products that require sufficient parking space for consumers. 3. A spot in the corner of a street does not apply to all business and products. The Original “4Ps” of Marketing Mix - PRICE Price regulates the It is the amount of It is the amount of cash value of a good or money required in charged for a product or service to the buyers, order to buy a service or the sum of values also to the sellers product and its that consumers exchanged for accompanying the benefits of having or service using a product or service.  Price means the money value of a product or service expressed in terms of peso or centavos. It is also the amount of money needed in order to acquire a product or service and its accompanying services. (p.91 Elements of Marketing 4th Edition by Mutya 2007) Some variables highly influence the setting of prices of goods or services: 1. Availability of the competing 2. Cost of marketing a product products Cost refers to the amount spent by If the supply of the rival product is the manufacturer in view of the high, the price of the product is low. expected future benefits. This Manufacturers incline to gradually includes the direct materials pull down the prices when the supply (materials that form part of the is high and assume a reverse finished product), direct labor (the mechanism when the supply is low. wages paid to workers directly involved in manufacturing a product), and factory overhead Some variables highly influence the setting of prices of goods or services: 3. Type of product 4. Presence of substitute product Classified either Industrial product Substitute products set the limit to the (used as raw materials to other selling price of the primary product since manufacturing entities with higher consumers can easily switch and buy prices than a consumer product yet substitute products at lower prices. The remains low for a long period of time) threat of substitute products is felt in the or Consumer products (used and realm of consumer products especially consumed by individual consumers when prices are low resulting in stiff that are convenient, shopping, and competition. highly-priced products, which are dependent on the consumers). Some variables highly influence the setting of prices of goods or services: 5. Stages of the product in the market – 5.1. Introductory stage (price skimming approach where new product is priced higher as introduced yet reduced as competitors increase and price penetration approach where product is introduced at a low price) 5.2. Growth stage and 5.3. Maturity stage (cost-based model where the price is equal to cost plus desired profit margin). 5.4. Decline stage (product experiences a decreased or negative growth in sales that leads to low profits or eventual losses to discontinuance of production and distribution of the product).  Some variables highly influence the setting of prices of goods or services: 6. Demographic profile of the target consumers – The demographic profile of consumers highly influences the process of setting the most appropriate prices of goods or services. Pricing strategies used by retail industries includes psychological pricing and discount. 6.1. Promotional pricing (products sold at low prices in a limited period like midnight sale, or anniversary sale.) 6.2. Odd or even pricing (products sold at prices that end in an odd number 5 like Php99.95 or Php399,95 appear cheaper than ending in even number 0 like Php100 or Php400). 6.3. Prestige Pricing (where products are purposely sold at a higher price in order to create a high or superior image like skin lotion sold at Php700 while similar products sold between Php150-Php200). Discount pricing (is used to keep up with the competition in the market, recreate interest in the product, and get rid of the old stock). Other demographic factors considered are age, gender, civil status, education, occupation, race, and religion of the target consumer. Promotion employs the most appropriate media to reach the consumers including the following: The most important element in 1. Advertising advertising is the message that must be The most common medium in conveyed to the consumers, that should promoting a product or service is be able to: advertising in the following forms: 1.1. (a) attract the attention of the consumers; television or radio commercials; 1.2. (b) communicate the message of the product; print advertisement like billboards, (c) elicit the feeling or desire to buy the product; magazines, or newspapers; 1.3. Online (d) identify the benefits of the product; (e) advertising; and 1.4. Packaging ads. convey the message using plain and simple language; (f) appeal to consumers’ understanding by being meaningful and believable; and (g) distinguish the product from other similar products. Promotion employs the most appropriate media to reach the consumers including the following: 2. Publicity – They then publish or write about the product, service, or business negatively or This is when the members of the unfavorably, particularly if they do not have the media are informed through a formal full knowledge of the product or service. statement or press release about a Publicity does not include compensation or fee particular event where the product or to media when strong public relation is service will be presented or endorsed established with the general public. Promotional by well-known personalities. items like pens, mugs, and t-shirts with business name and logo given to the target consumer is another approach to handling publicity. Promotion employs the most appropriate media to reach the consumers including the following: 3. Personal Selling – This gives the salesperson a competitive position to influence the consumers to buy the product, involves a salesperson who has yet entails having full knowledge of the product, personal and direct contact with the particularly its features and benefits. Examples potential consumers, thus this of this includes insurance companies and sales approach does not cover consumers representatives of organic health products even who have not visited the business Tupperware has been successful in promoting its establishment or have not been product mix using this approach. approached by the sales force. Promotion employs the most appropriate media to reach the consumers including the following: The most popular promotional tools are discounts (allows to buy a product or avail 4. Sales promotion – services lower than the regular selling price aims to influence the target usually during anniversary sales or Christmas consumers to buy the product or season), coupons (incentive to patronizing avail of the service now and not customers where they are encouraged to buy a tomorrow. This involves giving lot to accumulate more coupons), cash rewards incentives to consumers so they will (helps the business to gain the loyalty of acquire the product or service. customers who become members with issued plastic cards to record accumulated points every purchase), and gift certificates (incentive given to customers who completed the required amount of purchases). Promotion employs the most appropriate media to reach the consumers including the following: 5. Direct marketing – This is convenient for both the entrepreneur and is undertaken through the internet. consumer who can choose from a wide range of The entrepreneur starts building a products and buy the desired product anytime customer database performs a one- and anywhere. The products sold are cheaper on-one approach in building than those sold in physical stores. customer relationships and sells the product online. PREPARE FOR YOUR PRODUCT PRESENTATION Refer to the Guide Questions Answer those questions using the products that you will in coming up with the use in your presentation. Products and Services that will meet the Market Need Good luck and God bless!