SMALL BUSINESS MANAGEMENT Chapter 8 Marketing Management

Kotler’s social definition: “Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others.”

The Role of Marketing Management in the Small Business  Defining the target customer, characteristics and wants and needs.  Understanding the environmental that affect operations.  Developing the product and/or service.  Developing the channels of distribution.  Setting price levels of the product and/service.  Promoting the product and/or service to those influential in its purchase.

Target Customer(Market). 1. Consumer Market. 2. Organization market. 3. Export market.  How do find out information about the target customer---  Market research.

Market Research data collection

1. The Consumer Market  Demographics. Age, income, education, occupation, location.  Lifestyle characteristics. Activities, interests opinions.  Purchase characteristics. What when where how much of product.  Purchase motivations. Why?.

2. The Organization Market  Companies and government agencies that purchase from small businesses.  Influences on industrial demand. The economy, Government legislation and regulations, Potential competition. Agencies that exert influence on purchasers.  The Bidding-Tendering Process.

3. The Export Market  Government Assistance for Exporting.  Unique Characteristics of the Foreign Market.  Mechanisms of Exporting. Documentation, credit offered, distribution, Security.

Influences External to the Market  The Economy.  Competition.  Legal Restrictions.  Social and Cultural Environment.  Technology.

Influences External to the Market.  Management of External Influences The Influences.  Economy, competition, legal Restrictions, socio/cultural Environment, technology. The Possible Characteristics. System to Monitor. Possible Internal Adjustments.

Developing the Product or Service 1. Develop Product and/or Service Policies. 2. Decide how the product will be manufactured. 3. Understand the product life cycle. appeal to new target markets, adjust to changes in customer needs, increase promotion to increase purchase frequency, emphasize different uses, offer a new product or service.

product life cycle

Developing the Product or Service (cont) 4. Determine Factors that Accelerate Adoption. relative advantage. Complexity. Divisibility. communicability of results.

Developing the Product or Service (cont) 5. Understand How the Consumer Classifies the Product and/or Service. convenience products. shopping products. specialty products.

How the Consumer Classifies the Product and/or Service  convenience products. Staple vs impulse.  shopping products. appliances, stereos, cameras.  specialty products. Mercedes.

How the Organizations Classifies the Product and/or Service Production Goods Raw Materials: Component parts: becomes part of the physical product Process materials: not readily identifiable part of the production of other products Support Goods Major Equipment: Accessory Equipment: Type writers and tools Consumable Supplies: IE Paper, pencils or oils Business to Business services: Financial, legal marketing research etc.

Developing the Distribution System (Fig 8-9)  Channel Options. Manufacturer to Consumer (Short-Direct). Manufacturer to Wholesaler to retailer to consumer (Long-Indirect).  Channel length.  Channel Intensity.  convenience goods, and Raw material.

Setting the Price for the Good and/or Service  Cost-Based Pricing  Demand-Based Pricing elasticity  Competition-Based Pricing Movement & Shift of demand curve

Promotion Types of Promotion Advertising.  types, advantages, disadvantages, suitability, costs. Sales Promotion. Public Relations. Personal Selling.

Steps in a Promotional Campaign 1.Set Promotional Objectives (NUMBERS). 2.Determine the Promotional Target. 3.Understand the Target’s Needs and Perceptions of the Product/Service. 4.Develop the Relevant Theme. 5.Determine the Method or Media to Use.

Steps in a Promotional Campaign (cont) 6.Develop a Specific Promotional Message. 7.Set the Promotional Budget. 8.Implement the Program. 9.Evaluate the Effectiveness of the Promotion.

Concept Checks 1.What is marketing?. 2.What are the three target markets in which a small business can segment?. 3.What three areas should be investigated before developing an export market?. 4.What are the most common external influences that can affect a small business?.

Concept Checks 5.What steps should an owner- manager follow in working with external influences?. 6.Explain the significance of the Product Life Cycle. 7.When would a small business have another company manufacture its product?. 8.What factors can assist speeding up the adoption rate of new products ?.

Concept Checks 9.What are the consumer goods classifications?. 10.What are the three main decisions in developing the distribution system?. 11.What characteristics help determine the length of the distribution channel?. 12.What characteristics require a more intensive channel?.

Concept Checks 13.What are the three methods of price setting?. 14.Define price elasticity. 15.What are the four methods of promoting a product or service?. 16.Identify the steps in developing a promotional campaign.

Appendices  A. Agencies Providing Export Assistance  B. Advertising as Practiced by Small Business  C. Directories of Trade Shows and Exhibitions  D. Checklist for a Marketing Plan