SMALL BUSINESS MANAGEMENT Chapter 8 Marketing Management

How do we make a Buck?

The Role of Marketing Management in the Small Business Defining the target customer, characteristics and wants and needs Understanding the environmentals 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 Consumer Market Organization market Export market How do find out info about the target customer> ________

The Consumer Market Demographics Lifestyle characteristics ________ Lifestyle characteristics Activities, interests opinions Purchase characteristics What when _________ much of product Purchase motivations Why ? Who Is Your Target Buyer? Do you know precisely who your customers are? You may know many of them by name, but do you really know what type of people or businesses they are? For example, if you sell to consumers, do you have demographic information (e.g., what are their average income ranges, education, typical occupations, geographic location, family makeup, etc.) that identifies your target buyer?What about lifestyle information (e.g., hobbies, interests, recreational/entertainment activities, political beliefs, cultural practices, etc.) on your target buyer?This type of information can help you in two very important ways. It can help you make changes to your product or service itself, to better match with what your customers are likely to want. It can also tell you how to reach your customers through advertising, promotions, .How can you refine your understanding of your own customer base? We suggest that you look at the issue from two angles: niche marketing— identifying the heavy users of your product so you can direct your marketing efforts more precisely to those users segmenting the market— dividing the existing market up into sections or segments that may become new niches for your business

The Organization Market Companies and government agencies that purchase from small businesses Influences on industrial demand the _________ , government legislation and regulations, potential competition agencies that exert _________ on purchasers The Bidding-Tendering Process Canadian federal government contracts for about $14 billion in goods and services each year

The Export Market Government Assistance for Exporting Unique _________ of the Foreign Market Mechanisms of Exporting Documentation, credit offered, distribution, Security

Influences External to the Market The Economy Competition Legal _________ Social and _________ Environment Technology External

Influences External to the Market (Fig 8-6) Management of External Influences The Influences Economy, competition, legal, socio/cultural, technology The Possible Characteristics System to Monitor Possible Internal Adjustments

Developing the Product or Service Develop Product and/or Service Policies Decide how the product will be manufactured Understand the _________ life cycle

Developing the Product or Service (cont) Determine Factors that Accelerate Adoption relative _________ complexity divisibility communicability of results

How the Consumer Classifies the Product and/or Service convenience products _________ shopping products appliances, stereos, cameras specialty products Mercedes Unsought Funeral plots The following are classifications for consumer products: Convenience: Packaging is important to sell the product. Consumers will accept a substitute. Marketers focus on intense distribution, time utility. Convenience products can be categorized into staple (milk), impulse (not intended prior to shopping trip). Shopping: Consumers expend considerable effort planning and making purchase decisions. IE appliances, stereos, cameras. Consumers are not particularly brand loyal. Need producer intermediary cooperation, high margins, less outlets than convenience goods. Use of sales personnel, communication of competitive advantage, branding, advertising, customer service etc. Attribute based (Non Price Competition), product with the best set of attributes is bought. If product attributes are judged to be similar, then priced based. Specialty: Buyer knows what they want and will not accept a substitute, IE Mercedes. Do not compare alternatives. Brand, store and person loyal. Will pay a premium if necessary. Need reminder advertising. Unsought: Sudden problem to resolve, products to which consumers are unaware, products that people do not necessary think of purchasing. Umbrellas, Funeral Plots, Encyclopedia!!

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 _________ "we've eliminated the middle man and we're passing on the savings to you"-a typical broadcast from Supermarket XYZ

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

Types of Promotion Promotion Advertising Sales Promotion types, advantages, disadvantages, suitability, costs Sales Promotion Public Relations Personal Selling Tv, radio, newspaper direct mail, outdoor, tradeshows, internet, magazines

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 ?

6. Explain the significance of the Product Life Cycle. 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 ?

9. What are the consumer goods classifications ? 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 ?

13. What are the three methods of price setting ? 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 Practised by Small Business C. Directories of Trade Shows and Exhibitions D. Checklist for a Marketing Plan