marketing the small business

MARKETING THE SMALL BUSINESS

Small Business and Marketing Concept

• The marketing concept serves as a guide for small businesses in order for them to be able to match the target market and the products and services offered.


The following questions must be answered to achieve the desired match:

1. Who are my customers?2. What are the products and

services needed by my customers?

3. What should the price of the products and services be?


The following questions must be answered to achieve the desired match:

• Where should the products and services be sold?

• When should the products and services be sold?

• How should the products and services be delivered?


The following must be undertaken to provide the answers to the questions cited:

1. Devise a marketing strategy.2. Engage in marketing research.3. Develop a marketing mix.4. Identify the size of the target

market.

Devising a Marketing Strategy

• A marketing strategy serves as a guide to the small business organization (SBO) for it to be able to achieve its goal. It is necessary so that the organization will be able to deliver the products to the customers in a cost effective, timely and appropriate manner.

Market Strategy Planning

• A method used by the organization to be able to determine the strengths and weaknesses of the company and find attractive opportunities and develop profitable marketing strategies followed by an analysis of the external environment.

Market Strategy Planning

The output of the market strategy plan contains the following:

1. The target market2. The applicable marketing

mix3. The size of the market area

Target Marketing

Refers to the process of selecting the target market and choosing a marketing mix to satisfy their needs and preferences.

The following steps are undertaken in target marketing:

1. Identifying the target market.2. Identifying their wants and

needs.3. Measuring the size of the target

market area.

Identify the strengths and weaknesses of the firm.

Analyze the external environment.

Identify the attractive market opportunities.

Identify the target market.

Determine the applicable marketing mix.

Determine the size of the market area.

Market Strategy Planning Process

Identification of the Target Market

• It is the specific market segment the business organization wishes to serve.

• Before deciding on which among the specific market segment the firm will wish to serve, the small business organization (SBO), the firm must first decide on the number of markets they wish to serve.

Identification of the Target Market

The firm may be one of the following:

1. Mass market company

2. Market segment company

3. Multi segment company

Choosing the Target Market

The following should be considered when deciding on which of the market segment the firm intends to reach:

1. The goods and services category of the firm

2. The firm’s goals3. What the

competitors are doing

4. The size of the various segments

Choosing the Target Market

The following should be considered when deciding on which of the market segment the firm intends to reach:

5. The relative efficiency of each segment of the firm

6. The resource required

7. Other factors

Identifying the Characteristics of the

Target MarketThe important characteristics of

the target market should be identified to effectively serve the target market.

1. Age2. Sex3. Family Size4. Family Life Cycle5. Income

Identifying the Characteristics of the

Target Market

The important characteristics of the target market should be identified to effectively serve the target market.

6. Occupation7. Religion8. Race9. Nationality

Measuring the Size of the Target Market

The following information must be provided in order for the SBO to make a match between itself and the target market:

1. The number of potential consumers

2. The population growth trend of the target market area

The Target Market

Preschool

Elementary

High School

College

Vocational

Identified with highly desirable characteristic

Identified with moderately desirable characteristic

Identified with less desirable characteristic

Identified with less desirable characteristic

Identified with least desirable characteristic

The Marketing Mix

• Marketing mix is a set of tools the company uses to achieve its goals.

• Target marketing is used to be able to identify the appropriate marketing mix for the business.

• The marketing tools are controllable variables used to make a marketing mix.

The Marketing Mix

The controllable variables are the following:

1. Product offering2. Price3. Promotion4. Place

Product Offering

• The products sold could be offered so that the customers will prefer them over the competition.

Price

• The amount charged in exchange for the products and services sold.

Promotion

• Disseminating the information to potential buyers in attractive ways to entice them to avail.

1. Personal selling2. Advertising3. Sales

promotion

Place• The place of

the product should be near the target market in order to make it available whenever the customers want them.

The Importance of Market Research

• Knowing the needs of the target customers will be very helpful in designing the right marketing mix.

Types of Market Research

• Primary research; and• Secondary research.


PRIMARY RESEARCH• The firm could obtain primary

data about potential customers and competitors through any of the following methods;

• Observation• Survey; and • Experimentation.

Observation Method

• method involves collecting data by observing the actions of a person or a group of persons.

Survey Method

• consist of gathering data by interviewing people. This may be undertaken through any of the following techniques: – personal interview, – telephone survey, by mail, or by

the Internet.

Survey Method

• The personal interview is the most expensive and time consuming.

Personal interview

Survey Method

• Information can be collected quickly and at the least cost through

telephone surveys.

Telephone interview

• When telephone survey are not feasible, sending questionnaires through the mail may be resorted to and also internet survey, questionnaires can be posted on a firm’s website or sent by e – mail to a sample group of individuals.

Experimental Method

• The experimental method of gathering primary data involves observing the results of changing one variable in a situation while holding all other conditions constant.


• Secondary ResearchThe information provided by secondary sources are those previously gathered by other persons or institutions to satisfy their own specific requirements.

• The possible sources of secondary data are the following;–The company’s records;–Libraries; and–Government agencies.

Company records• The company’s internal

records are important sources of information. Sales reports, for instance, may provide some clues on customer behavior.

LibrariesGood libraries provide

information that may be useful to the small business operator.

Among the more useful sources of

secondary data found in may libraries are the following:– The Philippine Yearbook;– The top 1,000 corporations; and– Profile of Philippine Industries.

The major libraries which may be useful to the small business owner are the following

• National Library at Ermita, Manila• University of the Philippines – Institute

of Small Scale Industries Library.• Development Academy of the

Philippines Libraries at Pasig City;• Asian Institute of Management Library

at Makati City; and• Polytechnic University of the Philippine

Library at Sta. Mesa, Manila

Government Agencies

• There are government agencies that generates information intended to assist various users.

Market Share Forecasting

• One of the most important estimates a small business operator has to know is the forecast of how much sales the company will make for a given period. The purpose of market research is to determine the quality of sales the company can generate if it will concentrate on a certain market segment.

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

market 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.

Forecasting Company Sales

• Market – factor analysis this is a 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.


• Survey of buyer intentions This is a sales forecasting method in which a company asks a sample of currents or potential customers how much of a particular products they would buy at a given price during a specified period of time.


• Test marketing

This is a method of sales forecasting in which a company markets its new products in a limited geographic area, measures the sales and then from this sample, a projection is made for the company’s sales over a larger area.


• 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 average volume of the past few years.


• Trend Analysis

This is a statistical methods of forecasting sales over the long term by using regressionanalysis or over the short term using a

seasonalindex of sales.


• 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.


• Executive judgement

This is a method of forecasting sales that

consist of obtaining opinions regarding future sales volume from one or more executives.