SMALL BUSINESS MANAGEMENT

Chapter 8Marketing 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 Service1. 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 ServiceProduction 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 Checks1. 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 Checks5. 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 Checks9. 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 Checks13.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