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ENTREPRENEURSHIP AND INNOVATION BY: ANTHONY MOONGA MOBILE: 0977- 808172 MODULE NINE MODULE NINE: MARKETING STRATEGIES IN SMALL BUSINEESES What is Marketing? In Entrepreneurship, Marketing may be defined as finding out what your customers need and want and then figuring out a way to profitably meeting those customer needs and wants Marketing can further be defined as: The Management process responsible for identifying, anticipating and satisfying customer requirements profitably To satisfy your customers and make a profit requires the following key considerations:- Products: providing the selection of products/services needed by customers Prices: setting prices the majority of your customers are willing to pay Place: locating your business where you can reach the majority of your target customers Promotion: devising means and ways of effectively and efficiently informing and attracting your target customers Procurement: buying or producing the products/services at prices that can make a profit Key Marketing Functions Within any business organization, the marketing unit fulfils some very important functions, which are activities that must be performed to move products from producers to consumers. Such activities may be identified as follows: Product development: Marketing advises the production unit on what to produce; the quality, style, design, brand name and packaging – all based on customer expectations and market research Pricing: Marketing plays a large role in setting prices, whether at, above or below the competitor’s prices and in determining a system of discounts for the distributors/middle people who handle the products Key Marketing Functions Buying: This involves selecting from an assortment of goods, determining quantity and quality, selecting sources of supply and negotiating the terms of purchase. (This is sometimes called purchasing or procurement). Advertising: This is the impersonal presentation of goods through the mass media, namely radio, television, newspapers, etc. Advertising agencies may assist the Marketing Unit in performing this function Key Marketing Functions Personal selling: This is selling done through person-toperson contact. A large number of sales people are engaged in outside sales work or in retail sales in shops and market places. The sales force must be properly selected, trained and motivated to perform. Sales promotion and merchandising: This involves the development of such tools as point-of-purchase displays, window displays, free samples of the product, exhibitions at trade fairs and shows, news releases, price reduction during special ‘sales’ and so forth Physical distribution: Marketing arranges for the physical handling of goods, storage, transportation and proper inventory management Key Marketing Functions Market research: Marketing must gather and analyse information about demand, consumer wants, competition, government policies, new products and general changes in our social structure. This function underscores the fact that marketing begins even before the product is produced Credit management and financing: Credit is often used in serious business transactions where firms buy and sell on credit. In addition, various types of financing provide permanent as well as temporary capital for the marketing process. Post-sale transaction Marketing must arrange to handle customer complaints after the sale and provide for after-sales service, especially for machines, equipment and consumer durable goods. This shows that marketing does not end with the ringing of the cash register Marketing Mix A company that follows the marketing concept will use the marketing mix. The marketing mix a combination of factors which can be amended or adapted to suit the requirements of individuals or groups of customers. It is the “toolbox” of the marketers. Marketing Mix The Seven Ps The term “Marketing Mix” covers the seven controllable variables popularly referred to as the Seven Ps; Product Price Place Promotion People Processes Physical evidence Marketing Mix It will be appropriate additions(the last three) to explain the new People This aspect covers training and motivation of people involved in the marketing effort. It is important that the correct image is portrayed to a customer at all times and the staff are the people that deliver that image. Marketing Mix Processes This element refers to the systems used in the organisation which contributes to the marketing effort. All systems in the organisation should be integrated in such a way so as to become customer friendly so that it can add to the overall marketing effort Marketing Mix Physical evidence Refers to what the customer “sees” surrounding a purchase. Over all the term covers the physical appearance and ambience that collectively imprint on the customers. It could be the showroom, the trimming that are in the hotel, quality of information leaflets, external aspects of the building, type of music played in the background etc. Marketing Mix The concept of the 7 Ps were developed from the Marketer’s viewpoint of what is required. Kotler now considers marketing’s role from the perspective of what customers and consumers need. He therefore introduced the C Concept Marketing Mix # Seven Ps Seven Cs 1 Product Consumer Value 2 Price Cost 3 Place Convenience 4 Promotion Communication 5 People Consideration 6 Processes Coordination & Concern 7 Physical Evidence Confirmation IMPORTANCE OF MARKETING IN AN ENTERPRISE Customers are the most important people for your business. If it were not for your customers, you would not be in business. If you do not provide what your customers want, at prices they are willing to pay and do not treat them with respect, they will buy somewhere else (they will buy from your competitors). Without customers, there will be no sales and your business will have to close down eventually. Satisfied customers will come back and buy more from your business. They will begin to be your business ambassadors, going round spreading the good news about your business’ good products/services; your good prices, your good customer care and reception, etc. They will tell their friends and other people about your products and business. More satisfied customers means larger sales and bigger profits. WHAT IS A MARKET? The word market has two different meanings:- Market, for example, a vegetable market, means a PLACE where people meet to sell and buy vegetables and related merchandise In Marketing, market also means customers, people or other businesses, that want your products/services and are willing to pay for them For example In most areas, there is a large market for school uniforms. The school going children use school uniforms but they are not the market. The parents buy the uniforms for their children. Therefore, the market for school uniforms are the parents or guardians of school going children who are willing to pay for the uniforms. For example In Matero township of Lusaka, there are probably more than one hundred thousand people but the market for all bar owners are the number of people who drink beer, which may be a very small fraction of the total population. What is selling? Selling is the part of Marketing that involves directly or indirectly contacting, convincing and finally striking contracts with customers to purchase your product or service. How to increase customer sales Sell the solution the product provides to the customer, not just the product Sell the benefits of the product to the customer not just the features it has Build relationships with the customers not just a sales transaction What an entrepreneur ought to know about a customer A customer is the most important person in any business A customer is not dependent on an entrepreneur, but the entrepreneur on the customer A customer is not an interruption of the entrepreneur’s work. A customer is the purpose of an entrepreneur’s work A customer does an entrepreneur a favour by calling. An entrepreneur does not do a customer a favour by serving A customer is part of an entrepreneur’s business not an outsider What an entrepreneur ought to know about a customer A customer is a human being like an entrepreneur, with the same feelings and emotions but it is the entrepreneur who must exercise the highest form of tact, diplomacy and courtesy because he needs to sell A customer is not someone to argue or match wits with A customer takes his wants and needs to an entrepreneur, and it is an entrepreneur’s job to fulfil those wants and needs What an entrepreneur ought to know about a customer A customer is always deserving of the most courteous and attentive treatment an entrepreneur can give A customer is the person who makes it possible for an entrepreneur and his workers to earn their salaries. He keeps the entrepreneur and his workers in employment Principles of Excellent Customer Care Always assure the customers that you are there for them Promptly greet customers by name if you know them Listen to the customer and clarify needs and wants through questions Always ask customers for suggestions to improve your business Principles of Excellent Customer Care Have a positive attitude – be encouraging and helpful, smile and do not be negative or defensive Treat customers the same way irrespective of their status Stress to all employees the need for excellent customer service When there are many customers, employ the first come, first served strategy Remember: The Customer is always right How to Retain Good Customers and keep sales high Properly execute the sale – get it right the first time Offer improved value Be flexible to solve the customer’s problem Service the customer before, during and after the sale Quickly follow up and attempt to resolve complaints. Provide room for customers to always suggest to you possible improvements Tips for Improving Appeal to Customers Smiling and neat sales persons Clean and tidy store both inside and outside Selling the right product/services always Bright and well-lit store Tips for Improving Appeal to Customers Shelves stocked neatly and easy to reach Signs on specials and new items Inviting entry way, not crowded by rowdy youths playing games Well displayed price tags Market Research in an enterprise To understand your market and customers better, ask yourself the following questions:- Which different kinds of customers am I trying to sell to? What products or services do they usually want? Why do they want them? What prices are they willing to pay? Market Research in an enterprise Where are these customers and where do they usually buy from and when? How often and how much do they buy? Who are my competitors, that is, other businesses selling products and services similar to mine? How good are my competitors? Finding answers to these kinds of questions is called Market Research. Market Research is very important for your business. It means getting information about your market. The more information you have about your market and your competitors, the better the decision you can make about: What products or services to sell (Product) What prices to charge (Price) How to get your products/services to your customers (Place) How to inform and attract customers (Promotion) Some practical ways of doing simple Market Research Learn to talk to your customers. This must be in such a way that you extract a lot of genuine information from them about how they feel about your business Listen to what your customers say to each other about your business and goods and services. You must be alert to get your customers’ comments You must sometimes learn to find out why some customers keep by-passing you, to buy from your competitors Some practical ways of doing simple Market Research Study your competitors’ businesses Learn to ask suppliers, other businesses and business associates which goods sell well in their business; what they think about your products or services Check your order books, your sales records and your stock records to know which goods or services sell well Learn to get a lot of information by reading newspapers, catalogues, trade journals and magazines to get information and ideas on new products or services Some practical ways of doing simple Market Research Learn to belong to Associations like Business Associations, Chambers of Commerce and Farmers’ Unions. These are normally information centres, with very useful information which can help you improve your marketing Learn to attend trade fairs, shows, exhibitions, etc Learn to attend seminars, workshops and other related training programs Develop a habit of visiting some libraries that stock information on trade and commerce EXPORT MARKETING International Marketing is based on marketing in general but the major difference is that your product or service will have to cross political and national borders. This in effect has implications for the marketing of your product. An exporter will need to know inter-alia, potential demand for the product/service in the foreign country, competition from domestic and imported products, national regulations (home country and export market), distribution channels, political climate, financing, currency exchange risk and legal aspects. Specific issues relating to an export market will include: Existing export barriers of the own country or import barriers of the target country Export financing Population to ascertain size of the market Income distribution and disposable income Economic situation including foreign currency position Specific issues relating to an export market will include: Philosophy and religion Consumer characteristics such as literacy levels, eating habits, language, culture and so forth Communication including transport networks Environment situation and security measures Credit rating Trade policy Barriers to Export Trade One of the challenges that export trade poses are the various tariff and non-tariff barriers that an exporter is likely to meet in the course of doing business. Despite the trade regulatory framework instituted by the World Trade Organization (WTO) and other multilateral agreements, regional and bilateral agreements, international trade is not completely free. Barriers to Export Trade The following are some of the impediments to free flow of goods and services in export trade: Quality Control Some countries have placed stringent measures with regard to imports of food stuffs, for example groundnuts will only be allowed into their markets if levels of afflo-toxin content conform to stipulated standards, or the packaging has to meet defined standards according to size, strength used, materials etc. Strict regulations are often applied also to safety aspects (eg, electrical appliances) and environmental aspects of products to be exported. Barriers to Export Trade Documentation An exporter is normally required to complete a number of documents some of which may be rejected on presentation to customs authorities due to technical reasons. In some cases, this has interfered with the free movement of goods resulting in delays and missing delivery dates. Barriers to Export Trade Rules of Origin This has at times been a bone of contention especially when the product is originating from developing countries. The 35% local content of products originating from COMESA/SADC countries for example cannot be achieved by some countries, which depend on the importation of raw materials for the production of their export products. Barriers to Export Trade Custom Valuation Customs authorities have at times either knowingly or otherwise valued differently the same product/commodity to suit their needs. As a result, there have been delays in the clearance of goods. Red Tape These are administrative delays usually associated with the issuance of certain documents such as import permits and sheer inefficiency. Barriers to Export Trade One of the challenges that export trade poses are the various tariff and non-tariff barriers that an exporter is likely to meet in the course of doing business. In order to systematically assess the market potential for your product, you should carry out a detailed export market research in the target market. Export market research is the process of gathering and evaluating information in the foreign target market with the objective of identifying market opportunities and constraints. Some of the specific issues an export market research should cover include: Demand, growth and price trends for the product (if the product already exists) Consumer purchasing habits and cultural practices The extent of the competition and who are the main competitors in a specific market or region Market characteristics: what do they produce, how do they distribute, how do they communicate and what are their strategies The size of the market itself: how many inhabitants are there, how is the economy doing and what about the investment climate A company may research a market by using either primary or secondary data sources. Primary market research is when data are collected directly in the foreign market place through interviews, surveys and other direct contact with representatives and potential buyers or customers. The Secondary market research is when a company collects data from various secondary sources such as trade statistics for a country, trade magazines, the internet, International Trade Centre (ITC) , published business articles, etc. This method is also known as Desk Research. Obtaining information from secondary sources is less expensive and helps the company to weed out unpromising markets and therefore enables the company to focus its marketing efforts on few selected promising products and markets. The main disadvantage of secondary data sources is that the information may not be reliable because it may either be outdated, not specific to your business needs or distorted by incomplete datagathering techniques. However, having decided to undertake an export market research two factors will have to be taken into consideration:- Whether to use desk or field research or both Where to source the information Thank you