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CHAPTER 10

Marketing the Small Business

Objectives:

Definition of Marketing and Marketing


Concept
Devising a Marketing Strategy
Discussion of Market Strategy Planning
To discuss the Importance of Marketing
Research
Identify and discuss the Types of Research
Forecasting Company Sales

Marketing
is a function concerned with planning and
implementing the conception, pricing,
promotion, and distribution of products or
services that will satisfy the firms objectives

Marketing Concept

it provides a guide to small business. It


indicates that a match must be made between
its intended customers and the firms
products or service offerings

The following questions must be


answered:

Who are my customers?


What products or services are needed by my
customers?
At what price are the products or services required?
At what place are the identified products or services
required?
At what time are the identified products or services
required?
At what mode of delivery are the identified
products or services required?

To provide answers to these


questions, the firm must undertake:

Devise a marketing strategy


Engage in Marketing Research
Develop a Marketing Mix
Identify the size of the target market

Market Strategy

is the general guide the SBO will use to


achieve the firms marketing goal.
It is a plan for getting products and services
into the hands of customers in a timely, costeffective, and appropriate manner

Applicable Marketing Strategy

can be devised after a systematic market


strategy planning is undertaken

Marketing Strategy Planning:

It is a small business activity which seeks to


find attractive opportunities and develop
profitable marketing strategies.
It also recognizes the strengths and
weaknesses of the firm.
Must be followed by an analysis of the
external environment which is useful in
identifying attractive market opportunities.

Output of Market Strategy


Planning:

The Target Market


The Applicable Marketing Mix
The Size of the Market Area

The Marketing Mix


The purpose of target marketing is to develop a
marketing mix that is appropriate for the
company.
Marketing mix refers to the set of marketing tools
that the firm uses to pursue its marketing
objectives in the target market.

The controllable variables


are the following:
1. Product offering (including the breadth of the
product line, quality levels and customer
services );
2. Price
3. Promotion (advertising, sales promotion and
salesforce decision); and
4. Place (distribution)

The Product Offering


The products sold by the firm could be
offered so that customers will prefer them over
the competition.
The products may involve a physical good, a
service, or a combination of both.
It also includes packaging, warranties and
guarantees, associated services, installations
and maintenance.

The Price
The price is what is
charged for the products
offered for sale.In
setting the price, the
primary consideration is
profits, but it must be
determined in relation
to cost of production
and marketing.The price
of the competition must
also be considered.

The Promotion
Promotion refers to communicating
information between the company and
potential buyers to influence buying attitudes
and behavior.

Promotion takes the form of any or all of the following:


1. Personal selling this involves direct
communication
between sellers and potential customers.

2. Advertising this consists of any form of paid,


nonpersonal presentation of ideas, goods, or services.
3. Sales promotion this is a promotion activity that
stimulates interest, trial, or purchase by final
customers. Examples of sales promotion are the use of
coupons, point-of-purchase display materials, samples,
signs, catalogs, novelties, and circulars.

The Place
The place refers to making products
available in the right quantities and locations
when customers want them.

Market Research

Marketing Research
is any organized effort to gather information
about markets or customers.
It is a very important component of business
strategy

Market Research
Market research is for discovering what people
want, need, or believe. It can also involve
discovering how they act. Once that research is
completed, it can be used to determine how to
market your product.

Market Research
Market research is a key factor to get advantage
over competitors. Market research provides
important information to identify and analyze
the market need, market size and competition

Types of Market Research


1.

Primary Research - consists of a collection of original


primary data.
It is often undertaken after the researcher has gained
some insight into the issue by reviewing secondary
research or by analyzing previously collected primary data

2. Secondary Research -involves the summary, collation


and/or synthesis of existing research rather than primary
research, where data is collected from, for example, research
subjects or experiments

Primary Research Methods:

Observation

Survey

Experimentation

Observation

Involves collecting data by observing the


actions of a person or a group of persons.

In this method, there is no direct interaction


with the subject being studied

Survey

Gathering data by interviewing people.

Personal Interview
Telephone survey
Mail
Internet

Personal Interview
The most expensive and time consuming
method

Telephone Survey Requirement

1. A sound questionnaire

2. A representative sample group

3. Courteous telephone interviewers

Internet Survey
Questions are posted on the firms website or
sent to a group of individuals

Experimental Method
Involves observing the results of changing one
variable in a situation while holding all other
conditions constant.

Advantages of Primary Research

Researcher can focus on both qualitative and


quantitative issues.

Addresses specific research issues as the


researcher controls the search design to fit
their needs

Advantages of Primary Research

Great control; not only does primary research


enable the marketer to focus on specific
subjects, it also enables the researcher to have
a higher control over how the information is
collected. Taking this into account, the
researcher can decide on such requirements
as size of project, time frame and goal.

Disadvantages of Primary Research

Compared to secondary research, primary


data may be very expensive in preparing and
carrying out the research. Costs can be
incurred in producing the paper for
questionnaires or the equipment for an
experiment of some sort.

Disadvantages of Primary Research

In order to be done properly, primary data


collection requires the development and
execution of a research plan. It takes longer to
undertake primary research than to acquire
secondary data.
Some research projects, while potentially
offering information that could prove quite
valuable, may not be within the reach of a
researcher.

Disadvantages of Primary Research

By the time the research is complete it may be


out of date.

Low response rate has to be expected.

Secondary Research

Possible Sources:
1.

The company records

2.

Libraries

3.

Government Agencies

Other sources:

1. Reports
2. Newspapers
3. Magazines
4. Journal Content
5. Government and NGO Statistics

Company Records
Important source of information. It includes
sales report or clues on customer behavior.

Library
Collection of original studies, trade journals,
business magazines and graduate thesis.
1.
2.
3.

The Philippine Yearbook


The Top 1,000 Corporations
Profile of Philippine Industries

Major Libraries:

National Library
University of the Philippines Institute of
Small Scale Industries Library
Development Academy of the Philippines
Libraries Pasig City
Polytechnic University of the Philippines
Library Sta. Mesa

CHED

Commission on Higher Education

Provides basic data on the number of schools


operating in specific areas, the courses
offered, the number of students and others.

DTI

Department of Trade and Industry

Information on the number of enterprises


existing in an area

Local Government

Listing of business establishments


Identify types of business

Market Share Forecasting

Purpose of market research- is to


determine the quality of sales the company
can generate if it will concentrate on a certain
market segment.

Market share- refers to the individual firms


sales as a percentage of total sales in a specific
market.

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 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.

The companys market share can be computed by using the formula:


CMS = CS/TIS
Where: CMS = companys market share
CS = Companys sales

TIS =total industry sales

The Potential sales of target market refers to the total sales volume
that all competitors could achieve in that particular market segment.

The sales potential of the company refers to the portion of the market
potential that the company could expect to achieve under ideal conditions.

Company sales refers to the actual sales made by the company as


opposed to the potential sales of the company.

Forecasting Company Sales


1.

2.

3.

Market-factor Analysis- this is the 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 intention- this is a sale forecasting method in which a
company asks a sample of current or potential customers how much of a
particular product 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 product in a limited geographic area, measures
the sales, and then from this sample, a projection is made for the
companys sales over a large area.

4.

5.

6.

7.

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 other average volume of the past few
years.
Trend analysis- this is a statistical method of forecasting sales
over the long term by using regression analysis or over the short
term using a seasonal index 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 Judgment Opinion