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3920_Lecture 4_1.docx

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York University
Administrative Studies
ADMS 3920
Cameron Johnston

Lecture 4_Chapter 6&7 The lecture session will cover: 1. a - Chapter 5 > Page 141 – 'You Make the Call' Situation 2 b - Chapter 5 > Page 141 – 'You Make the Call' Situation 3 c - Chapter 5 > Page 141 – 'You Make the Call' Situation 4 2. a - Chapter 2 > Page 48 – 'You Make the Call' Situation 1 b - Chapter 2 > Page 49 – 'You Make the Call' Situation 3 3. Chapter 6 – Small Business Marketing, Product and Distribution Strategies a - Chapter 6 > Page 180 – 'You Make the Call' Situation 3 4. Chapter 7 – Promotional and Pricing Strategies a - Chapter 7 > Page 220 – 'You Make the Call' Situation 2 b - Chapter 7 > Page 220 – 'You Make the Call' Situation 3 Chapter 6: Small Business Marketing, Product, and Distribution Strategies Small business marketing: consists of those business activities that relate directly to 1) Market Analysis a. Identifying a target market b. Determining target market potential through a detailed analysis of the industry, competition, and potential customers 2) Marketing Mix Decisions & Execution c. Deciding Marketing Mix, and preparing, communicating, and delivering the bundled package of satisfaction to the Target Market. Marketing Analysis: an evaluation process that encompasses 1.market segmentation, 2.marketing research, and 3.sales forecasting. Marketing Mix (4 P’s): Product, Pricing, Promotion, and Placement (Distribution activities) Marketing Opportunity Assessment Creation of the Marketing Mix Industry analysis: Based upon research and the Presumes: Target Market Opportunity Identification opportunity analysis above analysis create the done in Business Conceptualization Stage Competitive analysis: Product Strategy prepare competitive matrix Stage 1: (Target) Market Opportunity Identification > was covered in Chapter 2 material Customer market research: Pricing Strategy  Identification of underserved need primary & secondary  Identification of how to serve identified need  Estimation of Competitive Advantage Marekting segmentation: Promotion Strategy Potential clarity niche opportunities  Evaluation of potential and fit of opportunity to entrepreneur’s capabilities, skills, interests and available resources estimating the opportunity Distribution Strategy Stage 2: Market Analysis basd on a sale forecast Stage 3: Marketing Strategy Formulation (Marketing Three Marketing Philosophies Mix Decision Making) 1) Consumer Oriented “ all about the customer” approach - Recommended as best for today’s hyper competitive world - Recognizes production efficiency goals and professional selling, & concerns for customer satisfaction - Focus on customer’s needs - Consumer orientation is most consistent with long-term success by emphasizing customer satisfaction. 2) Production Oriented ”engineering approach” - Emphasizes development of the product and production efficiencies over other activities 3) Sales Oriented ”all about us” approach - Favours product sales over production efficiencies and customer preferences 1 Lecture 4_Chapter 6&7 A marketing is a group of customer or potential customers who have purchasing power and unsatisfied needs & Buying units.  Segmentation variables (reasons: predict/forecast economy) - Benefit Variables: benefits consumers look for in products/services - Geographic: location, size, composition, etc. - Demographic: age, sex, education, income, occupation, etc. - Psychographic: how people think and behave (i.e. lifestyle trends) Perspective customers Exchanges, places Customers need economy resources to handle the exchange Economy valuation Methods of forecasting sales, a prediction of how much (in units and/or dollars) of a product or service will be purchased within a market during a specified period of time, and must be based on specific target market segments, two approaches 1) Buildup (bottom up: from potential buyers in target market to estimated sales) Process to use - Determine number of potential buyers for product in all targeted/identified submarkets - Estimate total target market demand - Estimate market share - Develop sales forecast - Adjust to reflect product stage of life 2) Breakdown (top down: estimate market size and then how much can be captured) Process to use - Calculate market size - Calculate potential market share  Production or retail capacity  Competitive data - Develop sales forecast - Adjust to reflect competitive advantage Conditions that make forecasting easier Conditions that make forecasting more difficult Established business New venture Experienced entrepreneur/manager Limited entrepreneurial managerial experience Entrepreneur family with forecasting techniques Poor understanding of forecasting techniques Established market and industry association New type of product or technology Components of a formal marketing plan 1) Market analysis i. Customer profile: a description of potential customers in a target market ii. Competition analysis: competitive matrix; identify industry leaders & key factors; consider potential of success via Porter’s 5 Forces iii. Sale forecasts & industry size and potential estimation: “most likely”, ”pessimistic”, and optimistic” 2) Analysis of Competition i. Profiles of key Competitors /Alternative ii. SWOT analysis 3) Marketing Strategy Explain the 4 P’s of the Company’s Marketing Mix i. [Product/Service] Marketing Plan: describe components that make up total product ii. Promotional Plan: information communications to the target market iii. Distribution plan [Placement]: how pro duct will be delivered to customers iv. Pricing Plan: explain sales price vs. consumer value of product An essential component of a business plan that: - Assesses the new venture’s feasibility - Assists in planning for product scheduling, setting inventory levels and personnel decisions. 2 Lecture 4_Chapter 6&7 Customer relationship management: a company-wide business strategy designed to optimize profitability and customer satisfaction by focusing on highly defined and precise customer groups Building Customer Relationships Traditional CRM Modern CRM  Company-wide business strategy  Customer satisfaction focus rather than products  Designed to optimize profitability and customer satisfaction  Changes in company processes, systems, and culture  Focus on highly defined and precise customer group  All channels and media involved in marketing effort, from Internet to filed sales Importance of CRM to a small firm 1. Acquisition costs for new customers are huge 2. Long-time customers spend more money than new ones 3. Happy customers refer their friends and colleagues 4. Order-processing costs are higher for new customers 5. Old customers will pay more for products Significance of providing extraordinary customer service Illustrate how technology can improve customer relationships CRM software programs are designed to help companies gather all customer contact information into a single data management program: - Meeting notes, personal & contact information - E-mails, letters, faxes - Phone calls - Internet communication – FAQ, live chats Enterprise Miner: a business can sift through data looking for patterns that can be used to increase response rates of site visitors and tag the most profitable customers. E.g. consider a customer who shops only once a year to purchase. Identify the key characteristics of consumer behaviour 1. Provide all basic expected benefits / elements 2. Offering appropriate general support services 3. Be delivered with company recovery / correc
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