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Chapter 6

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Administrative Studies
ADMS 3920
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2October2012CHAPTER 6 SMALL BUSINESS MARKETING PRODUCT AND DISTRIBUTION STRATEGIESSmall Business Marketingconsists of those business activities that identify a target market determine that markets potential and prepare communicate and deliver a bundle of satisfaction to that market Market Analysisan evaluation process that encompasses market segmentation marketing research and sales forecasting Marketing Mix 4Psthe combination of product pricing promotion and distribution activities MARKETING PHOLOSOPHIES1Productionoriented emphasizes the product as the most important part of the business The firm concentrates on producing the product in the most efficient manner 2Salesoriented deemphasizes production efficiencies and customer preferences in favor of marketing sales A shortsighted approach to marketing3Consumeroriented expresses the firms belief that everything including production and sales depends on consumer needs All marketing efforts begin and end with the consumer Contributes to a firms longterm survival by emphasizing customer satisfaction ESTIMATING MARKET POTENTIALA market is a group of customers or potential customers who have purchasing power and unsatisfied needs 2October2012Segmentation VariablesThe parameters used to distinguish one form of market behaviour from anotherBenefit Variablespecific characteristics that distinguish market segments according to the benefit sought by customers Geographic Variabledefining a market by its location size or extent Eg Postal code zone quadrant of a city western vs eastern part of the country or even urban vs rural zones Demographic Variablesspecific characteristics that describe customers and their purchasing power Eg Age martial status gender occupation education level ethnic origin and income Psychographic Variablesvariables that are related to how people think and behave Eg Fitness diet political orientation and sexual orientation Sales Forecastestimates how much of a product or service can be sold within a given market in a defined time period Can be stated in terms of dollars andor unitsMust be defined as precisely as possible Eg Adults between the age of 18 and 45 who live in a onemile radius of the coffee shop Also important to imply a specified time period Shortterm and longterm sales forecasts must be prepared for a good business plan Conditions that make Forecasting Difficult include New venture limited managerial experience poor understanding of forecasting techniques new type of product or technologyConditions that make forecasting easier include established business experienced manager familiarity with forecasting techniques and established market and industry associationProcesses The buildup processa forecasting method in which all potential buyers in the various submarkets are identified then the estimated demand is totaled and a market share estimate applied Determine number of potential buyers for product in all targetedidentified submarketsEstimate total target market demandEstimate market shareDevelop sales forecast
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