Small Business Management in st the 21 Century
Small Business Management in st the 21 Century By David T. Cadden and Sandra L. Lueder © 2012, published by Flat World Knowledge 1
COPYRIGHT PAGE Published by: Flat World Knowledge, Inc. One Bridge Street Irvington, NY 10533 © 2012 by Flat World Knowledge, Inc. All rights reserved. Your use of this work is subject to the License Agreement available here http: //www. flatworldknowledge. com/legal. No part of this work may be used, modified, or reproduced in any form or by any means except as expressly permitted under the License Agreement. © 2012, published by Flat World Knowledge 2
Assessments • Assignment-SWOT analysis—Share your weakness and strengths © 2012, published by Flat World Knowledge 3
Chapter 7 Marketing Strategy © 2012, published by Flat World Knowledge 4
News & Books • Marketing Insider Group • • • Figure out what business you’re really in Create products that perform the jobs people need to get done Get a bird’s-eye view of your brand’s strengths and weaknesses Tap a market that’s larger than China and India combined Deliver superior value to your B 2 B customers End the war between sales and marketing © 2012, published by Flat World Knowledge 1 -5
Funny © 2012, published by Flat World Knowledge 1 -6
Small Business • A Day in the Life © 2012, published by Flat World Knowledge 1 -7
Learning Objectives 1. Understand how marketing for small businesses differs from marketing for big businesses. 1. Understand the most significant risk factor facing small businesses. 1. Explain marketing strategy and why it is so important for small businesses. © 2012, published by Flat World Knowledge 8
Learning Objectives 4. Describe the marketing strategy process. 5. Explain why segmentation, target market, differentiation, positioning, and website decisions are so important for the small business. 6. Describe the marketing strategy decision areas for each element of the marketing mix. © 2012, published by Flat World Knowledge 9
Learning Objectives 7. Explain segmentation and the target market. 8. Explain why segmentation, the target market, differentiation, positioning, and website decisions are so important for a small business. 7. Describe the marketing strategy decision areas for each element of the marketing mix. © 2012, published by Flat World Knowledge 10
Learning Objectives 10. Explain differentiation and positioning. 11. Explain why differentiation and positioning are so important for an online marketing strategy and an onground marketing strategy. 12. Understand that a successful differentiation strategy cannot be copied by competitors. © 2012, published by Flat World Knowledge 11
Learning Objectives 13. Understand that there are many ways to differentiate a product or a service. 13. Understand that successful positioning of a small business or its brand is built on a well-defined target market combined with solid points of differentiation. © 2012, published by Flat World Knowledge 12
Learning Objectives 15. Understand why product is the key element in the marketing mix. 16. Identify the multiple decisions and considerations that factor into product or service development. 17. Describe three product layers and explain why small businesses should pay attention to them. © 2012, published by Flat World Knowledge 13
Learning Objectives 18. Explain the importance of product design to marketing strategy. 19. Understand the role of packaging to product success. 20. Explain what a brand is and why it is probably a company’s most important asset. 21. Explain the implications of the product life cycle for the marketing mix. © 2012, published by Flat World Knowledge 14
Learning Objectives 22. Understand that a company’s website is part of its product or service, whether or not the company sells anything online. 22. Explain the decision areas for the company website. © 2012, published by Flat World Knowledge 15
Learning Objectives 24. Understand the role of price in the marketing mix and to a company. 25. Understand the different pricing strategies that a small business can follow. 26. Understand price-quality signaling and its importance to the pricing decision. 27. Understand that the price of a product or a service lets customers know what to expect from a business. © 2012, published by Flat World Knowledge 16
Learning Objectives 28. Understand the role of place in the marketing mix and the importance of place to a company. 29. Understand the different distribution strategies that a small business can follow. 30. Explain the importance of logistics to small business. © 2012, published by Flat World Knowledge 17
Learning Objectives 31. Understand the role of promotion in the marketing mix and its importance to a company. 31. Understand the different ways that a small business can promote its products or services. 31. Explain the differences and similarities in the marketing communications mix of online and onground businesses. © 2012, published by Flat World Knowledge 18
Learning Objectives 34. Understand the role of marketing strategy in delivering customer value. 35. Explain how marketing strategy can positively and negatively impact cash flow. 36. Explain how digital technology and the eenvironment are impacting marketing strategy. © 2012, published by Flat World Knowledge 19
Small Business vs. Big Business Marketing • Small-business marketing and big business marketing are not the same. • The basic marketing principles are the same, but there are important differences with respect to scope, budget, risk factors, and areas of opportunity. • Small businesses cannot compete with the marketing budgets of big companies. • 2 Mentalities 4: 00 © 2012, published by Flat World Knowledge 20
Class Participation • Pair up with a partner, use your digital device (tablet, cell phone, laptop) – Find a large corporation and small business, what is the differences in terms of risks, customers, target market, etc © 2012, published by Flat World Knowledge 1 -21
Small Business vs. Big Business Marketing • Scope of small business marketing does not extend across the same level of multiple products and services of most big businesses. • Competition is the most significant risk factor facing small businesses. – However, small businesses are in a strong position to take advantage of niche markets and local needs and wants because big businesses are not interested. © 2012, published by Flat World Knowledge 22
Marketing Strategy for the Small Business • Small businesses have special vulnerabilities, so it is important to understand the components of marketing strategy. – Marketing strategy: Selecting one or more target markets, making differentiation and positioning decisions, and creating and maintaining a marketing mix—all within the context of marketing objectives. – Marketing objectives: What the business wants to accomplish with its marketing strategy. © 2012, published by Flat World Knowledge 23
The Focus • FOCUS: the management of the small business that is up and running. • The considerations of marketing strategy are twofold: 1. to modify or tweak marketing efforts already in place 2. to add products or services as the business evolves © 2012, published by Flat World Knowledge 24
Components of the Marketing Strategy Process © 2012, published by Flat World Knowledge 25
Positioning for Small Business • Positioning is about placing a company or a brand in the consumer’s mind in relation to the competition. • The “position” can be central to customers’ perception and choice decisions. • Small business owners think about positioning intuitively. They just don’t use the terminology and do not always know how to promote the decision. • Product Positioning 4: 00 © 2012, published by Flat World Knowledge 26
Positioning for Small Business • Successful positioning of a small business is built on a well-define target market combined with solid points of differentiation. • Six approaches to positioning that a small business owner should consider: 1. 2. 3. 4. 5. 6. Positioning by attribute Positioning by price/quality Positioning by use or application Positioning by product user Positioning by product class Positioning with respect to a competitor © 2012, published by Flat World Knowledge 27
Positioning for Small Business • The challenge for a small business is to decide which approach is the best fit. • A positioning statement helps to keep the small business on track, whether online or onground. © 2012, published by Flat World Knowledge 28
Product Decisions © 2012, published by Flat World Knowledge 29
Product Features and Benefits • Core layer: the nuts and bolts; the basic benefit or problem solution. • Augmented layer: Value that has been added by things like packaging and warranties. • Symbolic layer: Captures the meaning of a product to a consumer—its emotional and psychological connections. © 2012, published by Flat World Knowledge 30
Class Participation • Pair up with a partner, use your digital device (tablet, cell phone, laptop) – While looking at the Product features and benefits, find a company /product and develop a circle showing what we covered on slide 30. © 2012, published by Flat World Knowledge 1 -31
Product Features and Benefits © 2012, published by Flat World Knowledge 32
Product Features and Benefits • Packaging design: all the activities of designing and producing the container for a product. • Packages engage us consciously and unconsciously. • A well-designed package can build brand equity and drive sales. • A poorly designed package takes away from the customer experience – and it can lead to wrap rage. © 2012, published by Flat World Knowledge 33
Product Features and Benefits • Brand: a name, term, sign, symbol, or design (or a combination of them) intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of the competitors. • A brand is a promise to the consumer that certain expectations will be met. • A company’s brand is probably its more important asset. • Building a brand is an ongoing process for any small business. © 2012, published by Flat World Knowledge 34
Class Participation • Pair up with a partner, use your digital device (tablet, cell phone, laptop) – When we think of branding a product, have you ever thought of branding yourself? – What is your brand? Article © 2012, published by Flat World Knowledge 1 -35
Product Features and Benefits • Product life cycle (PLC): the performance of the product in terms of sales and profits over time. • Every small business will develop its own unique way. © 2012, published by Flat World Knowledge 36
Product Features and Benefits • Company website: a part of the company’s product or service. • The relevant website issues: – website objectives: What a company wants its website to do. – website layout: the positioning of the various elements on the web page. – color: affects mood and emotion; must match expectations of the target audience. – typography: communication using the printed word; important to aesthetics. © 2012, published by Flat World Knowledge 37
Product Features and Benefits • The relevant website issues: – graphics: pictures, artwork, animations, or videos. – site navigation: the purpose is to help visitors quickly and easily find the information they need on a website. – site usability: a measure of the quality of a user’s experience when interacting with a website. – site interaction: the things on a website that prompt some kind of action from visitors. © 2012, published by Flat World Knowledge 38
Product Features and Benefits • The relevant website issues: – content: all words, images, products, sound, video, interactive features, and any other material that a business puts on its site. – product display: how a website displays products will impact the success of the site. – performance: a website that takes too long to load will lose visitors. © 2012, published by Flat World Knowledge 39
Class Participation • Pair up with a partner, use your digital device (tablet, cell phone, laptop) – Let’s go online and look at companies that build websites – Find 1 that captures you and tell us the product © 2012, published by Flat World Knowledge 1 -40
Marketing Strategy and Price • Price: defined narrowly as the amount of money charged for a product or a service • Deciding on a price is a very important decision. – Choosing the right pricing strategy is not easy. • Having the lowest price is not typically a strong position for a small business—it can be matched easily by larger competitors. • Pricing objectives: what the small business wants to accomplish with its pricing strategy. • Sales-based objectives: focus on increasing sales volume and market share. © 2012, published by Flat World Knowledge 41
Marketing Strategy and Price • Profit-maximization objectives focus on earning the most profits while providing customer value. • Mr. Cliffard 4: 00 • Status-quo-based-objectives are reactive rather than proactive, suitable only for the short term. • A small business must determine a pricing strategy once the pricing objectives are set. – There a variety of strategies to consider: • Discount • Cost-based • Prestige • Even-odd Geographic © • 2012, published by Flat World Knowledge 42
Direct Channel • Direct channel: involves selling directly to the final consumer with no intermediaries (retailers, wholesalers, also known as middlemen). • This channel provides close contact with the customer and full control of all aspects related to the marketing of a company’s products. • Service businesses use the direct channel because there is no way to do otherwise. © 2012, published by Flat World Knowledge 43
Retail Channel • Retail channel: the intermediary between the manufacturer or producer and the final consumer. • Selling through retailers may expand distribution coverage to the small business’s target market, but the business must give up some control over pricing and promotion. • In addition, the business should expect to get a wholesale price from the retailer that is significantly than it would get if the product were sold directly to the customer. © 2012, published by Flat World Knowledge 44
Wholesaler • Wholesaler: a large or small business that sells to retailers, contractors, or other types of businesses (excluding farms), but not to the general public (or at least not in any significant amount). • Small businesses using wholesalers are using an indirect channel of distribution. • A wholesaler makes sense for a product that the business wants to sell in stores that would not be easily or conveniently reachable through the direct channel or the retail channel. © 2012, published by Flat World Knowledge 45
Multichannel Distribution • Multichannel distribution: the selection of two or more channels of distribution to reach one or more customer segments, offering customers multiple purchase and communication options. • Three important advantages: – Increased market coverage – Lower channel costs – More customized selling • This hybrid approach works well for small businesses. © 2012, published by Flat World Knowledge 46
Physical Distribution (Logistics) • Physical distribution (logistics): involves all the activities involved in the physical flow and storage of materials, semi-finished goods, and finished goods to customers in a manner that is efficient and cost effective. • The costs of logistics can account for as much as 10 -35 percent of a company’s gross revenues. © 2012, published by Flat World Knowledge 47
Class Participation • Pair up with a partner, use your digital device (tablet, cell phone, laptop) – – Let’s go online and look at Supply Chain/Logistics Find a few stats about it Impact on a business owner Impact on YOU © 2012, published by Flat World Knowledge 1 -48
Marketing Communications Mix © 2012, published by Flat World Knowledge 49
Marketing Communications Mix • Each mode of communication has advantages and disadvantages that need to be considered. • Advertising: any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor. • HSBC Funny Culture 3: 00 • Small businesses must choose advertising media (e. g. , radio, TV, newspapers, billboards, Internet, and magazines) based on its product, target audience, and budget. • Advertising offers several benefits to small businesses. © 2012, published by Flat World Knowledge 50
Marketing Communications Mix • Sales promotion: the variety of short-term incentives to encourage trial or purchase of a product or service. • For example: – Attracting new customers with price – Encourage repeat purchases – Gain community favor – Entice reluctant customers • Events and experiences: company-sponsored activities and programs designed to create daily or special brand interactions. • Public relations and PR: designed to promote a company’s image or its individual products. • Publicity is usually an outcome of PR that is produced by the news media at no cost to the business involved. © 2012, published by Flat World Knowledge 51
Marketing Communications Mix • Social media: websites featuring user-generated content or material created by visitors rather than the website publishers. • Entrepreneur Social Media • Small businesses can use social media for: – lead generation and competitive intelligence – monitoring what is being said about the business – keeping up with the industry – improving the customer experience • Personal selling: the process of communicating with a potential buyer (or buyers) face-to-face with the purpose of selling a product or service. • Crowdfunding can help: securing small amounts of money from multiple contributors online. • Crowd Funding 3: 00 © 2012, published by Flat World Knowledge 52
Marketing Strategy and Digital Technology and the E-Environment • Opportunities for using digital technologies and the e -environment in marketing strategy have exploded. • Strategic decisions can be made more quickly. • Mobile commerce continues to be one of the biggest trends to affect small business. • Mobile technologies have significantly impacted personal selling, making it possible for salespeople to access needed information at any time. © 2012, published by Flat World Knowledge 53
Follow-Up • Module 7– Assignment #2 – Chapter 7 Test • Due on Sunday • Module 8– Discussion #3 – Chapter 8 Test • Due on Sunday © 2012, published by Flat World Knowledge 1 -54
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