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The Marketing Process

• Research: Research is conducted investigating conditions in the general economy and the specific market the owner/operator plans to enter.
• Marketing Objectives: Objectives are identified that may address issues such as sales growth, profitability or new product development.
• Segmentation of Market: Segmentation is an analysis technique used to identify groups of customers who have common needs or wants.
• Selection of Target Market: This involves a decision on behalf of the business owner/operator to operate in a particular segment or segments of the market.
• The Marketing Mix: This may be viewed as the tools of marketing – the 4Ps. These have been traditionally identified as Product, Price, Place and Promotion.

Customer Characteristics

• There must be a need or want that the product or service is going to fulfil. It may be difficult to evaluate or understand, but it must be present.
• The customer must have the ability to pay. The credit policy of the owner/Operator plays an important role in the level of bad debts they experience, the effect on cash flow and the amount of effort they expend trying to collect these debts.
• Authority to decide: In the buying (or sales) situation different individuals may play various roles. The owner/operator needs to be able to identify the roles different individuals may play in the buying situation. Roles may include the influencer, decider, purchaser and user.

Customer Service includes:

• Understanding service expectations
• Generating repeat business
• Developing customer service skills, and
• Monitoring customer service satisfaction.

Getting to Know the Situation – The TOWS Analysis

• The technique used to conduct a situation analysis is called a TOWS Analysis. The external analysis lists those factors that are considered to be Threats and Opportunities. An internal analysis of a business is accomplished by listing its Weaknesses and Strengths. Strategies identify possible courses of action.
• The TOWS analysis is a further development of the traditional SWOT analysis. Why use the TOWS concept? It takes the elementary SWOT analysis one step further down the path in identifying possible future courses of actions (strategies). Often when inexperienced planners perform a SWOT analysis they are confronted with four lists of items and that they then find it difficult to progress to the next important step of identifying possible future actions (strategies).
• The TOWS matrix structures the information so it is easier to analyse and construct future actions (strategies). The major effort (strategy) of a business is to use its strengths to exploit its competitors' weaknesses while defending its position. This means that it recognises internal weaknesses and external threats and deals with them. How well weaknesses and threats are dealt with is in part, determined by the creativity of the owner/operator and the level of resources that can be applied.

Getting to Know Your Market

Getting to know your market involves:

Identifying Customers

• What needs do they have?
• How many are there? Are their numbers increasing or decreasing?
• How old are they?
• Where are they located?
• What is their disposable income (ability to pay)?
• Who influences the buying decision?
• Who makes the buying decision?
• Who makes the actual purchase?
• Who uses the product?

Knowing their Expectations

• Why do they buy? What motivates them?
• When do they buy?
• How do they prefer to make their purchases?
• What is the reason they purchase from one business and not another?
• How do they behave? Is it changing? If so, in what way?
• How much do they spend in a product category?

Identifying Competitors

• What are their strategies and objectives?
• What is their target market?
• Describe their product mix
• What level of service do they offer?
• What promotion methods do they use?
• Do people complain about their products/services? This allows for the development of a competitive advantage.

Marketing Objectives

• Increase sales
• Increase profit levels
• New product/service
• Enter new territory

Segment the Market

Basis for segmentation include:

• Geographic: This may include regional, city, urban and rural environments
• Demographic: This includes age, gender, household size, income and occupation
• Psychographic: This includes social class and lifestyle (conservative, experience seekers
• Behaviouristic: This includes benefits sought, user status (user, non-user), loyalty status and marketing factor sensitivity (quality, price, service)

Characteristics of good segmentation include:

• Measurability: Can the segments identified be measured? Is there data available from sources such as the Australian Bureau of Statistics, industry associations or Local Council?
• Accessibility: Can the owner/operator access the segment? Do they have the correct location? Can customers interact with them without too much difficulty? Will they be available to reach the segment with their promotional activities?
• Substantiality: Is the segment large enough to justify the business servicing it? Will their share of the market generate a profit for the owner/operator?
• Actionability: Do they have the necessary resources to service this segment? This could include having the necessary equipment, adequate personnel, skills and financial resources.

Which Market to Serve?

Selecting the Target Market

• Undifferentiated Strategy: The market is treated as having no segments and only one product/service is offered to the whole market. At one time Coca-Cola used this strategy worldwide.
• Differentiated Strategy: Two or more segments are to be serviced each requiring a different marketing mix. General Motors uses this strategy to make different cars for different segments.
• Concentrated Strategy: Operations are restricted to one small segment of the market. Rolls Royce follows this strategy by making cars for a very small segment of the world car market.

Developing a Position

• Positioning is how customers view competing brands or products. It is based on their perceptions of major attributes. Attributes include cost, value, quality, taste and reliability.
• Customers are surveyed and their responses summarised and put on a positioning map. The map compares two attributes and looks at relationships among the competing products. The closer the position of two or more competing brands/products/services/businesses, the more likely they are to compete.
• Positioning is concerned with how people in the market place perceive certain attributes of different organisation, brands and products/services relative toe the competition.
• For the small business owner/operating this means asking them how their customers or potential customers think of their business as compared with their competitors in the following areas: price (expensive or inexpensive), quality (high or low), service (late, on time, quick, slow) and product knowledge (extensive, limited).
• The small business owner must make a decision as to where the business should be positioned in market relative to competitors. Image and reputation play an important role in positioning.
• Image is a complex issue and is made up of the feelings, beliefs and thoughts that people in the marketplace have of the owner/operator, their products and their business. Some of the things that contribute to image include: technique used in answering the phone, the ‘look’ of the business (including logo), stationery and displays, how they dress and customer service.

Your Marketing Tools

Traditional Ps

• The fundamental marketing tools can be viewed as the 4Ps ( product, price, place, promotion) and are those factors that the small business operator largely has under their control. It is how these tools are applied in the market place that largely determines the success of a business.

Service Ps

• The service industry sector of the economy has grown in recent years. While the traditional 4Ps still apply to service business, another three Ps are associated with services.
• People: Since services are intangible, people take on special importance. How does the owner/operator or their staff interact with their customers? Are they trained? Appearance is important, does the staff project a good image?
• Physical Surroundings: What do the facilities look like? Does the owner/operator use tangible clues to build their image? For example, a doctor or lawyer will have their degrees and other awards in public view.
• Process: This is composed of policies, procedures and the flow of activities for dealing with a customer. Services have a high degree of customer involvement. The customer ought to find the process of doing business simple. Can they contact the owner/operator easily? Is the paperwork clear and easy to fill out? Is the paperwork attended to and processed quickly?
• Partner: Often an additional P for ‘partnerships’ is added. This is especially important for service industries but also for outsourcing and internet activity.

Product and Service Levels

• A Tangible Product: This is what is immediately recognised as being sold. It is the physical product or service being offered. Examples include milk, cars, computers, typing services and educational workshops.
• An extended Product: This is a tangible product with associated services attached. These services ought to be ‘valued’ by the customer. Examples include packaging, warranty, services, customer assistance and advice and financing.

This may lead to systems selling. For example, an owner of a computer retail store may sell the PC (tangible product) but will also offer software, printers, scanners and modems as a complete system.

• A Generic Product: This is the underlying ‘benefit’ that the consumer expects from the product. Consumers identify the benefit when they ask the question ‘What do I get out of it?’ Benefits may be broadly classified as emotional or financial.

An emotional benefit makes the person feel better inside. For example, feeling safe, showing affection to others or increasing a sense of beauty. Financial benefits could be applied in situations where you ‘save’ money or you ‘make’ money. What consumers see as a ‘benefit’ may change over time.

Compare and contrast features and benefits.

• Features are associated with product or service characteristics such as size, colour and power of motors, functional aspects and hours of business operations.
• Benefits on the other hand are often difficult to uncover but are powerful in influencing consumers.

Service Business Characteristics

• Intangibility: Intangibility refers to the fact that you cannot see, feel or smell the services. So the owner/operator attempts to offer some tangible clues like showing a picture of a person enjoying the service.

Consumers have a difficulty trying to determine the ‘value’ of a service, so there can be a pricing problem. Try to create a strong image in the market to justify prices.

• Inseparability: Inseparability means that the consumer is involved in the production of the service. It places increased importance on the staff member with whom the customer is dealing. Training is often needed by this person which may include selling skills.
• Heterogeneity: This involves standards and quality control associated with the service. Does each customer receive the same level and quality of service?

Major service providers attempt to set standards regarding service and quality levels, so that each customer receives the same experience in all their outlets.

• Perishability: This relates to the fact that services cannot be stored so there is no inventory. Services must cope with fluctuating demand.

Service providers often try to influence demand patterns by varying a price at certain times of the day, week, month or year. Part time workers are often used during peak periods.

• Ownership: Ownership of a service is never achieved. Service providers often stress the ownership of benefits.

Adoption Process

• Awareness: In the first stage the consumer needs to be exposed to the product. It needs to enter their ‘mind set’. This may come about through the media or by word of mouth. The promotion message at this stage will be ‘consider this, it is now available’.
• Interest: Once the person is aware of the product they may be interested and seek more information. The promotional message here will be information: what it will do, its size, its technical specifications and benefits.
• Evaluation: At this stage the person is interested in the product/service category and has compared various products. These products are ranked according to criteria that the person has developed. Some companies compare and rank their products against competitors in the media to help this process.
• Trial: The person tries the product or service on a limited basis to see if it fits their needs. Businesses give samples of a product or previous of a service (eg first lesson free) to people in an effort to get them to experience the product. In effect, this has by-passed the first three stages of the adoption process and it can be expensive.
• Adoption: This person has now become a full time user of the product.
• Confirmation: After the purchase, the consumer may seek assurance that they made the correct decision. The consumer may experience dissonance (tension/uncertainty) and this needs to be reduced. Dissonance is often more pronounced with high priced products such as a car or having a swimming pool installed, than repeat business.

Promoting Your Business

The Four Promotional Tools

• Advertising
• Personal selling
• Sales promotion
• Publicity

Advertising

• Who is the Target Audience? The business needs to know their customers or potential customers and use this information to advantage in their advertising.
• Where to Advertise? Once owner/operator has determined the target audience, then they have to identify the most effective advertising method to reach their audience.

Spending a lot of money in the wrong advertising media, is not a cost-effective approach.

Possible media alternatives include print, radio, TV, billboards or internet.

• What is the Message? The final stage is to determine what ‘message’ the business wants to send. The business and marketing plans and owner/operator knowledge of the target audience will influence the message.

AIDA Concept

• Attention: The product/service needs to get the attention of the target audience. There are techniques of getting attention but they must not hinder the person from going on to the next step – interest.
• Interest: Now the advertisement must hold the interest of the reader. They must be able to relate to it. Does it look right, is the right language used and does it make sense to the viewer?
• Desire: The advertisement must arouse a desire or motivate the individual to further action. Many advertisements will attempt to move individuals through the adoption process.
• Action: This is the final step in the process. It may seek to have the members of the target audience try or buy the product.

Personal Selling

The seven steps in the sales process:

• Prospecting is when an owner/operator follows ‘leads’. They cannot spend time with all the possible leads so they must determine which prospects are going to get more attention – they qualify the prospects.
• Pre-Approach: This involves planning the sales call and setting the objectives for the call.
• Approach: The method of approaching the potential buyer may vary due to the sales situation. Some methods include:

- customer benefit approach: If the owner/operator knows a need exists, they illustrate how their product will do that

- free gift or sample approach may gain goodwill

- question approach involves talking to the prospect to find out what their needs are and if they are interested in the product or service.

• Presentation and Demonstration: This is when the owner/operator interacts with the prospect and starts to sell. Presentations typically have three parts: an opening, a body and a close.
• Handling Objections: This involves informing the prospective buyer what product attributes, features or capabilities, satisfy the objection. It is one step along the path forward closing the sale.
• Closing the Sale: This involves an agreement between the business and the buyer.
• Follow Up: This is an opportunity to create goodwill and to make sure that the buyer is satisfied with the outcome of the transaction. It may lead to repeat business.

Sales Promotion

• Samples: Give away samples of product service.
• Contest: This is a good way to start a mailing list.
• Discounts: Offer a ‘two for the price of one’ or lower price for a certain period of time.
• Exhibitions: This a good way to show the public what the business has to offer.
• Demonstrations: Show the public how the product works and let them see the results.
• Speciality Items: Put the business name or logo on mugs, calendars, pens, shirts and caps.
• New Technology: This could include using the internet or creating home pages for products/services.

Publicity

• Free Promotions: Publicity attempts to influence buyer behaviour, although it is not paid for by the owner/operator or their business.
• Influence Buyer Behaviour: Its aim is to create a favourite image of the owner/operator and their business. Recognition, reputation and credibility are also associated with the process.
• Personal Referrals: Participants should consider using the personal referrals in their advertising and publicity. They could ask their customers to contribute ‘testimonials’ about their product/service.
• Word of Mouth: Participants should not overlook the importance of ‘word of mouth’. Customers who have had a bad experience with a business are more likely to tell others. Likewise, those customers who have had a complaint resolved to their satisfaction are likely to become loyal repeat customers.
• Lacks Control: Unlike paid advertising where the owner/operator controls the message, publicity is dependent on others outside the direct control of the business. They may interpret things differently to how the owner/operator wants themselves or their business to be perceived.

The Marketing Plan

• The Executive Summary: This is a brief, but clear description of the major thrust of the plan. It allows the reader to gain a quick overview of the contents.
• The Situation Analysis: This addresses market and competitor issues – size, growth, competition and products. The TOWS analysis is also incorporated.
• Customer Analysis: This focuses on the target market, segmentation, and customer needs and characteristics.
• Marketing Strategy: Within the market strategy, objectives are identified and the marketing mix development. How it gets started is the role of the implementation or action plan.
• Control: Activities have to be monitored and controlled to ensure that the plan is on track. Key Performance Indicators (KPIs) need to be identified and monitored. People often don’t track whether their investment in marketing has paid off. This may be measured by calculating responses to advertising, including the Internet, sales and cash flow.
• Finances: The financial section would contain forecasts and budgets associated with the marketing plan.
• Appendix: The appendix contains any supporting material that has not been put into the main body of the plan.