DOCUMENT RESUME

ED 373 224 CE 067 058

TITLE Marketing Analysis. Unit 8. Level 2. InstructorGuide. PACE: Program for Acquiring Competence inEntrepreneurship. Third Edition. Research &Development Series No. 302-8.

INSTITUTION Ohio State Univ., Columbus. Center on Education andTraining for Employment.

PUB DATE 94

NOTE 36p.; For the complete set, i.e., 21 units, each doneat thr see CE 067 029-092. Supported by theInternational Consortium for EntrepreneurshipEducation, the Coleman Foundation, and the Center forEntrepreneurial Leadership Inc.

AVAILABLE FROM Center on Education and Training for Employment, 1900Kenny Road, Columbus, OH 43210-1090 (order no.RD302-08 IG, instructor guide $4.50; RD302-08 M,student module, $3; student module sets, level1--RD301M, level 2--RD302M, level 3--RD303M, $45each; instructor guide sets, level 1--RD301G, level2--RD302G, level 3--RD303G, $75 each; 3 levels andresource guide, RD300G, $175).

PUB TYPE Guides Classroom Use Teaching Guides (For

'.:Licher) (052) Guides Classroom UseInstructional Materials (For Learner) (051)

EDRS PRICE MF01/PCO2 Plus Postage.

DESCRIPTORS Behavioral Objectives; Business Administration;*Business Education; Business Skills; *CompetencyBased Education; *Entrepreneurship; Free EnterpriseSy...tem; Learning Activities; "Marketing;Postsecondary Education; Secondary Education; SmallBusinesses; Teaching Guides

IDENTIFIERS *Market Research; *Program for Acquiring CompetenceEntrepreneurship

ABSTRACTThis instructor guide for a unit on marketing

analysis in the PACE (Program for Acquiring Competence inEntrepreneurship) curriculum includes the full text of the studentmodule and lesson plans, instructional suggestions, and other teacherresources. The competencies that are incorporated into this module

are at Level 2 of learning--planning for a business in one's future.

Included in the instructor's guide are the following: unitobjectives, guidelines for using PACE, lists of teaching suggestionsfor each unit objective/subobjective, model assessment responses, and

overview of the three levels of the PACE program. The followingmaterials are contained in the student's guide: activities to becompleted in preparation for the unit, unit objectives, studentreading materials, individual and group learning activities, casestudy, discussion questions, assessment questions, and references.Among the topics discussed in the unit are the following:market-oriented approach to planning, market research, the marketingmix, potential customers, market share, and components of a marketing

plan. (KC)

UNIT 8LEVEL 2

PACETHIRD EDITION

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CENTER OH EDUCATOR010 MUNRO FOE) EMPLOYMENT

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Program for AcquiringCompetence inEntrepreneurship

Research &Hr.clioprotra Series No..142.8

Objectives:

Explain the "market-oriented" approach to planning.

Justify the use of market research in planning.

Identify the process for determining the marketingmix.

Profile potential customers.

Define market share.

Define the components of a marketing plan.

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Unit 8

Marketing AnalysisLevel 2

HOW TO USE PACE

Use the objectives as a pretest. If a studentis able to meet the Objectives, ask him orher to read and respond to the assessmentquestions in the back of the module.

Duplicate the glossary from the ResourceGuide to use as a handout.

Use the teaching outlines provided in theInstructor Guide for assistance in focusingyour teaching delivery. The left side ofeach outline page lists , ,jectives with thecorresponding headings (margin questions)from the unit. Space is provided for you toadd your own suggestions. Try to increasestudent involvement in as many ways aspossible to foster an interactive learningprocess.

When your students are ready to do theActivities, assist them in selecting thosethat you feel would be the most beneficialto their growth in entrepreneurship.

Assess your students on the unit contentwhen they indicate they are ready. You

may choose written or verbal assessmentsaccording to the situation. Model re-sponses are provided for each module ofeach unit. While these are suggestedresponses, others may be equally valid.

2BEST COPY AVAILABLE

Objectives Teaching Suggestions

1. EXPLAIN THE "MARKET-"ORIENTED APPROACHTO PLANNING

What is marketing?

What is the marketing concept?

2. JUSTIFY THE USE OFMARKET RESEARCH INPLANNING

What is the "market-oriented" ap-proach to planning?

How does the planning processwork?

What about market research plan-uing strategies?

What is market information anal-ysis?

How can market information beanalyzed?

What are data sources for marketinformation and research analysis?

What types of marketing informa-tion should be obtained for an ac-curate marketing analysis?

What are the methods for collect-ing primary research data?

What are methods for collectingsecondary research data?

In their own words, ask the class to explain their understandingof marketing.

Discuss the philosophy behind customer service as it relates tothe marketing concept.

The marketing era of the 1950's and 60's brought with it awhole new approach to the buying, and particularly, the sellingof products. Ask the students to do outside research to findexamples of this marketing blitz to share with the class.

Illustrate the relationship between marketing and planning.

Discuss the basic target components of market information.

Introduce and discuss the steps of problem solving.

Discuss the different sources of data available to theentrepreneur.

Work with the class to develop a data gathering instrument forthe personal interview.

The local library houses a wealth of valuable information for theentrepreneur. Have the class visit the library, individually toider"ify sources of market information. They should then beprepared to share this information with the class.

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Objectives Teaching Suggestions

Why is information analysis im-portant?

What about pre- and post-research?

3. IDENTIFY THE PROCESSFOR DETERMINING THEMARKETING MIX

What are the considerations fordeveloping the plan for the mar-keting mix?

What decisions need to be maderegarding the marketing mix?

How do you develop a marketingstrategy?

What are the external marketingfactors?

What does the marketing environ-ment influence?

What is the product?

How is pricing affected?

What is a retailer's pricing goal?

How is promotion affected?

What are the methods of consumercommunication?

How can advertising help a busi-ness?

Explain how the analysis of the gathered data can lead to newand improved products.

Discuss the importance of research done both before and afterthe execution of the marketing plan.

Write the name and purpose of a fictitious business on the chalk-board or overhead. Have the class work together to answer eachof the questions posed in the text under this heading.

Review the important questions for each marketing mix elementlisted in the text.

Divide the chalkboard or overhead in half. On one side, create alist of fictitious business objectives. Use the opposite side to liststrategies, suggested by the students, that will help achieve thestated objectives.

On the chalkboard or overhead list in separate columns the ex-ternal forces listed in the text. With the help of the class, addspecific factors that are out of the entrepreneurs' span of control.

Have the class name other environmental forces that directlyinfluence the customer.

Explain the concept of product and its' relation to strategy.

Introduce the theory of pricing as it relates to "what the marketwill bear."

Discuss markup as a means of achieving a desirable profit.

The number of ways that a supplier communicates with the cus-tomer base is almost limitless. Involve the class in "brain-storming" possible promotion methods.

Review the AIDA formula.

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Objectives Teaching Suggestions

What services do advertising agen-cies offer?

How should promotional methodsbe mixed?

How do channels of placement anddistribution affect marketplanning?

How should a marketing channelbe selected?

What are the modes of transporta-tion?

4. PROFILE POTENTIALCUSTOMERS

What does research reveal aboutconsumer behavior?

How are industrial consumers af-fected by buying motives?

How are consumer markets chang-ing?

5. DEFINE MARKET SHARE

Discuss alternatives to employing an advertising agency.

Suggest specific types of products and have the class help decidethe most effective way to promote and sell them. Use the chalk-board or overhead to note the responses.

Explain and give examples of channels of distribution. Listspecific products and have the class select an appropriatechannel of distribution.

Ask students to name the modes of transportation that areavailable in and around your town.

Have the class review journals like Psychology Today forarticles about consumer buying behavior.

Discuss the differences between the average consumer and theindustrial consumer.

Discuss the factors that contribute to the changing market.

What is a target market? Have the class name as many target markets as they can thinkof. Record their answers on the chalkboard or overhead.

Why are target markets important? Discnss the case of Diana Randell.

What are the types of markets? Challenge the class to identify the major types of marketsrepresented in their own city or town.

What is the market share? Explain the correlation between the goal of increasing marketshare and the quality of the market research.

Objectives Teaching Suggestions

What are consumer buyingmotives?

6. DEFINE THE COMPONENTSOF A MARKETING PLAN

How can a marketing plan bedeveloped?

There is a wealth of topical information available on the subjectof consumer buying habits as they relate to marketing. Assignoutside research to be shared with the class.

Discuss the components of a marketing plan.

MODEL ASSESSMENT ANSWERS

1. When business moved into the marketing era there was a shift from a production-driven economy to acustomer-driven economy. Consequently, production planning had to be done based on research thatindicates the wants and needs of the customer.

2. A business is opened with the understanding that it will need to make a profit in order to continue. In orderto win customer loyalty, evidenced by sales, they will have to satisfy the customer's needs and desires.The first step is to obtain knowledge about the nature of these wants and desires. This is done throughmarket research.

3. The four P's of the marketing mix are: product, price, promotion, and place.

Product mix strategies include changing the existing product, and/or introducing new products. Thesestrategies apply to all the product lines rather to a particular product. (For example, some products areoftentimes introduced to support other products on the market. Competition among products on the sameproduct line may lead to cannibalization, i.e., some products are marketed at the expense of other products.)

Pricing strategies consider the costs of the product, the consumer's willingness to pay the price in exchangefor the product's benefits, and the amount of pre'it the seller should make for selling the product. Usually,the markup rule is applied to calculate the price of a product.

Promotion strategies combine all the actions the seller takes to communicate the product's benefits to themarketplace. These strategies include advertising, personal selling, and sales promotion. An effectivepromotion strategy should combine all these methods, rather than using one method at the time.

Placing and distribution strategies ensure that the product reaches the consumer fast and the right way.In determining which distribution channels should be chosen, the seller should consider the nature of theproduct, the size and location of the market, the availability of distribution channels (transportation,'wholesalers, distributors, etc.), and the staff's expertise to market the product.

4. Some factors that must bf; considered when selecting a target market are: costs of selling to the targetmarket; anticipated sales :olume; size and number of competitors; and resources required to sell to the

target market.

5. Analyzing market information involves the following steps: (1) recognizing the problem, (2) conducting

a preliminary investigation, (3) gathering factual information, (4) interpreting the information, and

(5) reaching a conclusion.

(1) Recognizing the problem is simply assessing the need of solving a problem or identifying an opportunityin the market. For example, if a product does not sell well, you need to recognize that you might need tolearn what are the reasons why the product did not perform well in the marketplace.

(2) Conducting a preliminary study involves analyzing trade publications, and talking with people insideand outside the firm to understand what is in the marketplace that challenges your product.

(3) Gathering factual information involves consulting the library, performing a market research study, orhiring consultants to perform this type of analysis.

(4) Interpreting the information refers to thoroughly understanding and analyzing the information gatheredpreviously to make it pertain to your problem.

(5) Reaching the conclusion can be achieved only after reconciliating your market analysis with theproblem. Future evaluation of this decision will help you improve your future decision-making process.

6. Factors to be considered when developing the plan for marketing mix include: identification and analysisof the target customers (what are their primary and secondary needs and which of these needs have priorityfor the customer), identification of advantages and disadvantages of the product, and analysis of thecompetitors' products.

7. Market share represents the product's sales computed as a percentage of the total sales of the product inthe market. Market share can be expressed in dollars or units of the product. The market share shows howwell your product performs from a sales standpoint relative to the competition.

8. A marketing plan includes two major parts: the market analysis and the marketing strategy.

The market analysis involves establishing the industry characteristics and trends, identifying the targetmarket, approximating the current and potential size of the target market, identifying direct and indirectcompetitors, and projecting sales and market share.

The marketing strategy establishes advertising, promotions, pricing, sales, distribution, and product support(i.e., warranties, guaranties, services, customer training) strategies.

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Program for Acquiring14x Competence in

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Incorporates the needed competencies for creating and operating a small business at three levels of learning, with experiences and

outcomes becoming progressively more advanced.Level 1 Understanding the creation and operation of a business.Level 2 Planning for a business in your future.Level 3 Starting and managing your own business.

Self-contained Student Modules include: specific objectives, questions supporting the objectives, complete content in form of answers

to the questions, case studies, individual activities, group activities, module assessment references. Instructor Guides include the full text

of each student module and lesson plans, instructional suggestions, and other resources.PACE,Third Edition, Resource Guide includesteaching strategies, references, glossary of terms, and a directory of entrepreneurship assistance organizations.

For information on PACE or to order, contact the Publications Department at theCenter on Education and Training for Employment, 19(X) Kenny Road, Columbus, Ohio 43210-1090

(614) 292-4353, (8(X)) 848-4815.

Support for PACE, Third Edition provided in whole or in part by:

International Consortium for Entrepreneurship Educationand

International Enterprise AcademyCenter on Education and Training for Employment

The Ohio State University

The Coleman Foundation

Center for Entrepreneurial Leadership Inc.Ewing Marion Kauffman Foundation

MarketAnalysis

UNIT 8LEVEL 2

Your Potentialas an

Entrepreneur NA

Nature ofSmall Business

BusinessOpportunities

Global MarketsThe

Business Plan

Help forthe

Entrepreneur

Types ofOwnership

LocationPricing

StrategyFinancing

the Business

LegalIssues

BusinessManagement

HumanResources

Promotion Selling

Record FinancialKeeping Analysis

CustomerCredit

RiskManagement

Operations

Program for AcquiringCompetence inEntrepreneurship.

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CENTER ON EDUCATIONAND TRAINING FOR EMPLOYMENT

COLLEGE OF EDUCATIONTHE OHIO STATE UNIVERSITY

3 Research & Development Series No. 302-8

MARKETING ANALYSIS

BEFORE YOU BEGIN . . .

1. Consult the Resource Guide for instructions if this is your first PACE unit.

2. Read What are the Objectives for this Unit on the following page. If you thinkyou can meet these objectives now, consult your instructor.

3. These objectives were met in Level 1:

Define marketing.

Explain "marketing mix."

Discuss the importance of marketing research.

4. Look for these business terms as you read this unit. If you need help with themeanings, ask your instructor for a copy of the PACE Glossary contained in theResource Guide.

Bureau of CensusData collection.Industrial RevolutionMarketing conceptMarketing planMarket shareTarget marketTrade associations

Copyright 1994, Center on Education and Training for Employment,

The Ohio State University. All rights reserved.

MARKETING ANALYSIS

WHAT ARE THE OBJECTIVES FOR THIS UNIT?

Upon completion of this unit you will be able to

explain the "market-oriented" approach to planning,

justify the use of market research in planning,

identify the process for determining the marketing mix,

profile potential customers,

define market share, and

define the components of a marketing plan.

WHAT IS THIS UNIT ABOUT?

A basic goal of any business is to sell itsproducts or services and to make a profit.Marketing activities help a business sell pro-ducts at a profit. Those profits provide theresources needed to develop new products orservices. Marketing activities help business-es make the profits needed for the survivalof the business. Those same profits areneeded for the health and ultimate survivalof our entire economy. Without profits, itwould be difficult for businesses to buyadditional raw materials, hire more employ-ees, and sell more products that, in turn,make more profits.

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Marketing helps consumers develop a higherstandard of living. Marketing can help con-trol the costs of the products and services.It helps consumers get the most satisfactionfrom the goods and services they buy. Tothe degree that marketing is able to do this,it serves both consumers and businesses.

WHAT IS MARKETING?

Marketing is a total system of businessactivities designed to plan, price, promote,and place or distribute products, services,and ideas in target markets in order toachieve business organizational objectives.

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According to the American Marketing Asso-ciation, marketing is the process of planningand executing the conception, pricing, pro-motion, and distribution of ideas, goods, andservices to create exchanges that satisfyindividual and organizational objectives.

This definition has some significant implica-tions:

It is a managerial definition.

The entire system of business activitiesmust be customer-oriented because cus-tomers' wants must be recognized andsatisfied effectively.

The marketing program starts with thegerm of a product idea and does not enduntil the customer's wants are complete-ly satisfied, which may be some timeafter the sale is made.

The definition implies that in order to besuccessful, marketing must maximizeprofitable sales over the long run; thus,customers must be satisfied in order fora company to get the repeat business thatordinarily is so vital to success.

Many managers are now trying to get cus-tomers into their businesses by promising tomeet a competitor's price. For example, ifJoan, a car salesperson at Friendly's FordDealership, wants Mr. Richardson to pur-chase his new Ford from the Friendly's lot,she may have to meet the offer Mr. Richard-son received at another Ford dealer. If shecannot or will not meet the price, Mr. Rich-ardson will more than likely go back to theother dealership and purchase his new auto.Joan knows the pressure of bargaining with

customers to sell the product and today'svalue of marketing if she meets Mr. Richard-son's price and he buys the auto from herand not another dealer. She increases hersales and decreases another dealer's sales.

WHAT IS THE MARKETINGCONCEPT?

The marketing concept means that a busi-ness is interested in consumer satisfaction,with the objective of achieving long-termprofits. The company with a marketing con-cept believes that customer satisfactionshould be the basis of all management deci-sions.

Providing satisfaction to customers and mak-ing profit for the company are accomplishedthrough a coordinated set of activities. A

marketing analysis must take place. Thecompetition must also be assessed. First, abusiness must identify the customers to beserved. Then, it muFt find out what willsatisfy these customers. With this informa-tion, the business can develop marketableproducts and services.

Next, the business must make the productsavailable to the customers when they wantthem and where they want them. Productsmay need to be improved to keep pace withchanges in customer needs and wants. Themarketing concept stresses the importance ofcustomers to a business. Marketing activi-ties begin and end with the customers. Aswith the previous example about Joan, shemust market her product (cars) to the cus-tomer (buyer) SP that her company will con-tinue to exist in the marketplace. If acustomer is unhappy with the sales deal or

the service received, the business has lost apossible repeat customer. This is why somany businesses are now trying to gain andkeep customer loyalty. It is more difficult toreplace former customers than to simply tar-get new customers.

Marketing in the 1990s also requires an en-vironmental responsibility. The averageAmerican by age 75 has produced 52 tons or104,000 pounds of garbage. The marketerand manufacturer must therefore take re-sponsibility. Landfills are reaching a criticalstage of being filled. Social responsibilitymust be part of the marketing process.

WHAT IS THE "MARKET-ORIENTED" APPP OACHTO PLANNING?

The marketing concept emerged as weknow it after World War II and is the thirdmajor era of U.S. business. The first erawas production. Dunng the second half ofthe 1800s, the Industrial Revolution cameinto its own in the United States. Consum-ers' demand for manufactured goods wasstrong. The emphasis was on production.

The second era was sales. In the 1920s,strong consumer demand diminished. Pro-ducts that were efficiently produced had tobe "sold" to consumers. Personal selling andadvertising were considered to be the mostimportant marketing activities.

The marketing era of the 1950s became ap-parent when consumers did not buy whatthey didn't want. Customer orientation hadto be considered first. In the 1990s andbeyond, a world economic and business

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environment must be considered. Customerorientation is not just within the UnitedStates but worldwide. Either products mustbe standardized for around the world orproducts for specific countries must bedeveloped.

There are four question' which must be ad-dressed. They are (1) yeti is your targetedconsumer; (2) where will they buy; (3) howmuch will they pay; and (4) why will theybuy? When these questions are answered,the entrepreneur can begin the planningprocess.

HOW DOES THE PLANNINGPROCESS WORK?

Disciplined planning for market-orientedapproaches has two major components. Thefirst, marketing background, includes thebusiness review, which is commonly referredto as a situation analysis, problems, andopportunities segments. The business reviewis a comprehensive analysis of the market-place and of your own organization brokendown into sequentially ordered sections.The second major component is the market-ing plan itself, which is developed from theinformation gathered and analyzed in themarketing background section. The market-ing plan is totally inclusive, beginning insequential order with the sales objectives andending with a budget and calendar of mar-keting activities necessary to realize the salesobjectives.

If your company sells computers, your busi-ness review may tell you that there are al-ready too many businesses selling computersin your area (situational analysis). You also

find out that there is a lack of softwareavailability (opportunity). Now you havesome information on what path to take inyour planning for the future.

Once the plan is prepared, it must be exe-cuted and. then evaluated. Evaluation beginsagain each time customer purchasing is notat the level the business desires. If a com-pany uses marketing techniques carefullyand accurately, they can often forecast theneeds and desires of the consumer.

WHAT ABOUT MARKETRESEARCH PLANNINGSTRATEGIES?

If you plan to conduct research, begin nowto establish a research strategy. You maydevelop a research strategy to solve a spe-cific problem that will help you to buildsales and accomplish a marketing objective.Or, you may decide to conduct an ongoingawareness, attitude, and behavior trackingstudy to assist with long-range planning andto provide a standard to evaluate the resultsof current and future marketing plans.

HOW DO YOU DEVELOP AMARKETING STRATEGY?

First, go back and review your problemsand opportunities. Read through the list andmake notes regarding ideas you have on howto solve the problems and take advantage ofthe opportunities. Be as creative as possiblein this exercise, coming up with multiplesolutions for each problem or opportunity.

Review your marketing objectives. Now re-read the problems and opportunities, alongwith your original notes on how to solve theproblems and take advantage of the oppor-tunities. Determine which of the ideas willform strategies capable of achieving the mar-keting objectives in your plan.

Make certain that you have developed stra-tegies to cover each of the strategic cate-gories that are necessary to fulfill yourmarketing objectives. The strategies shouldprovide the direction for use of the marketresearch approach you plan to use. Thesetools may end with a strategy to emphasizestronger selling periods versus weaker sell-ing periods. If you have a seasonal cycle,you may choose to go with radio and televi-sion ads for peak seasons, but during lowselling periods perhaps in-store promotionsmay work as well.

An example of this is the Christmas sellingseason. Most stores make the majority oftheir profits during this 6-week period oftime, from mid-November to the end of De-cember. Many companies have found a use-ful marketing strategy in have "Christmas inJuly" sales to push not only Christmas mer-chandise but all other merchandise as well.Once the consumer is in the door, manycompanies feel they can effectively competefor the consumers' dollars. Craft stores haveproven that the mid-year sales of seasonalgoods is effective and now many major de-partment stores are using this strategy bybringing in seasonal goods so that the con-sumer can see other nonseasonal goods aswell.

If your business is a retail business, you maywish to utilize primary research, since youwill be able to track your sales ratio and thatof your competitors from year to year. This

should provide direction when establishingyour sales ratio in the marketing plan.Whether you have primary research or not,analyze the amount of traffic (retailers) ornumber of sales calls made (service) in dailyand weekly increments. Next, estimate yourcurrent sales ratio and project what an in-crease of even three percent would do foryour sales. Finally, ask yourself if it isrealistic to expect an increase like this. Thisevaluation step will aid in your planningfrom your research results.

WHAT IS MARKETINFORMATION ANALYSIS?

Market information analysis includes allactivities involved in gathering and under-standing information about a company's tar-get markets. It includes getting informationabout the market' buying habits, the compe-tition, distribution patterns, and sales prac-tices. It includes developing a plan for get-ting and using all the information needed.For example the small apparel manufacturerwho was considering adding swimwear tothe company's product line should use mar-ket research to determine whether the newline will be successful. Market research isnecessary for an analysis to take place.

HOW CAN MARKETINFORMATION BEANALYZED?

In analyzing market information, the tradi-tional problem-solving approach is used.The five steps of problem solving are:

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7

1. recognizing the problem,

2. conducting a preliminary investigation,

3. gathering factual information,

4. interpreting the information, and

5. reaching a conclusion.

The first step, recognizing the problem, isvery important. A problem is not alwaysnegative. It may be an opportunity. Entre-preneurs are always on the lookout for op-portunities. You must carefully identify thereal problem or opportunity before conduct-ing any other steps in market research. Ifthe real problem or opportunity is not accu-rately determined, the rest of the marketingresearch will be wasted, because you will beidentifying solutions for the wrong situation.

The second step is conducting a preliminaryinvestigation of the situation and of possibleelements that are part of it. This step mayinvolve analyzing records, talking with peo-ple inside and outside the firm, and readingtrade publications. If more information isrequired, you should identify the best meth-od for obtaining it.

Gathering factual information is the thirdstep. This can be done through a variety ofmethods, ranging from discussions with ex-perts to a market research study.

The fourth step is to interpret the informa-tion obtained in the previous step. Whatdoes it mean and how important is it? Thedata should be carefully analyzed and pos-sible solutions determined.

In the final step, reaching a conclusion, thebest all-around solution should be chosenand used. After putting the solution into

8

action, the results obtained should beevaluated and used for future reference.

ments of Labor and Commerce, and the Fed-eral Reserve Board.

Data Sources for Market Information and Research Analysis

Federal Reserve Board

Newspapecs

Company records

Utility companies

Swan Business Administration

Exhibits

U.S. Department of Labor and Commerce

WHAT ARE DATASOURCES FOR MARKETINFORMATION ANDRESEARCH ANALYSIS?

Many small businesses do not develop aninformation analysis because they believe thesources of information are not accessible orcost too much. However, several free or in-expensive data sources are available to smallbusinesses. These sources are secondary,since someone else has done the analysis.The company's own records are a very im-portant source of information. They can beanalyzed to determine successful and lesssuccessful activities and decisions.

The government is another source of infor-mation. The Bureau of the Census publishesinformation about businesses, population,housing, and so forth. Numerous reports andpamphlets are published by the Small Busi-ness Administration (SBA), the U.S. Depart-

Trade journals

Yellow Pages

Trade shows

Many other sources of secondary researchinformation are available to the small busi-ness owner. Trade associations collect andpublish data for their members. Trade jour-nals often report research findings. LocalChambers of Commerce, banks, newspapers,utility companies, and other organizationscan provide useful marketing information ifcarefully analyzed.

The Yellow Pages are extremely importantfor an analysis of the competition. This self-search process by an enthusiastic entrepre-neur can result in all types of useful infor-mation. How many window-treatment busi-nesses are located nearby? What type ofservices do they offer? What do theycharge? A telephone call for informationcan be very useful. How about a visit totheir store? Tiey might even make a housecall to your home or apartment. Learn whatthe competition is doing. This is time wellspent by a budding entrepreneur! This isconsidered primary research since the entre-preneur is doing it solely for their own use.

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Participating in trade shows, exhibits, andconferences are also ways that allow you tomeet business people like yourself and toobserve new developments in your field.Local advertising agencies may also prove tobe useful sou of information.

WHAT ARE THEMETHODS FORCOLLECTING PRIMARYRESEARCH DATA?

Gathering data for market research can bedone in a number of ways. Analyzing yourcompany's past sales records is often a goodplace to begin. For a new business, twoother important methods used in collectingdata are interviewing and observing.

The interview method is one of the mostwidely used methods for collecting informa-tion. Several distinct types of interviews canbe used. The first type is the personal inter-view. Face-to-face discussion provides theopportunity to gather expert opinions and re-view issues in detail. Telephone interviewscan be a simple, inexpensive method of col-lecting information. However, you must becareful not to offend the persons you call, orwaste their time with unnecessary chitchat.

The mail questionnaire is another form ofinterview, but the percentage of people whorespond to mail questionnaires is usuallyvery small. If a small "reward" is offered tocomplete the mail survey, this percentagewill increase slightly. Mailed questionnairesmust be attractive and easy to complete. Asimple questionnaire can give you helpful in-formation about what customers want, need,like, and dislike.

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Another research method is observation. Forexample, you can count pedestrians or auto-mobiles passing a certain spot and gathergeneral information about the age and sex ofeach passerby and the type of vehicle theymay be driving. By observing and talking tocustomers, you may also get the same resultsas more sophisticated research methods.Your employees may gather additional infor-mation through their observations of anddiscussions with customers. However, theobservation methods are only as thorough asthe interview methods.

WHAT ARE THE METHODSFOR COLLECTINGSECONDARY RESEARCHDATA?

Another important method for collecting re-search is by using secondary sources avail-able to most businesses. These include li-brary resources and other companies whoseprimary product is industry research.

Library resources are a good starting pointbecause they are free to the user but do re-quire time to research and evaluate the infor-mation after it has been found. Many com-panies find this too time consuming and pre-fer to have a research company do the workfor them. A research company will discusswith your business what you really want toexamine and then compile the informationfor you to evaluate. For an additional price,the company can even do all evaluations. Ifyou are planning to market a new product,this type of secondary research can be quitebeneficial.

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After a business person has gathered andanalyzed customer information, decisionsabout the busin( ss can be made. The busi-ness must be organized to satisfy prospectivecustomers and make a profit.

WHY IS INFORMATIONANALYSIS IMPORTANT?

Marketing activities will not be as effectiveif businesses only send information to con-sumers. Consumers provide useful informa-tion to businesses as well. Several market-ing activities are used to gather informationfrom consumers. This information is used todevelop new products and improve currentones. It is also used to help in settingprices, designing sales and advertisingmessages, and improving other businessdecisions.

Another area which is extremely importantto information analysis is that of decisionmaking. If a company will not or cannotmake a decision for a product after review-ing all pertinent data, all of the data may belost. This is due to the timeliness of market-ing information. A company must decidewhen and where to use the information, butit must make a decision so that other planscan be made and executed regarding theproduct.

WHAT ABOUT PRE-AND POST-RESEARCH?

Pre- and post-market primary research isimplemented both before and after the exe-cution of the plan. Most pre- and post-

research involves awareness, attitude, andbehavior tracking studies. These studiesmonitor the movement of awareness, atti-tude, and behavior variables both before andafter the marketing execution.

Whereas increased sales is a very valuableindicator of the success of a marketing plan,it is not the only one. Many times whilesales remain relatively flat, there is a signifi-cant movement in awareness and attitudes.These shifts signal the probability of futureincreases in sales. As has been proven timeand time again, with increase in awareness,there is a good probability that there will bean increased level of purchases.

An example of this is a cookie company thathad been around for more than 50 years. Anaggressive research campaign was conductedand it was found that name recognition waslacking. To get awareness of the product, amassive marketing campaign ensued. Salesfor that month were 10 times larger thantheir next largest monthly sales. However,the next month's receipts fell and revertedback to original sales figures. The companydiscovered through post-market research thatmost new customers found the cookies to bedistasteful and would not purchase themagain. The marketing research was doneproperly as was the campaign; the problemwas the product.

Pre- and posL-research can also serve as adiagnostic tool to help explain why saleswent up or down. Research can uncoverchanges in consumer awareness of your pro-duct, attitudes about your product, changingpurchase behavior patterns, or competitivestrengths and weaknesses as reasons for in-creases or decreases in sales. Using theabove example, the product was lacking andthe consumers showed their dislike by not

purchasing it again. Thus, research evalua-tion has the capability of providing indepthinformation to help you in your planning andevaluation.

WHAT ARE THE EXTERNALMARKETING FACTORS?

The marketing forces external to tne busi-ness are elements that an entrepreneur mayhave little control over. The marketing en-vironment of political, legal, regulatory,societal, economic, competitive, and techno-logical forces surrounds the entrepreneur andthe market mix. These marketing factorscannot be predicted with absolute certainty.

WHAT DOES THEMARKETINGENVIRONMENTINFLUENCE?

It affects the life styles, standards ofliving, and preferences plus needs forproducts by the customers. This en-vironment in turn, influences themarketing mix.

It affects the marketing manager andhow the functions and activities arecarried out.

It affects marketing decisions and ac-tions in regard to the marketing mix.

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It affects the relationships betweenproducts/service, prices, promotion,place, and people.

It affects change and sometimes op-portunities of which businesses mustbe aware.

The external environmental forces directlyinfluence the customers.

WHAT IS THE PRODUCT?

Managing the product ingredient includesplanning and developing the right productsand/or services to be marketed by the com-pany. Strategies are needed for changingexisting products, adding new ones, and tak-ing other actions that affect the assortmentof products carried. Strategic decisions arealso needed regarding various product fea-tures. A product can be anything from lum-ber sold at the lumberyard to a concert ofclassical music performed by the symphonyorchestra.

HOW IS PRICING AFFECTED?

The pricing of goods and services in alltypes of business is similar in several basicways. Most businesses arrive at pricing de-cisions based on cost-plus--that is, totalingthe costs of providing the product or serviceand adding a sum for profit. Cost-plus pric-ing techniques do not take customer demandinto account, so the price may not be whatcustomers are willing to pay.

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Pricing is perhaps the most complex market-Lig decision. There is no one best formulato use to establish prices. A price strategy isonly effective if the customer is willing topay the price and a profit is received. Somecomputer and technology advancements havesimplified pricing decisions. To be success-ful, a marketing strategy must set prices thatare both satisfying to customers and profit-able to the business.

Retailers have some of their prices suggestedby manufacturers and wholesalers. General-ly, wholesale prices as well as retail pricesare based on the markup (amount added toth cost of the product) necessary to handleeach line of goods profitably. Suggestedprices are sometimes marked on the productby the manufacturer. Even though someprices are recommended, retailers still needto determine their own prices for many ormost of the items they sell.

WHAT IS A RETAILER'SPRICING GOAL?

The goal for the retailer is to balance highand low markup items to achieve an averagemarkup that produces a desirable profit forthe overall operation. This gross profit mar-gin, usually expressed as a percentage ofcost or selling price, must pay for all ex-penses and provide for a profit. For exam-ple, the average gross margin needed by abusiness may be 35 percent. All goods mustbe sold at a price that is an average 35 per-cent above their cost price.

Because of demand and competition, somegoods will be marked higher and some lowerthan 35 percent. Some products can have

only a very small markup. Competition issuch that if the retailer were to price theitem even slightly above competition, itwould not sell. Other items that are not ascompetitive may have a much higher thanaverage markup.

HOW IS PROMOTIONAFFECTED?

Promotion involves trying to determine theproper means of communicating the avail-ability and benefits of the product or serviceto the potential customer. Deciding on theright methods of promotion will involve acareful analysis of the product, price, andplace components of the marketing mix.Each of the mix elements must be examinedin detail.

WHAV ARE THEMETHODS OF CONSUMERCOMMUNICATIONS?

The finest product or service is useless untilit is in the customer's hands. Most peoplemust be informed and motivated before theywill buy products. Promotion used forthis purpose. Advertising, personal selling,and sales promotion are the major waysbusinesses communicate with customers.Promotion is becoming more and more im-portant. Whether a business should use pro-motion is no longer the question. Insteadentrepreneurs should be asking, "How muchand what kind of promotion do I need?"

HOW CAN ADVERTISINGKELP A BUSINESS?

The two major goals of advertising are toattract new customers and to keep the oldones. In order to achieve these objectives,good advertisements must do what goodsales people dothey must follow the AIDAformula. This means:

A: The advertisement must get the attentionof the desired audience.

I: Once the attention is attained, interestmust be held.

D: In holding interest, the advertisementmust create a desire for whatever isbeing advertised.

A: Once attention, interest, and desire havebeen attained, the advertisement mustinduce the customer to actto go to thebusiness offering the product.

However, advertising is not a cure-all.There are a number of things advertisingcannot do, including the following:

It cannot make a business succeed if thatbusiness offers a poor product or inferiorservice.

It cannot lead to sales if the prospectivecustomers it brings to the business areignored or poorly treated.

It cannot create customers overnight, orincrease sales with a single effort.

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It will not build confidence in the busi-ness if it is untruthful or misleading.

Small businesses commonly use written ad-vertisements such as flyers, local printmedia, and perhaps the radio. Small busi-nesses may use direct mail. TV and maga-zines are usually too expensive.

WHAT SERVICESDO ADVERTISINGAGENCIES OFFER?

After an analysis of promotional efforts tobe used, an ad agency may be useful. Ad-vertising agencies prepare and place ads forbusinesses. The decision to use an adver-tising agency should be based on whether ornot the agency can do a more effective andefficient job than the business.

If you &Tide to use an advertising agency,you should select an agency that has had ex-perience with businesses of a similar sizeand knows the needs and budget of the smallbusiness. If advertising dollars are to pro-duce the maximum possible impact on salesand profits, then all the parts of the prugrammust be put into action skillfully, no matterwho prepares the advertisements.

Most advertising agencies are paid on com-mission. These agencies receive the bulk oftheir fees from advertising media rather thanfrom advertisers. Advertising ai,..ncies buy-ing space and time on behalf of advertisersare granted a certain discount, usually 15percent. They bill the business at the actualrate.

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HOW SHOULDPROMOTIONALMETHODS BE MIXED?

Determining the proper mix of advertising,sales promotion, and personal selling is oneof the fundamental tasks of a marketinganalysis. If the entrepreneur decides to relymostly on personal selling, advertisingshould be used to make the salesperson'sselling efforts more effective. For example,advertising may be used to make customersmore receptive to your sales presentation, orto communicate part of the selling message,thus saving much of the salesperson's time.The opposite situation is true when you de-cide to rely mainly on advertising; here,advertising does the preselling, and order-taking becomes the salesperson's chieffunction.

HOW DO CHANNELSOF PLACEMENT ANDDISTRIBUTION AFFECTMARKET PLANNING?

Channels of placement and distribution pro-vide the way for producers' products tomove to customers. The cost of goods is di-rectly related to the channel of distributionused. How a firm's product will be distri-buted is one of the most important decisionsan entrepreneur must make in the marketinganalysis because these decisions can affecthow rapidly a product can be placed in thehands of the public.

HOW SHOULD A MARKETINGCHANNEL BE SELECTED?

In determining which channel to use, thefollowing points should be considered:

The nature of the product

The size and location of the market

The availability of suitable channelmembers

Your own or your staff's ability to man-age all of the marketing activities

If market conditions or buyer attitudeschange, distribution channels should bechecked to be sure they are getting goods toprospective buyers in the most effective way.If other channel members change their distri-bution plans, you may have to adjust yourown plan. For these reasons, you need toreevaluate policies on marketing channelsregularly.

WHAT ARE THE MODESOF TRANSPORTATION?

Selecting distribution channels requiressome knowledge of the various modes oftransportation available. Selecting the besttype of transportation to get the job done forthe least cost is becoming more and moreimportant in the analysis because of in-creases in transportation costs and differ-ences in levels of transportation service.

There are several types of carriers to choosefrom. A producer or manufacturer needs toselect the type of carrier that best suits his orher needs. Sometimes two or more types ofcarriers will be used. Researching transpor-tation modes is an important marketing anal-ysis factor.

Common carriers (trucks) can be hired byany shipper and are under the regulationof the Interstate Commerce Commission.These carriers haul about one third of allmotor freight. Common carriers have tocharge certain rates and most operate overcertain established routes.

Contract carriers can enter into specialagreements with individual shippers and arenot as restricted as common carriers. Theyagree to move specified shipments for acompany and they can establish their ownrates.

Private carriers are company-owned trucksthat haul the company's goods only.

Air freight is being used more and more to-day because of increases in motor freightcharges and the speed of air freight. Airfreight is most frequently used for quickdelivery and smaller items. However, sev-eral air carriers will handle large and heavyshipments.

Railroads have provided a vital link inmany channels of distribution for years.Railroads are generally quite reliable.Piggyback cars (flatcars on which trailerscan be loaded) have increased railroad effi-ciency. Shipments in containers are oftencarried on rail and then transferred to trucksfor local delivery.

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WHAT TYPESOF MARKETINGINFORMATION SHOULDBE OBTAINED FOR ANACCURATE MARKETINGANALYSIS?

In opening a successful new business, theentrepreneur will need market analysis infor-mation. Answers to a variety of questionsare important: What are the needs andwants of the customer? Will the company'sproducts or services fill a current need? If aneed is not strong, can it be increasedthrough promotion? Are the products andservices timely? What products or servicessold by other companies will be competitionfor those of the new business?

WHAT IS A TARGETMARKET?

Identifying markets and becoming familiarwith them will help make a business suc-cessful. Products are of little value on astore shelf. Therefore, one of the most im-portant tasks to be accomplished is a market-ing analysis for the target market. The tar-get market represents the people who aremost likely to purchase a businesses goodsand services.

When choosing a target market, several fac-tors need to be considered, including thecosts of selling to the group; anticipatedsales volume, size and number of competi-tors who already are selling in the targetmarket; and the resources requi ied to sell tothe target market. For example, a small

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clothing manufacturer who is thinking aboutadding swimwear to the company's productline might consider these factors in selectinga target market:

Racing swimwear is usually plain andlightweight and is inexpensive to pro-duce. Recreational swimwear, however,is designed for appearance and can bemore expensive to manufacture.

The types of racing swimwear arelimited, requiring not as many styles.For recreational swimwear, a companymay need a larger product line for dif-ferent ages, sizes, and tastes.

The distribution of athletic swimwearwould be primarily to sporting goodsstores. Recreational swimwear would bedistributed to almost all clothing stores.

The advertising for racing swimwearwould be limited mainly to sports maga-zines, whereas advertising for recrea-tional swimwear would probably have toappear in several types of media.

The prices of athletic swimwear could behigher than recreational swimwear be-cause there are fewer competitors.

WHY ARE TARGETMARKETS IMPORTANT?

The importance of identifying a target mar-ket cannot be overemphasized. Consider thefollowing example.

Diana Randell opened her own specialty fur-niture store, "Natural Products," featuringhandcrafted items. She found a location forthe store in a shopping center in a large mid-western city. Diana characterized the targetmarket as young, upper income homeowners,many who are style conscious consumers inthe condominium buildings in the neighbor-hood or commuters and shoppers from sur-rounding suburbs.

When the store first opened, the target mar-ket that Ms. Randell had identified did notstop in the store as expected. Instead, col-lege students and single renters were the pri-mary customers. They were not interested inthe store's furniture lines, but instead wereinterested in art pieces and single items offurniture. They generally did not spendenough money to maintain the business at aprofit.

Ms. Randell then invested heavily in promo-tion directed toward her original target mar-'. et. Through selected use of radio and alocal cultural events magazine, she was ableto inform the market of her store. Shortlyafter the promotional emphasis, her businessstarted to show a profit.

This illustrates an important key for businesssuccesseffective target marketing. Inorder to identify target markets, you willneed to know the different types of marketsand how customers satisfy their wants andneeds.

Products and servic. :s are differentiatedaccording to the custc,lers' wants and needs.

A

WHAT ARE THE MAJORTYPES OF MARKETS?

There are basically three types of markets in

our economy:

1. Consumer market

2. Industrial market

3. Nonbusiness organization market

The consumer market consists of purchasers,individuals or households who buy productsfor their personal use and who do not buyproducts for the purpose of making a profitfrom them.

The industrial market consists of individuals,groups, or organizations who make pur-chases to resell the products or to use themin the operation of their own business.There are many different types of industrialmarkets:

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Producers are individuals or businessorganizations that make purchases to beused in producing their own products.Buyers of raw materials, purchasers ofsemifinished and finished items used toproduce other products, and service busi-nesses are part of the producer market.

Resellers are middlepersons, such aswholesalers and retailers, who buyfinished goods and resell them for thepurpose of making a profit. Resellersare involved in providing marketingactivities.

Governrient includes federal, state,

county, and local governments that makeup governmental markets. They spendbillions of dollars annually for a varietyof goods and services to support theiroperations and to provide taxpayers withproducts and services, such as highways,education, health protection, water, wastedisposal, energy, and fire and policeprotection.

MAJOR TYPES OF MARKETS

Consumer market

Industrial market

Nonbusiness organizationmarket

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The nonbusiness organization consists of in-stitutions and groups with nonprofit servicegoals. They serve a particular group or pro-vide a social service. Such markets includechurches, civic and professional groups,charitable organizations, and so forth.

WHAT IS THEMARKET SHARE?

Market share is your product's sales as a'percent of the total market or category'ssales. Market share can relate to total com-pany dollar sales as a percent of total marketor category dollar sales, total unit sales as apercent of total market or category unitsales, or total product sales as a percent oftotal market product or category sales. It isa measure that quickly tells you how wellyour company or product is performing froma sales standpoint relative to the competition.

The sales analysis should provide marketshare information. What percent of the mar-ket does your company have? Is it growing,shrinking, or stable? Market share informa-tion is used to help you develop a point ofreference from which you can evaluate andplan your future marketing efforts. To in-crease your share, evaluation of consumerbuying motives and a workable marketingplan are necessary.

WHAT ARE CONSUMERBUYING MOTIVES?

Consumers buy to satisfy their own or theirfamily's wants and needs. When they buyany product or service, they do so because

of what they expect the product or service todo for them.

There are two reasons that motivate peopleto buy: (1) emotional reasons and (2) ra-tional needs.

Emotional buying motives include thefollowing:

Pride of personal appearance

Social achievement

Ambition

Cleanliness

Pleasure

Increased leisure time

Rational buying motives include:

Durability

Economy in use

Economy in purchase

Handiness

Efficiency in operation

Dependability in use

WHAT DOES RESEARCHREVEAL ABOUT CONSUMERBUYING BEHAVIOR?

Psychologists have found in their researchthat consumer buying behavior is first "-rested toward satisfying certain basic needs.

These very basic needs include food, drink,and sleep. An individual attempting to ful-fill the most basic needs is usually influ-enced more directly by rational motives.Persons with few resources need the mostfor their money in terms of quantity, quality,and dependability.

Most people live above a basic survivallevel, and they make many purchases to ful-fill needs other than just the basic ones.Therefore, their purchasing is often done tosatisfy both rational and emotional buyingmotives. This fact makes the job of sellingto consumers more difficult.

Many consumers won't admit they purchasegoods and services to satisfy emotionalneeds. Most psychologists believe that dis-tinctiveness and pride in personal appearanceare emotional buying motives, but customersmay think of them in other ways. They maylook for quality or value as well. In thissense, it might be said that all consumerbuying motives are logical. However, cer-tain motives generally seem to be more ra-tional than others. Because people think ofthemselves as rational individuals, they tendto express their reasons for buying in verylogical ways.

HOW ARE INDUSTRIALCONSUMERS AFFECTEDBY BUYING MOTIVES?

Industrial users tend to be more rational intheir buying than consumers who buy forpersonal uses. Industrial users usually buyto fulfill the needs of their bu.inesses. How-ever, entrepreneurs who sell primarily to theindustrial market need to be aware that these

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rational organizations are made up of indi-viduals who are often emotional. So evenindustrial purchases can be made on a some-what emotional basis.

To market a product or service successfully,you need to be aware of what motivates theprimary consumer to buy each product orservice. Motivational research can help youunderstand buying motives and develop moresuccessful marketing mixes.

HOW ARE CONSUMERMARKETS CHANGING?

All markets, including the industrial andnonbusiness markets, have undergone somebasic changes. The consumer market is con-tinuously changing. Many factors have con-tributed to consumer changes, including thefollowing:

Population changes, such as shifts in agedistribution and greater mobility

Size and distribution of income, includ-ing increases in total purchasing powerand the amount spent for "luxuries"

Changes in lifestyle and attitudes

A greater percentage of women in thework force

More leisure time

More purchases on credit

Increase in the number of white collarand skilled workers

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Higher overall educational level

You should watch for changes carefully. Inorder to respond to them, you may need tomodify or refine some of your marketingpolicies and procedures. Attempting to pre-dict and keep up with changes in the market-place are important and difficult tasks.Market information must be collected andanalyzed continually.

HOW CAN A MARKETINGPLAN BE DEVELOPED?

Because there are so many marketing activi-ties to be completed, they must be plannedand coordinated with each other. Making amarketing analysis for your product or ser-vice is necessary for a marketing plan to bedeveloped. A marketing plan is the businesstool that helps you to plan and coordinateyour marketing activities. In the marketingplan, you decide what important marketingactivities should be done during a specificperiod of time (usually six to eighteenmonths). You then put these activities downin writing. You also decide what standardsof performance to set for each activity, soyou can evaluate them later. Within theplan, you must decide what people will beresponsible for each activity. You will alsodecide on time lines, so each activity will beaccomplished at the right time.

It is easy to see why very big firms needwritten marketing plans. When hundreds ofpeople are involved in marketing, a plan isneeded to tell them what must be done andwhen. Marketing plans can help small busi-nesses, too. It is difficult to be sure thateverything in a business is done at the right

time unless there is a written plan to follow.Without a plan, the way your company mar-kets its products may change and no onewill realize it. Also, it will be hard for youto tell what your business does well andwhere its weaknesses are without specificplans. The following section will assist youin analysis and strategy of the marketingplan.

Market AnalysisIdentify and Evaluate

What are the industry characteristics andtrends?

Who are your target market customers?

What is the current and potential size ofyour market?

Who are your competitors?

What are your projected sales and mar-ket shares?

How will you continually evaluate themarket?

Marketing StrategyPlan Actions

How will you advertise and promoteyour product?

What is your pricing strategy?

What is your sales strategy?

How will you distribute your product orservice?

What product support will you offer(warranty, product service, customertraining)?

WHAT ARE THECONSIDERATIONS FORDEVELOPING THE PLANFOR MARKETING MIX?

Each of the marketing mix elements hasbeen reviewed. They must be developed andcoordinated as a part of marketing planning.Before getting too specific in planning amarketing mix, however, you should answera series of questions and analyze the re-sponses. These questions are designed toidentify the target market, but they alsoprovide valuable information for developingthe mix.

Who are the people that are most likelyto buy from my business?

What are their primary needs or uses forthe product?

Are some needs more important thanothers?

What other products or brands mightthey consider to satisfy their needs?

What do customers identify as the ad-vantages and disadvantages of each ofmy competitors' products or brands?

Are some customers more dissatisfiedthan others with competitors' products?

Who will be my best customers?

r.

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How can they be identified?

Where are they located?

How do they typically shop for this typeof product?

WHAT DECISIONS NEEDTO BE MADE REGARDINGTHE MARKETING MIX?

When you have identified your potentialcustomers and your competitors' strengthsand weaknesses, you will better understandwhat is needed to be successful in the mar-ket. Analysis is very important as you beginto develop your best marketing mix.

You will need to make several decisions asyou plan each element of your marketingmix. Every business will not be able tomake each of these decisions. A manufac-turer has more control over product featuresand packaging than a retailer has. A whole-saler will usually not get involved in directpromotion to consumers. However, the im-portant decisions for each marketing mixelement are these:

Product

What is the physical product?

What additional features/accessories areneeded?

What are the functions or uses of theproduct?

Do services need to be provided

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Does the customer expect guarantees orwarranties?

How should the product be packaged forshipment?

How should it be packaged for theconsumer?

What image should the product project?

What brand name should be used?

Price

What price is needed in order to make aprofit?

What price will customers be willing topay?

What price should be charged to channelmembers?

Who determines the price customers willpay?

Should discounts and allowances beprovided?

Place

Who should be involved in productdistribution?

What marketing functions should be per-formed by each channel member?

What transportation methods will beused?

Where will the products be made avail-able to customers?

How will products be handled, stored,displayed, and controlled?

How will orders be processed?

What services do customers expect?

Who will be responsible for productsthat are damaged or not sold?

Promotion

What information do customers need?

Should promotions be informational, per-suasive, or be reminder messages?

Do all customers need the sameinformation?

What combination of advertising, person-al selling, sales promotion, and publicityis needed?

Will mass or individual promotion bemost effective?

What media should be used?

How often must information be com-municated to customers?

Of course the costs involved in making eachdecision are important to the business. Thecosts of developing a marketing mix must bebalanced with the effectiveness of the mix insatisfying the needs of the target market.

These decisions can be used as an effectivechecklist to test marketing decisions. Youshould review each mix element regularly toensure the best decisions have been made.

The final step of marketing planning is thedevelopment of an actual, written marketingplan. A marketing plan is a document thatidentifies marketing activities and responsi-bilities for a specific time period. The timeperiod is often one year, but could be a bitshorter or longer depending on the needs ofthe company. Marketing plans may be briefor quite lengthy, but they should containenough information to direct the company'smarketing efforts. The plan is not written in

enough detail if people are not sure of themarketing activities that must be accom-plished, or if they are unable to judge thesuccess of marketing activities.

Even a small business should develop a writ-ten marketing plan. It forces an owner tothink carefully about the planning period andwhat needs to be done during that time. Italso shows relationships among all of thefirm's activities. A marketing plan is flexi-ble and always open to change.

Finally, if a written plan is not available, itis easy to ignore some activities, lose trackof the direction of the business, or to changemarketing plans whenever a short-term prob-lem occurs. The major parts of a marketingplan are:

Market Description. The target mar-ket(s) to be served should be describedin detail.

Marketing Objectives. The goals of thefirm for a particular period of timeshould be written. They should be writ-ten specifically so they can be evaluatedlater to determine if the business hasbeen successful. Goals may relate tosales, profits, market share, customers,products, and many other factors.

Competition. Competitors, their pro-ducts, customer groups, st, ngths, andweaknesses should be described.

Environment. Any factors in the mar-ketplace that could affect the company'ssuccess should be described. The econ-omy, state and federal laws and regula-tions, new products, population changes,

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and others should be described if theymight influence the business.

Marketing Mix. Each element of themarketing mix should be described.Then marketing activities related to eachmix element can be described, timetables developed, and responsibilitiesassigned. This section can be quite briefor very detailed, depending on the sizeof the business, number of employees,and amount of marketing activitiesperformed.

Budget. An anticipated budget shouldbe developed to show how funds are tobe spent for major marketing activities.

It is apparent that it will take time to com-plete the analysis and planning activitiesdescribed above. It will be tempting for abusiness person to omit much of the plan-ning or to spend little time at it. Time spentin planning marketing activities should resultin less time required to accomplish those ac-tivities. It also should result in better andmore profitable operations. Finally, it willprovide useful information for the businessperson to use in checking the performance ofthe business. Problems can be identified andcorrected more easily if a good marketingplan is available.

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ACTIVITIES

The following activities are designed to helpyou apply what you have learned in thisunit.

INDIVIDUAL ACTIVITIES

A.

Identify two businesses in your communitywhich need to have market research done.They may be two businesses that are justbeginning operation or about to go bankrupt.Study your limited research and devise aplan the companies could use for a week. Itmight include better advertising or a surveyto target new customers.

B.

Devise a plan using the marketing mix totake a product from the first idea to theshelves of the local grocery store. Can yourproduct skip one of the four mix steps andbe successful? If yes, explain why.

C.

Select a high-priced product (furniture,automobile tires, stereo equipment). Go toseveral stores and write down the price eachstore charges for the product. Prepare awritten report that analyzes the reasons fordifferences in prices for the same product inthe same community.

GROUP ACTIVITIES

A.

Working in teams of four to six study sev-eral newspapers and business journals for a1-week period. Identify all information fromthose sources that could help a business per-son define characteristics of target markets.From your school or city library, prepare alist of government publications that couldprovide useful information about consumers.At the conclusion of the information gather-ing, reassemble your team to discuss yourfindings.

B.

working in teams of 4 to 6 prepare a list of15 products each of you has purchased. Onyour own, list the primary emotional and ra-tional reason you used to purchase each pro-duct. Again, as a team, prepare a total listof all buying motives. Discuss the results.

C.

Working in teams of four to six identify aproduct that you would like to market. Con-sider steps for analyzing the product's poten-tial. Then develop a detailed marketing planfor the product, using the outline presentedin this unit. When completed, ask a busi-ness person to review the marketing planand discuss it with your team.

4

CASE STUDY

A little over a year ago Diana Swan andDebbie Stump pooled their resources andopened a small store to sell second-handgoods. After a year in business, the storestill was operating at a net loss. Given theirlimited financial resources, Diana andDebbie were wondering what kind of promo-tional program they should adopt in order toincrease the store's exposure and to generatemore customer traffic.

The two women decided on the name, ForWomen Only, hoping that it would attractcustomer attention. The stor' was locatedon a busy street on the north side ofWinston-Salem, North Carolina. The loca-tion was considered to be a good one forthis type of store.

Although the store's primary product linewas clothing, the store also carried furniture,shoes, pictures, and some housewares. In

fact, For Women Only would carry any pro-duct that a person brought in to be sold, solong as it was in good condition. In addi-tion, the store owners also purchased somearticles at rummage sales and garage sales.

DISCUSSION QUESTIONS

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The main competition of For Women Onlycame from two well-established second-handstores within a 12-mile radius. One of thesestores, which had been in business for 30years, strived to project a more sophisticatedimage and thus charged higher prices thanFor Women Only. The other competitor waslocated near the store and had a similar pro-duct mix.

In analyzing the store's target market, thewomen determined that the bulk of this mar-ket lived within a 2-mile radius of the store.Also, the customers were in the 20- to 40-year age bracket and the middle incomebracket, and 100 percent were female.About 70 percent of the customers wereAnglo-American and 30 percent African-American.

The initial promotional effort for the storeconsisted of two half-page ads in the localnewspaper the first week the store opened.No other ads have been purchased since theopening week. Also, business cards couldbe purchased if profits rise and Diana andDebbie see a need for them.

1. What promotional program should be adopted by For Women Only?

2. How can the store better target its chosen audience?

3. Should the promotional methods used for this store be the same as for any other store in thisarea? What changes need to be made?

26

ASSESSMENT

Read the following questions to check your knowledge of the topics presented in this unit.When you feel prepared, ask your instructor to assess your competency on them.

1. Explain the market-oriented approach to planning.

2. Why is market research necessary in making business plans?

3. Identify and describe the four components of the marketing mix.

4. List factors that must be considered when selecting target markets.

5. Identify the five steps in analyzing market information and describe the activities to becompleted in each step.

6. Identify considerations for developing the plan for the marketing mix.

7. Explain the concept of market share.

8. Outline the components of a marketing plan.

REFERENCES

Anderson, P., and Rubin, L. Marketing Communications. Englewood Cliffs, NJ: Prentice-Hall,1986.

Berle, G. The Green Entrepreneur: Business Opportunities That Can Save the Earth and MakeYou Money. New York, NY: Liberty Hall Press Books, McGraw-Hill PublishingCompany, 1992.

Evans, J., and Berman, B. Marketing. New York, NY: MacMillan Book Company, 1992.

Hiebing, Roman G., Jr., and Cooper, Scott W. The Successful Marketing Plan: A Disciplinedand Comprehensive Approach. Lincolnwood, IL: NTC Business Books, 1992.

Pride, W., and Ferrell, 0. Marketing: Concepts and Strategies, 8th ed. Boston, MA: HoughtonMifflin Publishing Company, 1993.

Stanton, William J., and Futrell, Charles. Fundamentals of Marketing, 9th ed. New York, NY:McGraw-Hill, 1901.

Level 2

PACE

Unit 1. Your Potential as An Entrepreneur

Unit 2. The Nature of the Small Business

Unit 3. Business Opportunities

Unit 4. Global Markets

Unit 5. The Business Plan

Unit 6. Help for the Entrepreneur

Unit 7. Types of Ownership

1* Unit 8. Marketing Analysis

Unit 9. Location

Unit 10. Pricing Strategy

Unit 11. Financing the Business

Unit 12. Legal Issues

Unit 13. Business Management

Unit 14. Human Resources

Unit 15. Promotion

Unit 16. Selling

Unit 17. Record Keeping

Unit 18. Financial Analysis

Unit 19. Customer Credit

Unit 20. Risk Management

Unit 21. Operations

Resource Guide

Instructor's Guide

Units on the above entrepreneurship topics are available at the following levels:

Level 1 helps you understand the creation and operation of a businessLevel 2 prepares you to plan for a business in your futureLevel 3 guides you in starting and managing your own business