Kuldeep Sharma

Marketing Concepts and Approaches
Marketing is a core part of your business. That’s true no matter what type or size of business you have. The goal of marketing is to stimulate demand, attract customers and increase sales.

MARKETING CONCEPTS AND APPROACHES
Marketing is a core part of your business. That’s true no matter what type or size of business you have. The goal of marketing is to stimulate demand, attract customers and increase sales. To be successful you need to pick your business up and turn it around so that you are looking at it from your customers perspective.
Marketing is not just about advertising. It has as much to do with personal service, signage or building up a detailed, recorded knowledge of your client base. Marketing is all about letting people - your customers and prospective customers - know exactly who you are, what you can offer them and where they can find you or you can find them.
The prime focus of this module is to look at marketing as a commonsense set of steps, so that you can come away saying "I can do that and it’s going to make a difference to my business."

Steps To Effective Marketing
Step one... Describe your business clearly. A short, clear description of what your business does - from the customers point of view - is perhaps the most important marketing tool you can have.

Step two... Determine your customers' needs. Do your own Market Survey. Get to know your future customers. Be friendly ! Talk with them about themselves, about how your intended products and services will fill their needs, and about how you might satisfy their other needs. Write down what you already know about your customers. Design and plan how to find out the information you don't know.

Step three... Analyse your competitive advantages. Who will you be in competition with? Why will people buy from your competitors rather than from you. Are you doing a good enough job of filling customer needs? By studying the competition, you learn about yourself!

Step four ... Target your market.
Don't try to be all things to all people! Instead, focus your energy and resources on a certain income level, special interest group or geographic area. Think about who your 20% best customers are.

Step five ... Use your marketing mix - the four "P"s - to satisfy customer needs.
Each business satisfies customer needs with its own unique marketing mix - a strategy combining the right products and/or services, the right prices, the right place or distribution system and the right promotional and advertising strategy. Consider what you will be offering in your marketing mix!

What is Marketing?
Marketing is not making something and then looking for a market. (Product Approach)
Marketing is not selling something as if selling itself was the key. (Selling Approach)
Marketing is responding to a customer need... in ways that find a customer response. (Marketing Approach)

Marketing is not a fancy word for selling. Marketing is above all else concerned with customers and satisfying customer needs.

Marketing is more than "pushing a product". It is satisfying real customer needs to ensure repeated sales. A primary objective of marketing is to develop a large pool of satisfied customers who will not only return to buy, but will also spread the word about your business because they trust your products and appreciate your personal attention.

	SELLING	MARKETING
FOCUS	Products	Client Needs
MEANS	Selling and Promotion	A Working Marketing Approach
ENDS	Profits through Volume Sales	Profits through Customer Satisfaction

Describe Your Market
Marketing is looking at your product or service from your customers point of view. You need to be able to describe what you do clearly, so then your customer can easily get a picture of what you are offering.

Your product or service will be bought because people think it will give them benefit or satisfaction from buying it. In effect, they buy what the product/service will do for them. For example:

"In the factory we make cosmetics, in the store we sell hope"

"We do not sell 1/4 inch drill bits but 1/4 inch holes"

"We make numerically controlled milling machines, but we sell the means to make accurate, smooth metal parts"

"I doubt if I could have fixed it myself. Anyway, I like the way nothing was any bother to him and he cleaned up afterwards"

Think about your product/service and the need you are wanting to satisfy. What does your customer really want ?

"People need clothes for warmth but want clothes that are fashionable."

"Hospitals could provide medical services but most people want their own family doctor."

"People don't need a hairdresser but want their hair to look good."

Your Business Identity

The first step in marketing is being able to describe your business clearly. You should try to do this in thirty-five words or less. If you were a business adviser you could say:

"I advise small businesses from one to ten employees, on management issues such as personnel, marketing strategies, time management, support services, and financial projections."

If you have a clear description like this, then your friends and admirers can more readily refer new business prospects to you. For you, its ideal to have this concise, well-thought-out description handy to tote out at parties or social occasions as well as in business situations.

You will be surprised how few small business people can describe their own enterprise with any degree of clarity! Still fewer can describe their business from the customers point of view! In their disbelief they declare that "everyone knows what a photographer, consultant, or desktop publisher does."

One homework exercise for you. Tonight ask ten people, including friends and family members, to describe exactly what service or product they think your business offers. The purpose of this assignment is to find out if those most likely to give referrals to your business have more than just a superficial idea of what your business is about.

Describing your business clearly is important. Take the business consultant described earlier. Before he started to describe himself clearly, his colleagues were heard to say something like, "I know of a really nice business consultant, but I don't know what he specialises in. Here’s his name and phone number - you call him and check." That's not a very inviting referral.

A photographer may get her friends referring to her as "some sort of photographer". Or those same friends could say with assurance, "Pat specialises in candid wedding photos and does a top-notch job of photographing children. You don't have to drag your kids to a studio - she'll come to your home."

What Is Your Market?
Write down in a few sentences a description of the market your business is in.

Who Are Your Customers?
The market is made up of people, but only some of those people are your customers. You have to find out where they are, what sort of people they are, and how many of them are in a given area.
If you opened a woolshop it's unlikely that you'd get the male population in the district rushing in to buy knitting needles. Ninety nine percent of your business would be with women. But the question to ask is: What type of women? Are they with children? Middle-aged? Middle class? How much disposable income do they have? Do they live in the Housing NZ flats around the corner? Or are most of them living in nineteenth century villas and trendy town houses? These questions will be the beginning of your Market Survey.

Learning how many potential clients for your product or service inhabit the market you would like to focus on.

When your business is actually running, you can start studying your own records and acting on feedback from the business. Try to keep an up-to-date list of regular customers showing where they live and what their buying habits are.

Find out if a small number of your customers account for a large proportion of the business. If they do, your business will be exposed to downturns more easily. Ask yourself whether you should (or are able to) give your big customers a special deal through discounts and special terms.

Another way of looking at it is that first write down what kinds of answers you anticipate after a particular research or survey. Once you have the answers then try to find out what kind of questions ,respondents, data, information will lead you to those answers.

MARKET SURVEY
Who are my customers? (Teenagers? Retired people? People with leisure time? People with special interests?)
Where do they live? (Country? City? Suburbia? Nearby? Out-of-area?)
Why do they or would they use me instead of the competition? (Personalised service? Prices? Quality? Store hours? Availability of merchandise?)
When do they come to me? (Daily? Once in a while? At unusual times, When they run out?)
What particular services or products are they looking for? (What are my best selling items?)
What Information Do I Need To Know about My Customers?
How Can I Do This Research?

YOUR COMPETITIVE ADVANTAGES
Be Different
Competing in the market you have chosen means knowing about your competitors, and offering a better deal, or something special.

Don't compete on price alone. Cut-throat competition isn't called that for nothing. Instead, make customers believe your business offers better value for money in other ways. This something extra could be after sales service, more personalised service, long guarantees and better than average quality. For example a small garage owner might offer a free tyre check and windshield-cleaning service to his customers, to compete with self-service cut price petrol stations.

When you have your customers thinking your product or service is a better deal, even if it's just the way they interpret it, then you have created a unique selling position for your product or service in the market.

But don't be a rip-off merchant. Wild claims and false promises will soon earn you a name for dishonesty instead of fat profits.

A lower than normal price is in itself not a competitive advantage, rather it is an indication that some other competitive advantage has been achieved or that a policy of price cutting has been adopted.

What Competitive Advantages Have You Over The Competition?
Many things can give your product/service a competitive advantage and this may result from:
the owners:

The S.W.O.T. Analysis
Identify and evaluate opportunities and threats in the marketplace.
Analyse the strengths and weaknesses of your own business idea.

This is called a S.W.O.T. analysis, the name being derived from the first letter of the four words, Strengths, Weaknesses, Opportunities, and Threats.
Think about these qualities as they apply to your own business ideas. As you note these down, you will find them very useful later in developing both your marketing and business plans. Look at ways in which you can develop these advantages and what you may need to do to broaden them.
Then do the same S.W.O.T. analysis for at least two of your competitors. This will help you to learn from their strong points and take advantage of their weak points. Most of the time Strengths and weaknesses are to be found out inside the company and opportunities and threats outside the company in the business environment.

TARGET YOUR MARKET
You must target your market because you have limited resources and can't be all things to all people. It's a question of focusing your time, energy and financial resources on those who will benefit from your business while providing you with a fair return.
Consider these approaches:

A Step-By Step Analysis To Targeting Market Groupings

1. Is your target market a consumer market? Or is it an industrial or professional market? If it is a consumer market, go to no. 2; if it is industrial or professional, go to no. 11.
1. Look at family and personal factors. Would age, sex, family size or marital status form the basis of different groups?

2. Is your product the sort which relies on supplying a local area? Location may be an important feature of a group.

3. Look at social class. Could this be important for your product?

4. Can you distinguish groups of potential customers on the basis of how much or how little they use or buy your product? Could your product be tailored to or appeal to heavy or light users?

5. Are there psychological or social factors at work? Could the product appeal to those wishing to "better themselves"? Are lifestyles important? Would prospective customers be likely to "follow the crowd" or want to be seen as trend-setters?

6. Could there be snob or prestige appeal? Some customers like to think they are getting the best.

7. Price could be a feature which distinguishes one group from another. Is there an element of value for money in a target group’s make-up? Some people go for the cheapest, no matter what. Most customers would say that they want good value for money they spend.

8. How do the potential customers buy? Local shop, large supermarket or store? Mail order? Can you create a niche out of distribution methods?

9. Now go to no. 16.

10. What type of industry will you be selling into? You could specialise in one industry or profession (called vertical marketing).

11. How big are the companies or businesses you are likely to sell to? Size can mean different procedures in buying, frequency of purchasing, invoicing and payment cycles.

12. Will one group of potential customers require quicker or more frequent deliveries than others?

13. Price could well create different market segments in industrial or professional users.

14. Will one group of customers be looking for a higher level of after-sales care or maintenance? Could this be your distinguishing product feature?

15. Consider what other categories might apply to your market. Each market will have its own specialised characteristics apart from the general ones listed above.

16. Now look to see if there is a group with more than one of the characteristics listed above. This could define your target group or segment even more closely.

1. Channelling money and effort to the potentially most profitable markets.
1. Designing products that really match market demands.
2. Determining what promotional appeals will be most effective for the company.
3. Choosing advertising media intelligently and determining how much of the budget to allocate among the various media.

THE MARKETING MIX
To ensure that the product or service you offer matches the needs of the target market, the marketing mix is used. This is basically a strategy for getting the details right in your marketing objectives.

The marketing mix consists of a whole range of items which for discussion purposes are divided into four basic groups called the four P's.

The first P is the product. The next P is place. You have to place the product where the potential customer expects to find it. Then comes promotion, where you tell the customers where the product is and what it will do for them. Finally, the customer will want to know what the price is.
The variety of possible elements in discussing the marketing mix is summarised in the table below:

Elements of the Marketing Mix:

Product	Place	Promotion	Price
Product range	Outlet location	Advertising	Basic Price
Quality	Type of outlet	Personal selling	Credit terms
Brand	Warehousing	Direct selling	Delivery terms
Packaging	Use of wholesalers	Sales promotion	Guarantees and warranties
Service	Use of retailers	Publicity	Allowances and deals
Delivery	Franchising Sales territories	Public relations	Discounts

Products & Services
Every small business needs to determine it’s product policy, or the assortment of product lines and items it will offer for sale. This is generally referred to as your product range.
The product policy provides the business with a framework for making decisions on modifying, adding to or changing the existing range of products. Adding or deleting a range of products within your existing business idea may make a tremendous difference to your overall profitability.

Compare your different products and services. What’s unique about them? Do they fill the needs of your targeted customers? Is there too much or too little of anything? Do some sell better that others?

Let's face it, people want the most for their money! "The best product at the best price" is a phrase heard so often and taken so seriously. Recognising this, small businesses can specialise in high quality products and services. They can guarantee their customers the best at reasonable prices.

As a rule, always try to provide the finest product or service you can and keep up with trends. Learn all you can about your trade; study new methods of production or the latest techniques in your field. Focus on what's special about your business and make the most of it!

Remember, whatever you offer should fill real customer needs. Be flexible and make changes as the market dictates; understand the life cycle of your products or services - a new item may sell poorly at first, pick up as its reputation grows, then eventually decline. Keep your sales moving by anticipating those ups and downs in customer demands.

Place & Distribution
Do you have the right location? Does your distribution system really fill your needs? Is it economical? Is your objective to wholesale, retail or both? What's entailed?
Your options for distribution are usually either direct sales to the consumer(retailing) or the use of a "middleman" (wholesaling). The type of business often dictates the system to be used. There are pros and cons to both.
Don't forget to evaluate periodically the effectiveness and efficiency of your distribution methods. Changes in customer buying habits, company rules, retailer's techniques, competitor's methods and other business trends could require you to make adjustments. Experiment with different methods to see what brings the best results!
Retailing... is selling directly to the consumer. It gives you a higher profit margin and has the advantage that you keep control of the marketing. The disadvantages often include higher overhead and capital tied up in slow moving merchandise. It can mean you start small and stay small for longer!
Wholesaling... relieves you of some marketing work, but cuts into your profits. To wholesale you have to produce more product for less money - the emphasis is on volume. This can be a problem for those who take pride in producing finely crafted one-of-a-kind items.
Service firms ... location is important to some service firms, as success could depend greatly on traffic flow. To other service businesses, a home office and telephone may be adequate.
Producers... in determining where to locate a manufacturing business the objective is to minimise production and distribution costs. You will need to consider: the location of suppliers, availability of raw materials, location of your markets, cost of transport and delivery, council by-laws and zoning regulations and access to essential services.

Promotion & Advertising
Are you getting the most mileage from your promotional budget? Are you sure you've covered the basics well enough (name, logo, sign, etc.)? Have you gotten other people's opinions about your image and the effectiveness of your promotion?
These two work together to build awareness of your product or service, to stimulate sales, and to establish a favourable image of your company. By carefully emphasizing your business strengths, you can build a promotional effort of lasting value.
Promotion... deals with the generalities of "popularizing" your business operation as a whole. It helps you establish an overall image for your enterprise and informs the public of what products and services are available.
Advertising...( according to the dictionary) "proclaims the qualities or advantages of a product." Its purpose is to sell a particular product or service.

Pricing
Are you adequately covering your costs? Are your prices fair both to you and your customers? How do they compare with your competitor's prices? Do you review your prices regularly?
Determining fair prices can be tough! The idea is to cover costs and makes a profit while attracting customers and building volume. Prices must be competitive and within the customer's reach. In setting them, consider the minimum you need to take out of the business for living expenses.
Pricing Strategies should be in line with your positioning in the marketplace. A number of alternative pricing strategies are:
Differential pricing… the product is priced differently to your different customer categories as different levels of effort or service are required by each.
Leader pricing… A new product or service is substantially reduced in price to attract new customers
Competitive pricing… products are intentionally priced either lower, the same, or higher than specific competitors
Prestige pricing… if you are positioning your product in pursuit of prestige and status, your prices should reflect this
Discounting… with good reasons, e.g. seasonal factors, or quantity buying with savings passed on to the customer
Cash discounts… If credit collections and cash flow are a problem for you... offer a discount to encourage cash payments
The right price... now that's fairly interesting!

For all those clients who have to set prices on goods, particularly in retail shops, we have come across some recent market research on the way customers respond to prices. Some conclusions that they came to are :

THE COMPLETE MARKETING APPROACH
Marketing is a way of doing business. The philosophy of customer satisfaction is something that will influence most of your business decisions. Your marketing plan is complete if you can say that:

1. My product or service is the best it can be.
1. I'm prepared to handle an increase in the number of customers smoothly and efficiently.
2. The physical appearance of my business and of all my products, packaging and other materials encourages customers to trust my management skills.
3. My pricing is clear, complete and fair.
4. The people around me, including employees, suppliers, friends and even those who dislike me, are treated as honestly and professionally as possible; if they don’t agree with my business practices, they have clear and easy access to communicate with me.
5. I can clearly describe my business and so can most of my customers and suppliers.
6. My customers know as much as they want to know about my product or service, including what is superior and unique about the way I conduct my business.
7. Current and future customers can locate my business with ease.
8. Customers who have problems with me or my business are aware of my recourse procedure and feel they will end up satisfied.
9. I have a complete and current list of customers and my business community and a file of activities that will be of interest to them.
10. I schedule and carry out marketing activities on a regular basis.

CASE STUDY - Suzie's Sewing Shop
Charlie was a qualified technician who, with his wife Suzie, owned a small business in Hometown retailing and repairing sewing and knitting machines. They also offered a range of sewing accessories. Their business was situated in old premises close to, but not part of, the main business district of the city. The building was not very attractive and space was limited, but the rent was cheap. Charlie did the repairs and offered technical advice when required.

Suzie worked with him and was in charge of the front office, as they jokingly called the small counter in the front of the shop. Most of the customers were women, and they found Suzie an easy-going, helpful person with whom they could discuss their sewing problems. When discussion became technical, Suzie would summon Charlie from his workshop and they would together try to solve the customers' problems. People found Charlie an easy person to talk with who could explain technical things in a way they could understand.

There was a good flow of pedestrians past the shop, particularly in-the late afternoon when the local factories closed for the day. Charlie and Suzie's turnover was mainly from repairs and sewing accessories. They also sold second-hand machines after reconditioning them, as well as new machines from a reputable manufacturer with a national brand name. Charlie knew that he couldn't match the selling price for new machines offered by the retail outlet situated in a nearby shopping centre. He assumed that the high level of new machine sales in the shopping centre, enabled his competitor to buy at a lower price than he could. He sold new machines at full retail price.
Suzie estimated that most of her customers were working women from the local factories, and she stayed open for them. During the day there were customers of all types who came in to buy accessories on their way to and from the shopping centre, and who had time to chat.

The outside of the shop was shabby and there came the day when Suzie and Charlie had to decide to do it up and to change the facade so as to better publicise their products and services. Then they decided not to do this, but to give the place a coat of paint and keep it neat and tidy.

Charlie reckoned that many women were confused by the numerous types of sewing and knitting machines that were on offer and didn't understand the new technology that was being used in their manufacture. They were confused also by the numerous types of stitching that the new machines could provide for a wide range of fabrics and were not sure they needed to pay for all these features.

The business grew, Suzie and Charlie worked long hours, and Suzie felt she was not giving enough time to the children. Finally, she told Charlie she would like to drop out of the business and suggested he look for a partner. It was a profitable business that someone may wish to join.

Charlie realised that he couldn't run the business on his own, so he Contacted Fred. Fred was an old acquaintance, who was a sales representative for Excel Ltd., a manufacturer of quality sewing and knitting machines. Fred had a look over Charlie's and Suzie's business, confirmed his interest and said he would come back to them with a proposal.

Fred's proposal was as follows. Excel Ltd. was not represented in the district and he could obtain the exclusive local rights for the proposed new partnership. Their product range was comprehensive, technically sound and of excellent quality. He would look after the sales. The machines were expensive but retail margins were good. Charlie would continue with his repair business The existing premises were too small, so Fred suggested they should move into the main street of the city's business centre, where a shop was available for rent.

The rent would be double the rent of the existing premises, but the proposed premises would be more in keeping with the 'quality' profile of Excel's products. They would have to put money aside for fitting out and furnishing the new premises in a way that would attract attention in the main street, which had an established ‘up market’ image. Fred was prepared to buy a 50 per cent share in Suzie's Sewing Shop at an attractive price.

If you were Charlie and Suzie, what would your response be to Fred?

Answer to Question
Before responding to Fred, we will examine Charlie's and Suzie's existing business.

Most of the existing turnover is in repairs and sewing accessories. Customers can be divided into two groups or target markets. The women who work in the local factories and may well not have too much money to spend on sewing and knitting machines. Also there are the casual buyers on their way to or from the shopping centre. Both groups seek the advice of Suzie and Charlie and seem to feel comfortable in their rather simple premises. Maybe they feel that they are not paying for any fancy overheads. The main assets of the present business are Suzie and Charlie. Although they sell some new and reconditioned machines, they are running a service business and consequently their contact with their customers is important. They also keep their shop open for their customers from the factories.

Fred's proposal may be a very profitable one, but a great deal more information is required before this opportunity can be evaluated. Fred is interested in a product, selling Excel's machines, to a different target market than Suzie and Charlie are currently serving. The new business is a diversification; its main objective is to offer a new product, not a service, to a new target market.

This is not an extension of the existing business; it uses Fred's skills and experience, but not necessarily Charlie's.

The main street of the business district is an expensive place to run a repair shop. It is also doubtful that Charlie's existing customers would feel at home in the new premises, bringing their old machines in for repair. The location of the present shop is convenient for both the existing sets of customers.

Suzie's and Charlie's response to Fred based upon his existing proposal, must be a qualified no. The new business must be planned and evaluated as a new business, for that is what it is. Charlie and
Suzie must look at alternatives to see if there is not a way of building on their successes to date. Maybe Suzie's contribution could be replaced by a partner or employee with similar skills?

Finance could be a problem as well as marketing in the existing and the new proposed business, and will put pressure on sales. Introducing a new partner into the existing business will increase costs. The new partner will want to live out of the business or get a return on the investment.

Alternatively, if someone is employed to replace Suzie, there is a fortnightly commitment to salary, PAY and all the other costs of wages.

The proposed new business is going to require a substantial investment in shop fittings and stock. Overheads such as rent will be much higher. Will sales be sufficient to cover costs, make a return on the new investment and a living for the partners? Competition from the businesses in the shopping centre must also be taken into account. Suzie and Charlie will have to weigh up carefully the advantages and disadvantages of Fred joining the business as a half owner (50 per cent). These are just some of the issues that need to be researched and discussed before a decision is reached.