To succeed, entrepreneurs must
attract and retain a growing base of satisfied customers. Marketing
programs, though widely varied, are all aimed at convincing people
to try out or keep using particular products or services. Business
owners should carefully plan their marketing strategies and performance
to keep their market presence strong.
What is Marketing?
Marketing is based on the importance
of customers to a business and has two important principles:
1. All company policies and activities should be directed toward
satisfying customer needs.
2. Profitable sales volume is more important than maximum sales
To best use these principles, a small business should:
- Determine the needs of their customers through market
- Analyze their competitive advantages to develop a market
- Select specific markets to serve by target
- Determine how to satisfy customer needs by identifying a market
Successful marketing requires timely
and relevant market information. An inexpensive research program,
based on questionnaires given to current or prospective customers,
can often uncover dissatisfaction or possible new products or services.
Market research will also identify trends that affect sales and
profitability. Population shifts, legal developments, and the local
economic situation should be monitored to quickly identify problems
and opportunities. It is also important to keep up with competitors'
A marketing strategy identifies customer
groups which a particular business can better serve than its target
competitors, and tailors product offerings, prices, distribution,
promotional efforts, and services toward those market segments. Ideally,
the strategy should address unmet customer needs that offer adequate
potential profitability. A good strategy helps a business focus on
the target markets it can serve best.
Owners of small businesses usually
have limited resources to spend on marketing. Concentrating their
efforts on one or a few key market segments - target marketing -
gets the most return from small investments. There are two methods
used to segment a market:
1. Geographical segmentation - Specializing in serving the needs
of customers in a particular geographical area. For example, a neighborhood
convenience store may send advertisements only to people living
within one-half mile of the store.
2. Customer segmentation - Identifying those people most likely
to buy the product or service and targeting those groups.
Managing the Market Mix
Every marketing program contains four key components:
- Products and Services
These are combined into an overall marketing program:
Products and Services - Product strategies may
include concentrating on a narrow product line, developing a highly
specialized product or service, or providing a product-service package
containing unusually high-quality service.
Promotion - Promotion strategies include advertising
and direct customer interaction. Good salesmanship is essential
for small businesses because of their limited ability to spend on
advertising. Good telphone book advertising is also important. Direct
mail is an effective, low-cost medium available to small business.
Price - The right price is crucial for maximizing
total revenue. Generally, higher prices mean lower volume and vice-versa;
however, small businesses can often command higher prices because
of their personalized service.
Distribution - The manufacturer and wholesaler
must decide how to distribute their products. Working through established
distributors or manufacturers' agents generally is easiest for small
manufacturers. Small retailers should consider cost and traffic
flow in site selection, especially since advertising and rent can
be reciprocal: A low-cost, low-traffic location means spending more
on advertising to build traffic.
The nature of the product or service is also important in siting
decisions. If purchases are based largely on impulse, then high
traffic and visibility are critical. On the other hand, location
is less a concern for products or services that customers are willing
to go out of their way to find. The recent availability of highly
segmented mailing lists, purchased from list brokers, magazines,
or other companies, has enabled certain small businesses to operate
from any location yet serve national or international markets.
After implementing a marketing
program, entrepreneurs must evaluate its performance. Every program
should have performance standards to compare with actual results.
Researching industry norms and past performance will help to develop
Entrepreneurs should audit their company's performance at least
quarterly. The key questions are:
1. Is the company doing all it can to be customer-oriented?
2. Do employees ensure the customers are satisfied and leave wanting
to come back?
3. Is it easy for the customer to find what he or she wants at a
Back to WannaLearn's Business and Careers : Marketing category.