Small Business Management - week 3 - Part C - chapters 12,13,14

* This posting covers chapters 12-14*

Chapter 12 - Small Business Marketing: Product.

On this chapter we have - *Defined the term marketing mix. *Discussed the different forms a product can take, and identify the five levels of product satisfaction. *Outlined the importance of purchasing and its procedures. *Discussed the main concerns in selecting a supplier. *Calculated how much inventory you need and when. *Described seven methods of inventory control. What is a marketing mix? The Marketing mix is a combination of four components that can be changed and controlled in order to bring your product to your target market. These four components are : Product Place Price Promotion Some personal thoughts... Competitive advantage is highly important for the small business. It allows a business to make profits by selling product or services that are unique. How can you do that ? Search for an idea that is innovative and unique. Provide best quality of service Look for something that has a demand on the market Price it accordingly (you can start hight and when competitors arise - lower your rates in order to stay competitive). As an Interior Designer - how could I do that ? How can I make MY DESIGN a unique one ? how can I create a competitive advantage ? Price places a role, customer service, and uniqueness too. During my Interior Design classes, I have developed a style that fits my personality: I have used very bright colors, interesting flooring plans, and unique fabrics that all comminucate well together and have a common theme. I remember my professor told me I should stick to this style because it is ME, My own THING ! So this would be my competitive advantage as an Interior Designer... a unique, non-conformist style......

Chapter 13 - Small Business Marketing - Place.

On this chapter we have - *Described small business distribution and explain how "efficiencies" affect channels of distribution. *Explained how the location of your business can be your competitive advantage. *Described factors in selecting a state in which to locate your business. *Described factors in selecting a city, and compare location sites within the city. *Explored the central issues of choosing a particular site. *Compared the three basic types of locations. *Explained the types of layout you may choose. *Presented the circumstances under which leasing, buying, or building is an appropriate choice. Product distribution, business location and business design and layout are all important parts of the marketing plan. These are factors that contribute to a business's success and profitability. Location can provide a competitive advantage. Layout can increase sales. Channels of distributions that are right for one's business - play a serious role in the business's profitability. Sometimes buying a location is better than leasing, and sometimes building a new building for your business can be better than buying or leasing. It all depends on the type of business and there are advantages and disadvantages to every option. Some personal thoughts.... I love shopping. It may sound silly, but as a shopping-lover, going to the city for a day of shopping makes my shopping experience more fun. I love to be able to travel by public transportation without having to look for expensive parking lots and get stuck in heavy traffic during rush hours, I love having all my favorite shops close by, and to be able to stop at the Starbucks for a refreshing Caramel Machiatto. Other people like to drive from one place to another and shop in large retail stores (Why do all MEN LOVE BJ'S ??!). It all depends what kind of products people are looking for. It makes sense to open a designer clothing butique on Newbury street in the beautiful Back Bay in Boston instead of Shopper's World Shopping area in Framingham... What do you expece to see when you enter a large retail store like WalMart ? do you expect to enter a free-flow shopping area, and then go through the whole store in order to find your favorite laundry detergent ? or do you prefer to go directly to a marked aisle that has a big blue "Cleaning supplies" sign over it , get your detergent, and hit the cashier ? so layout is also important to the type of business. You have to find the right design that will match your products and type of product / service you are offering. Know your product, know your place.Find a match, combine them wisely and you're half way to success.

Chapter 14 - Small Business Marketing - Price and Promotion.

Ahhhhhh... the last two P's . Price and Promotion.

On this chapter we have -

*Established the three main considerations in setting a price for a product. *Explained breakeven analysis and why it is important for pricing in a small business. *Presented examples of customer-oriented and internal-oriented pricing. *Described why and how small businesses extend credit. *Described the advertising, personal selling, public relations, and sales promotion tools that a small business owner uses to compile a promotion mix.

Some personal thoughts about Pricing and Promotion... People want to know they paid a reasonable price for the most reasonable product. Nobody likes to pay alot of money and get low quality mechandise. We all want Good Value for Money. That is what pricing is all about. Setting what consumers think is the value of your product. Three factors affect how much you can charge for your product: - Competition - Customer Demand - Costs You have to stay competitive pricewise otherwise you won't get any business. If you're product has a high demand - it can allow you to set higher rates. Operating costs will have to be covered by your price and leave a profit in your pocket. Promotion includes all actions taken in order to help sell your product to customers. It can include giving out free samples, advertising, special package low rates, public relations, personal selling and many more. I have chosen to add closing case # 5 - "Reborn to be wild" - as an example for a unique product that can be priced accordingly and my suggestions to promote it.

Closing case # 5 – Reborn to Be Wild. Summary: Dave and Dan Hanlon are the founders and owners of Excelsior-Henderson Motorcycle Manufacturing Company in Belle Plaine, Minnesota. Their competitive advantage is the fact they are different; the company’s history, name and product are all different than what is offered on the market. Their product is priced accordingly; more expensive than other competitors’ products. Questions: 1. Analyze and discuss Excelsior-Henderson’s pricing strategy of making its motorcycles more expensive than those of the primary competitor, Harley-Davidson. Do you think this is a good strategy for a startup company competing against an established one? - Dave and Dan Hanlon claim they sell higher technology, comparing to others. Their product is more expensive than others’, but they claim to be selling a “piece of American history”, a reason for them to believe that no competition can beat that. The pricing strategy of the company works in conjunction with its prestige: the company is different in its mentality, its name, the quality of product and therefore the price as well. - In general this would not be a good strategy for a startup company competing against an established one. A startup company should start with low prices in order to gain customers. Competing with a well known & established company can be tough. Most of the times clients will prefer to do business with the company that have years of good reputation rather than a start up business. However; in this case, the company offers a better quality of product. In this case, when customers shop for heavy motorcycles – they would probably look for quality rather than price. I would have to say that in this case, the strategy is right for the specific business. 2. Harley-Davidson is an American Icon. If a motorcycle is shown on TV of movies, it’s usually a Harley. Consumer passion runs strong for Harleys – after all, how many other company names are tattooed on customers? How can Excelsior compete against that loyalty? Suggest ways that the Hanlons can create a promotional campaign that will convince people that Excelsior is more attractive than a Harley. - I think that since Harley Davidson has been such an Icon in America for so many years, the Hanlons can take advantage of that and present the Excelsior as the “NEW GENERATION” of heavy motorcycles in America. Such a campaign will have a hidden-but well understood-hint that Excelsior comes to replace the “good old Harley”. Advertising can show a “hip” grandfather riding a Harley, while his grandson, a young man with an updated modern ensemble – rides an Excelsior next to his grandfather. And as Grandfather stays in the background; the young Excelsior rider sails away on his brand new Excelsior with an American flag in his back pocket. Such an ad can say: “Excelsior –preserves history and constructs the future” (or something similar that will still have a connotation to history yet appeals to the future as well). - The Excelsior Company can aim its marketing and advertising towards younger populations – put ads in younger magazines like “People” and TV guide, publish ads online, have TV commercials during primetime hours. Publish posters in places that are known to be packed with young populations (night clubs, entertainment and shopping areas, colleges and universities) and also subway & bus stations (for those planning to purchase a motorcycle…), sport fields etc’. - Possibly have a celebrity that appeals to younger populations – participate in the campaign – like a famous baseball or basketball or football player, famous artist that is an American icon like Benjamin McKenzie or Adam Brody who play on “The O.C” TV series. - As far as sales promotions - I would recommend the company to emphasize the quality of their product but still offer convenient payment terms. Provide a long warrantee (like minimum 10 years of warranty). Guarantee quality of service. Conclusion: The proper use of a company’s marketing mix is the key to successful marketing. A business owner should know to whom to direct his marketing, how marketing should be done and in what channels, and what issues should be emphasized on an advertising campaign.

And a link to an article I brought to class, about a bike company that promotes their products through Lance Armstrong http://www.msnbc.msn.com/id/8645920/ And an interesting website that offers promotion via the web. http://www.allwebpromotion.com/pricing.htm Link to an interesting article about increasing number of clients and selling your business better http://www.businessweek.com/smallbiz/content/may2005/sb20050517_3509.htm nd last but not least - a free promotion guide website http://www.apromotionguide.com/