Sample Problem:
Joe wants to open a cotton candy store, but is not sure what his 2 major goals should be. He also needs to develop his marketing mix. Help Joe set up 2 goals and a marketing mix
Sample Answer:
Joe's cotton Candy store's 2 major goals should be to 1) satisfy the customers needs and 2) have profitable sales volume. Satisfying your customer means that they are more likely to return and buy again. Profitable sales means that Joe can stay in business.
The marketing mix for Joe will involve product, promotion, price and place. Joe should focus on creating a great cotton candy, perhaps with several flavor options. He should promote his cotton candy by advertising through the app "Foursquare" where people with the app get an offer when they are near his store. His price should be set at double his cost, called key-stoning. He should place his business near a school and a shopping center so that young people will want to buy his cotton candy.
two guiding principles:
- All company policies and activities should be directed toward satisfying customer needs.
- Profitable sales volume is more important than maximum sales volume.
- Determine the needs of their customers through market research
- Analyze their competitive advantages to develop a market strategy
- Select specific markets to serve by target marketing
- Determine how to satisfy customer needs by identifying a market mix
- Products and Services (plus packaging): Product strategies 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 focus on advertising and direct customer interaction. Good salesmanship is essential for small businesses because of their limited advertising budgets. Online marketing is a cheap, quick, and easy way to ensure that your business and product receive high visibility.
- Price: When it comes to maximizing total revenue, the right price is crucial. Generally, higher prices mean lower volume and vice-versa; however, small businesses can often command higher prices because of their personalized service.
- (Place) Distribution:
Market Research
The process of gathering, recording, analyzing, and reporting information regarding customers or potential customers.
Data
Primary Data
Facts collected for the first time for the problem under study.
Survey
A series of questions asked to a select and representative group of people to obtain quantitative data.
Observation
An information-gathering technique that involves watching people by using other people or by using a camera.
Focus Group
A small group of 8-15 people who provide qualitative data through their opinions about a business, its products, or other issues under the direction of a discussion leader.
Sample Size
The number of people questioned for a survey.
Secondary Data
Facts that have been collected previously for a purpose other than the problem being studied.
Qualitative Research
Research that is used to discover consumer information whose validity can then be assessed with quantitative research questions.
Quantitative Research
Research often used to answer questions about quantities and amounts using a large sample of consumers.
Competition
In business, competition refers to other businesses that are trying to attract the same customers as your own business.
Consultative selling
When a salesperson relies primarily on the customer to determine which product most closely matches his or her needs.
Consumability
The speed with which products are used up and must be purchased again. Automobiles have low consumability; paper towels have high consumability.
Marketability
The ease with which products can be sold. "Hot" items, such as the latest smartphone, have high marketability. Three-year-old smartphones have low marketability.
Merchandise
The product, or goods, that a retail store has for sale.
Perishable
Product that has a limited shelf life and must be sold rather quickly, such as milk or batteries.
Price points
The typical selling prices at which goods are sold. Televisions, for example, may have price points at $500, $1,000, $1,500, and so on.
Product
The goods that a factory manufactures and that a retail store offers for sale to customers.
Profitability
The amount of money that can be made from the sale of a particular product. Some items, such as goods in a grocery store, typically have low profitably, while others, such as computers or cars, may have much higher profitability.
Seasonal
Goods whose sales fluctuate according to the time of year. Sporting goods such as skis and swimsuits are seasonal, but some goods, such as whole turkeys or pumpkins, may be tied to a particular holiday or time of year.
Shopping Center
A group of retail businesses that are located together.
Mall
A containment of stores serving a large area that is usually an enclosed building with an adjacent parking lot.
Strip Mall
Typically a neighborhood space composed of a group of separate stores that are connected by sidewalks and that have parking lots in front of the stores.
Business District
An unenclosed shopping area that has evolved without a lot of planning and that features a variety of stores.
Freestanding Location
A store that is unattached to other stores.
Trade Area
A business's geographic surroundings, which provide most of the customers.
Traffic
The term used to define the number of people who go by a store location during a given time.
Competitive Business
One that sells the same or comparable merchandise.
Complementary Business
One that sells merchandise that is related to, but not the same as, an area business's goods.
Lease
A contract between a landlord and a tenant for use of a property for a specified amount of time in exchange for a specified amount of rent.
Fixed-rate Lease
One that charges the tenant a specific amount of rent each month.
Percentage Lease
One that bases the amount of rent on a percentage of the sales generated in the space.
Triple Net (NNN) Lease
One that charges the tenant rent plus the three operating costs of the rented property.