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Small Business Management Notes

 

MARKETING AND SELLING

                                                     

a)      Food for Though

“It is a fool whose own tomatoes are sold to him”.

Black people are great and creative producers. Yet there even more consistent consumers. We have given so much to the world and for some strange reason, we keep buying it back. We can not complain about what others do to us if we are not doing for ourselves. If we as a people are ever t stand, we must give credit to one another for the things we create. We must take every necessary precaution to safeguard what is ours. Buy in your own communities first. Educate our children well. Protect the women and elders at all cost. Give to our own expecting nothing in return. Above all, do not allow the love of money to supersede our pride for our people……………..

 

b)     The Goal:

To equip the potential person/farmer with skills which help him/ her to market his/ her products/ service efficiently and profitably.

 

c)      Objectives:-

At the end of this chapter we should be able to:

  1. Define marketing and selling (process and concept)
  2. State the importance , differences and relationship of both
  3. Identify pertinent elements relating to marketing and selling

 

Brief Background

The marketing of goods/ service/ ideas has been around for long as people of the world have engaged in trade. Before the 1930’s we experienced a production-oriented marketing. This means that the producer presented a product and the consumers purchased it. Between 1930’s and World War II, we experienced a sales oriented marketing whereby producers developed their sales force, advertised and sold to consumers. The present day is experiencing a consumer oriented marketing where producers must be engage in the total marketing concept? What then is the total marketing concept? Let us find out………………

 

As more and more producers are engage in the production and the supply of the same product, and as companies are getting bigger and bigger, there is an increased need for companies (businesses) to satisfy the consumers who enjoy the power of choice. A business person should fine out what the consumer needs, produce a product to appeal to the consumer and then engage in advertising and sales methods designed to appeal to the consumer and then engage a follow-up on consumers after sales.

Let us take a look at some basic definitions:

Marketing: – This is a process by which we identify, informs, persuade, convince, a potential customer to buy a product/service and engage in follow- up the sale of a good has taken place.

(Are you sure you can explain all the underlined words?)

 

Marketing Concept: – BUINESS SHOULD DO EVERYTHING POSSIBLE TO STAISFY A CUSTOMER AS WELL AS TO MAKE A PROFIT (find out what is a concept)

 

Selling: –  This is the process which actually places goods and services in the hands of the final consumer. Simply put, selling is the exchange of goods/services/ideas for money.

 

Selling concept: THE MORE YOU KNOW ABOUT YOUR CUSTOMER AND WHAT HE/SHE NEEDS/WANTS THE MORE YOU SELL AND THE BIGGER WILL BE YOUR PROFITS

Given the above definitions we can deduce the importance, differences and relationships market and selling.

 

Importance and relationship include:-

  • They generate income/create employment
  • They create satisfaction/offer choice
  • They enhance living standards

 

Their difference include;-

  • Selling is a tactic/marketing is a strategy. A tactic is a part of a strategy. What do you mean?

 

Now let us take a close look at selling

Type of selling

  • Retail (item by Item)
  • Wholesale(in Bulk)
  • Specialty selling (selling a particular name brand of a product)
  • Departmental selling (one-stop shopping center)

Selling channel includes:-

  • personal /direst selling (face o face)
  • impersonal /indirect selling (telephone, mail, TV, radio, newspaper)

 

Factor affecting selling includes:-

  • Prices, income, taxes, demand, credit facilities, sellers, attitude and business location

At this junction, we have a working knowledge of marketing. Our appreciation of the subject will increase as we move on…….

 

CASE STUDY

Your cousin is a hawker selling ladies shoes and handbags.  He target customers in their offices, drinking spots and banks. You have recently graduated from CM Marketing Seminar. What will you advice your cousin to do in term of marketing his products.

 

STARTING A BUSINESS (For Your Information)

a)      Food for thought:-

“We must learn to look for that which we have been trained not to see”

 

b)     The Goal:-

To expose the potential business person to a few facts he /she needs to understand before engaging I a business venture

 

c)      The objectives

At the end of this chapter, we should be able to:-

  1. Appreciate the who, what, when and how of starting a business
  2. Know the importance of a feasibility study
  3. Know how to register a small business

 

GOING INTO BUSINESS

Thinking of owing and managing your own business is a wonderful idea provided you know and have what it takes.

Starting understanding a business is risky at best, but your chances of making it will be better if you understand the problem you will encounter and work out as many of them as you can before you start

 

BEFORE YOU START

Auto-observation

Think about why you want to start your own business. Do you want it badly enough to keep you working long hours without knowing how much money you will end up with? Have you worked in any business like the one you want to start? Have you worked for someone else as a foreman or manager? Have you had any business training in school? Have you saved any money/

 

Knowing Yourself:

Can you start a business and make it go?

Are you a self –starter?

Below are some questions and worksheets to help think through what you need to know and do. Under each, check the answer that says what you feel or comes closer to it. Be honest to yourself. Check each question if the answer is YES. Where the answer is NO. You have some work to do.

Worksheet No 1

  1. I do things on my own. Nobody has to tell me to get going……………………….
  2. If someone gets me started keep going all right…………………………………
  3. I don’t put myself out until l have it………………………………………………

How do you feel about other people?

  1. I like people. I can get along with just anybody……………………………………….
  2. I have plenty of friends –l don’t need any one else…………………………………..
  3. Most people irritated me……………………………………………………………….

Can you lead others?

  1. I can get more people to go along with when l start something……………………
  2. I can give the order if someone tells me what l should do…………………………………
  3. I let someone else get things moving, then l go along if l feel like it………………………

 

 

Can you take responsibility?

  1. I like to take charge of things and see them through………………
  2. I will take over if l have to, but I’d rather let someone else be responsible………………….
  3. There’s always some eager bearer around waiting to show how smart he is. I say let him……

How good an organizer are you?

  1. I like to have a plan before l start. I’m usually the one to get things lined up when the group wants to do something……………………………………
  2. I do all right unless things get too confused. Then l quit………………………………………..
  3. Get all set then something comes along and presents too many problems. So l just take things as the come……………………………………………………………………

How good a worker are you?

  1. I can keep going as long as l need to. I’d mind working hard for something l want…………
  2. I’ll work hard for a while, but when l have had enough, that’s it………………………………
  3. I can’t see that hard work gets you anywhere………………………………………………….

Can you make decision?

  1. I can make up my mind in a hurry if l have to. It usually turns out O.K too…………………
  2. I can if l have plenty of time………………………………………………………………….
  3. If l have to make up my mind fast, l think later l should have decided the other way……….
  4. I don’t like to be the one who have to decide later l should………………………………….

Can people trust what you say?

  1. You bet they can, l don’t say things l don’t mean………………………………………
  2. I try to be on the level most of the time, but sometimes l just say what’s easiest
  3. Why bother if the other fellow doesn’t know the difference………………………………

Can you stick with it?                                           

  1. If l make up my mind to do something, l don’t let anything stop me…………………………
  2. I usually finish what l start- if it goes well……………………………………………………
  3. If it doesn’t go right away, l quit. Why beat your brains out………………………………

How good is your health?

  1. I never run down…………………………………………………………………
  2. l have enough energy for most things l want to do…………………………………
  3. I run out energy sooner than most of my friends seem to……………………………

 

Count the checks you made

How many checks are there beside the first answer to each question? ………………………………..

How many checks are there besides the second answer to each question?…………………………

How many checks are beside the third answer to each question?……………………………………………..

If most of your checks are besides the first answer, you probably have what it takes to run a business. If not, you are likely to have more trouble than you can handle by yourself. Better find a partner who is strong on the point you’re weak on. If many checks are besides the third answer, not even a good partner will be able to shake you up

 

Now go back and answer the first question.

How about the money?

  • Do you know how much money you will need to get your business started?……………………….
  • Have you countered up how much money of your own you can put into the business?……………
  • Do you know how much credit you get from your suppliers –the people you will buy from?……..
  •  Do you know where you can borrow the rest of the money you need to start your business?….
  • Have you figured out what net income per year you expect to get from the business?……………
  • Count your salary and profit on the money you put into the business…………………………
  • Can you live on les than this so that you use some of it to help your business to grow…………
  • Have you talked to a banker/financial institution and credit union about your plans?……..

 

How about a partner

  • If you need a partner with money knowing that you don’t have, do you know someone you can get along with?…………………………………………………
  • Do you know the good and bad point about doing it alone, having a partner, and incorporating your business?…………………………………………..
  • Have you talked to a lawyer about it?………………………………

 

How about your customers

  • Do most businesses in your community seem to be doing well?…………………………………..
  • Have you tried to find out whether stores like the one you want to open  are doing well in your community and in the rest of the country ……………………………………
  • Do you know what kind of people will want to buy what you will plan to sell?……………
  • Do you like people to live in the area where you want to open your store?………………..
  • Do they need store like your?…………………………………………………………………….
  • If not have you thought about opening a different kind of store or going to another neighborhood………………………………………………..

 

GETTING STARTED

Your Building

  • Have you found a good building for your store? ……………………………………………..
  • Will there be room for expansion when your business grow bigger…………………………
  • Can you re-structure the building the way you want it without spending too much money……
  • It is assessable?………………………………………………………
  • Have you had a layer check the lease and zoning?………………………………………………………..

Your equipment and supplies

Do you know just what equipment and supplies you need and how much they will cost?

(Here, make a list of furniture, fixture and equipment) see if you can save some money by buying second –hand equipment.

 

Your merchandise

  • Have you made a decision on what things to sell?…………………………………………………….
  • Do you know how much or how many of each of you will buy to open your store with?………….
  • Have you found suppliers who will sell you what you need at a good price……………
  • Have you compared the prices and credit terms of different suppliers?…………………………….

 

Your records

  • Have you planned a system of records that will keep track of your income and expenses, what you owe other people, and what other people owe you?………………………………………..
  • Have you work out a way to keep track of your inventory so that you will always have enough on hand for your customers but not more than you can sell?………………………………..
  • Have your figured out how to keep your payroll record and take care of tax report and payments?……………………………………………………..
  • Do you know what financial statement you could prepare?………………………………………….
  • Do you know an accountant who will help you with your records and financial statement?……..

 

Your store and the law

  • Do you know what licenses and permits you need?……………………………………………
  • Do you know what business law you have to obey?…………………………………………………
  • Do you know a lawyer you can go to for advice and for help with legal papers?……………………

 

Protecting your store

  • Have you made a list of what you like and don’t like about buying a business someone else has started?…………………………………………………………………………………
  • Are you sure you know the real reason why the owner wants to sell this business……………
  • Have you compared the cost of buying the business with the cost of starting a new business?….
  • Is the stock up to date and in good condition?………………………………………………………
  • Is the building in good condition?……………………………………………………………………
  • Will the owner of the building transfer lease to you?………………………………………………………
  • Have you talked with other business owners in the area to see what they think of the business…
  • Have you talked with the company suppliers………………………
  • Have you talked with a lawyer about it?…………………………………………………………………

 

 

 

Making It Go

Advertising

  • Have you decided how you will advertise? (Newspaper-poster-handbills-radio-mail)………….
  • Do you know where to get help with your adverts?………………………………………………………
  • Have you watched what other store do to get people to buy?…………………………………………

 

The price you charges

  • Do you know how to figure what you should charge for each item you sell?………………………
  • Do you know what other stores like yours charges?……………………………………………………

 

Buying

  • Do you have a plan for finding out what your customers want?……………………………………
  • Will your plan for keeping track of your inventory tell you when it is time to order more and how much to order?…………………………………………………………………………………………………….
  • Do you plan to buy most of your stock from a few suppliers rather than a little from many, so that those you buy from you will want to help you succeed?……………………………………..

 

Selling                                                                                                 

  • Have you decided whether you will have sales clerks or self-service?………………………….
  • Do you know how to get customers to buy?…………………………………………………………..
  • Have you though about why you like to buy from some salesclerks while others twin you off?…….

 

Your employees

  • If you need to hire someone to help you, do you know where to look?……………………………
  • Do you know what kind of person you need?…………………………………………………………….
  • Do you have a plan for training your employees?………………………………………………………..

 

 

Credit for your customers

  • Have you decided whether or not to let your customers buy on credit?……………………………
  • Do you know the good and bad points about joining a credit –plan?………………………………
  • Can you tell a dead bear from a good customer?…………………………………………………………

 

A few extra questions

  • Have you figured out whether or not you could make more money working for someone else?………
  • Does your family go along with your plan to start a business of your own?……………………..
  • Do you know where to find out about new ideas and now products?……………………………..
  • Do you have a work plan for yourself and your employees?………………………………………….
  • Have you gone to CM consultancy for help with your plans?…………………………………………..

If you have answered all these questions carefully, you’ve done some hard work and serious thinking. That’s good. But you have probably found some things you need to know more about or do something about. Do all you can for your self, but don’t hesitate to ask for help from people who can tell you what you need to know? Remember, running a business takes guts? You’ve got to be able to decide what you need and then go after it.

 

 

GOOD LUCK!!

Type of business you are engaged in (or want to engage in)

a)      Farm crop production (coffee, cocoa, banana, yams, rice etc)

b)      Animal husbandry, livestock production & cattle, poultry, goats, sheep, rabbits, fish, pigs etc.)

c)      Manufacturing (blacksmithing, tailoring, cloth making, handicrafts etc)

d)     Services (motor, electronics, watch repairing, barbershop, transportation of goods or people etc)

e)      Trading (shop, whole sale)

f)       Skilled trade (construction, plumbing, carpentry, masonry)

g)      Other (specify)

 

How and why was business started? (Or why and how do you want to start business?)

a)      Acquired business from family members

b)      Started business by choice (usually as a result of previous work experience)

c)      Started business by necessity ;i.e. no other employment opportunities available

d)     Other (specify)

 

How was the initial capital to start the business obtained? Or do you intend to obtain the initial capital to start the business? (Estimate percentage if possible)

a)      Personal saving

b)      Loan or gift from family members

c)      Loan from community (specify)

d)     Loan from a financial institution e.g. Bank or credit union

e)      Grant or loan from a donor agency

f)       A combination of the above

If already in business, what is your business address and location?

………………………………………………………………………………………………………

Total Amount in FCFA used to start business (approximate)

a)      25.000 to 50.000

b)      51.000 to 100.000

c)      101.000 to 200.000

d)     201.000 to 500.000

e)      501.000 to 1.000.000

f)       Above 1.000.000

 

Ownership:

a)      Sole proprietor

b)      Partnership (how many partner)

c)      Other (specify)

Do the business keep records (a) YES   (b) NO?

Present net worth of your business (all that is owned minus what is owned )in France CFA

a)      0 to 50.000

b)      51.000 to 150.000

c)      151.000 to 500.000

d)     501.000 to 1.000.000

e)      1.000.000 to 5.000.000

f)       Above 5.000.000

g)      Don’t know (specify why)

Other than shortage of capital, rate on a scale of 1 to 5

(1=favorable, 2=very favorable, 3= moderate, 4 = unfavorable 5= very unfavorable).  The degree to which the following factor affects business performance

a)      Government policies (taxation ,subsidies etc)

b)      Technical skills

c)      Labor shortage

d)     Raw materials

e)      Transportation

f)       Lack of markets

g)      Others (specify)

Entrepreneur’s outlook on future of business

a)      Optimistic

b)      Pessimistic

c)      Indifferent

 

What factors contribute most to the success of your business? (Specify) what efforts, if any, has the entrepreneur taken to alleviate the problems facing the business (specify)

 

How to register a small business (are business formalities restrictive)

  • Business plan of action
  • Site (location)
  • Capital needs (budget)
  • Employment needs
  • Ministry of trade and commerce
  • Ministry of finance
    • Department of taxation
    • Patent
    • Stamp duty
    • Price control
    • Business license
    • Stamp application form (form 1B)
    • Certified copy of I.D card
    • Business name
    • Copy of patent
    • Attestation of business premises
    • Authorization in case of drugs by ministry of Public health
    • Article of Association in case of partnership
    • Fees according to capital involved.

 

 

 

 

 

BUSINESS PLAN DEVELOPMENT

 

Food for Thought:

“Plan Purposefully, Prepare Prayerfully, Proceed Positively and Pursue Persistently”

 

THE IMPORTANCE OF THE BUSINESS PLAN

  • Provides the business with directions
  • Provides good entrepreneurship
  • It strengthens the business over time
  • It helps eliminate the unwanted surprises.

PRELIMINARY WAYS TO PREPARE:

  1. Read trade journal
  2. Begin to network
  3. Contact trade associations
  4. Begin to build your personal financial resources

 

THE PRODUCT: FINDING A NEED

Ten questions to ask about the product or service:

1. Is it needed?

2. Is it unique?

3. Is it easy to understand?

4. What is the market potential?

5. Can the product line expand?

6. Is there an existing customer base

7. Are the productions cost realistic?

8. Why would a customer buy it over a competitor product?

9. Can you bring it to market before the competition?

10. Is it priced competitively?

 

UNDERSTANDING THE MARKT

Things you should know about your competitors?

  1. What are their products?
  2. How are they different from yours?
  3. what are their strengths
  4. What are their weaknesses
  5. What customers do they target
  6. What territories are they in?
  7. What are their prices
  8. What do they include in that price

 

Source of market information

  1. Library
  2. research unit of local Ministries /Offices /Department
  3. Trade meeting and shows
  4. Trade magazines
  5. Chambers of commerce
  6. on line data base (computer)
  7. Suppliers
  8. School/Universities

 

DISTRIBUTION STRATEGY

How to get the product to the customer:

  1. Choose a distributor with a reason to push your product
  2. Bolster the distributor’s efforts with your own
  3. save cost by shipping in volume
  4. share fight cost with another company

 

SEVEN WAYS TO CONTAIN AND IMPROVE CSAH FLOW:

  1. Share with another company
  2. Purchase equipment cheaply (auction are good source)
  3. Or lease rather than buying
  4. Use sales representatives rather than full time sale people
  5. Push customer for prompt payment
  6. Don’t hold exceed inventory
  7. In the beginning give yourself a small salary

 

PEOPLE

Putting together a winning team

  1. Outside expertise
  2. Partners
  3. Take time to hire the right person
  4. Attract top people who have proven right records
  5. Look for specific expertise
  6. Look for confidence , ability to work with others, know exactly what you want each person to add to your organization

 

Outside Expertise

  1. Seek specialized knowledge
  2. Choose experts who understand and pursue your business objectives .e.g. A lawyer, an accountant and a business consultant

Partners:

  1. Choose a partner whose skills compliment your own
  2. Bring additional resource such as capital and contacts
  3. Has a compatible management philosophy

 

 

THE BUSINEE PLAN

Putting it all on paper

  1. THE EXECUTIVE SUMMARY
  2. COMPANY HISTORY
  3. THE PRODUCT/SERVICE
  4. THE MARKET
  5. THE COMPETITION
  6. MARKETING
  7. MANUAFACTUREING /OPERATIONS
  8. MANAGEMENT
  9. FINANCIAL PROJECTIONS
  10. FINANCIAL NOTES: Maintaining the relationship; growing your customer bas netw

 

  1. THE EXECUTIVE SUMMARY

Should contain

a)      A description of your business

b)      Identification of your target market

c)      Description of your management team

d)     Summary of Key financial projections

e)      Summary of funding requirements

 

  1. COMPANY HISTORY

Should Contain

a)      Who started the business and when

b)      What is the legal form of your business

c)      Are there present loans or investment commitments

 

  1. THE PRODUCT/SERVICE

The product/service entails:

a)      Precise definition of your product/service

b)      Distinct product /benefits

c)      Legal protection obtained or applied for

 

 

  1. THE MARKET

The market should state

a)      Who are your customers?

b)      What are the Historic Forecasted rates of Growth?

c)      How will you distribute your product /service

d)     How is the purchase decision made and by who

 

  1. THE COMPETITION

The competition should say

a)      Who are your competitors

b)      What are their strengths and weaknesses?

c)      What is the market share of each?

d)     What share of the market to intend to capture and how?

 

  1. MARKETING

a)      How will you research, develop and test your product

b)      How will you compensate your sales staff

c)      What is your product pricing strategy

d)     How will you promote your product

 

  1. MANUAFACTUREING /OPERATIONS

Manufacturing /Operating:

a)      Will you produce  your product

b)      What are your company’s production strengths and weaknesses

c)      Do you plan on adding production capacity

 

  1. MANAGEMENT

a)      Who is your management team

b)      What level of expertise do they poses (education/experience/achievements)

c)      Are you in partnership? What level of influence (politically, economically etc) does your partner have.

 

  1. FINANCIAL PROJECTIONS

What should you prepare?

a)      Monthly cash flow projections (1-2 years)

b)      Monthly profit and loss projections (1-2 years)

c)      Monthly projected balance sheets (1-2 years)

 

  1. FINANCIAL NOTES

What must you do?

a)      Be prepared to invest your own money in the business

b)      Be prepared to disclose your personal financial situation

c)      Be prepared to answer any questions to financial institutions on your industry

d)     Go to investors that know your industry

e)      Be able to explain why this is an excellent investment

f)       Know exactly how much money you need and how much equity you are prepared to give up to potential investors

 

Maintaining the relationship:

  1. Repay loans on time
  2. Keep investors informed
  3. Negotiate covenant you can live with

 

Growing your customer base:

  1. Remembers the customer is always right
  2. Keep in constant contact with your major customers
  3. Excellent service is critical
  4. Ask your customer how your service/product can be improved
  5. Find ways to solve your customers problems
  6. Look for situations in which both you and your customers win

 

Networking:

Industry colleagues, customers, suppliers, local businesses, bankers and lawyers, politicians, community groups.

 

CASE STUDY

  1. Want to crossbreed snails
  2. Want to grow mush room?
  3. Want to mass-produce soap
  4. Want to operate a fishpond
  5. What’s your own project?

 

Produce a business plan, which can convince a donor or a bank ( financial institution) for funding.

                                   

 

                                       MARKETING PLAN

Food for Though:

WORK OUT A PLAN, PLAN THE WORK and WORK THROUGH THE PLAN”

 

GOAL: to impress upon the businessperson the importance of developing and using a marketing plan

 

Objectives:

By the end of this chapter, we will be able to:

a)      Give the definition of marketing plan

b)      List the “importance” of a marketing plan

c)      Analyze the six steps to marketing plan

 

Marketing Defined

b)      Marketing is every detail of your business

c)      Marketing is taking a good look at your customers, competitors and suppliers

d)     Marketing is the distribution of goods and service: that means marketing is: everything from the inception of an idea to the acceptance of the idea in the market place

e)      Marketing is growth

f)       Marketing is the function that identifies the needs of the buying public, assessing the extent of the needs and endeavoring to satisfy them in the most profitable manner

g)      Marketing is promotion- i.e. Through newsletters, by telephone, radio etc

 

Marketing plans (where successful marketing starts)

a)      Marketing plan is defined simply a document that formalizes, your missions, goals, objectives which you want to achieve.

b)      Importance of a marketing plan

  1. it is good way to save money
  2. it keeps one on a steady track
  3. it prevents owners from being distracted by every sales representative who walks in trying to sell space or time
  4. it helps the company to grow
  5. it is a convenient vehicle.

 

THE MARKETING PLAN INVOLVES SIX STEPS

 

1. Diagnosis (where are you now and why)

a)      What is your image?

b)      What is your position in the market place?

c)      How do you perceive customers?

d)     How do you measure employment ‘effectiveness?

e)      What service should you offer?

f)       What about your prices, competition, quality control, client base, sales comparison, advertisement cost etc

g)      Where are you getting your business? I.e repeats business, new business with existing customers, new business with new customer?

h)      Are you generating business fro existing from client? Are you networking?

i)        Have you defined your market? I.e. think about your potential customers. The geographical area you serve etc

j)        What are your annual sales?

k)      How frequently do your customer purchase?

l)        What are their particular needs

m)    Are you communicating to customers the benefits of doing business with you

 

A commonly used tool to analyze your business currently position is the SWOT analysis

 

 

Strength Weaknesses
Opportunities Threats

 

 

 

  • Identify all your business strengths
  • List all your weaknesses

 

These two are internal to your business. Now see which opportunities (external to your business) which you can derive from your strengths. Also see which threats (external to your business) which can arise from weaknesses. Given the opportunities and threats (limitations0 you can now engage in prognosis.

 

2. PROGNOSIS (Where do you want to be and when)

b)      Is your producer/service going to remain competitive?

c)      Is there opportunity for your key employees to grow fast enough to carry on business well?

d)     Are you paying enough attention to marketing to ensure future growth?

 

 

3. GOALS AND OBJECTIVES

a)      Clearly define your goals and objectives

b)      Make projections on your business in terms of:-

  1. Market position
  2. Size of business
  3. Are your customers going to patronize the business regularly?
  4. What is the percentage of new business and in what market?
  5. what new business are you going to generate with existing clients
  6. What new market would you want to develop?

 

4. STRATEGY: (How are you going to get there)

a)      Start with your market  budget

b)      Figure time for each person and your designated market team based on your resources, goals and market place

c)      What market strategy would you employ?

 

This is would it be: Direct mails? Newspapers? Television? Radio? Trade press? Speeches to targeted groups? Business lunches? Newsletters? Update of company brochure? Taking a critical look on your company logo and letterhead?

Not that before you implement your business strategies, you have to take your time, effort and cost in to consideration.

5. TACTICS: (How are you going to get there?)

d)     What specific tactics are you going to use to accomplish the three strategies you have chosen? For example, let’s assume that your market is anxious for specialized information that only you and a few others can give. You have decided that: Newsletters (fliers) Network (contact groups such as church, meeting houses) and business lunches are the key strategies).

For newsletters, ask yourself:

  1. Who are assigned to write the newsletters?
  2. what is the time and the anticipating mail day? After determining this, work backward from that date to determine assignment date line.
  3.  clarify the roles of everyone involved. Don’t be afraid to delegate.
  4. once theses questions have been answered, start implementing the strategies

 

apply the same procedure discussed above for the networking. That is determine which organization you belong to now, who will represent you in each group etc. these procedures also apply to business lunches i.e. you should consider who to invite and how often should they be invited. All theses will provide information needed

Let us combine all the above steps into another commonly used tool called the work plans

WORK PLAN FOR 2001 (……………… BUSINESS)

Activity Responsible Dateline Means Available Measure by verifiable Indicator
         

 

 

 

The work plan will keep the entrepreneur on track. Please feel free to constantly adjust your work plan in order to meet the changing times

 

 

6. CONTROL (How are you doing)

You have to find out:

e)      Your progress every three months by reviewing your activities with your key people. This could be done by organizing brainstorming session with your key people to examine things like:

 

  1. Number and quality of new accounts
  2. levels of success
  3. repeat business
  4. new business with existing clients
  5. evaluate time invested
  6. check profitability
  7. clients feedback

 

To effectively control business operations, it is advisable to use a performance tools:

Planned Activity/output Actual Activity/Output Variance (why)
   

 

 

 

While considering the above factors do not paint a rosy picture in the first few steps of the marketing plan. Paint a realistic picture. However, if you find that you have problems in dealing objectively with the marketing plan, you just put it off and hire a marketing consultant.

 

CASE STUDY

E.T.A Enterprises is a successful firm located in Kumba having three separate units. The firm main product is trye. With the changing economic, social and political patterns in our country, E.T.A has been forced to continuosly monitor and evaluate its long  and short –term plans as reflected in the diversity of products offered. E.T.A’s other units includes , cars ,Auto parts/repairs

 

QUESTION

If you were E.T.A’s Marketing Contract, what recommendations would you make for future strategic market planning.

 

COSTING

a)            Food for Thought:

“Money is exactly like sex, you think of nothing else if you don’t have it and think of other things when you have it”

b)           Goal

To expose the potential business person to the necessary inputs which make-up prices

c)            Objectives

At the end of this chapter, we should be able to:

Define price

  1. Establish costing (determining cost)
  2. Understand the need to stay in business

 

A)    WHAT IS COST

Cost is the amount of expenditure (actual or notional) incurred in or attributable to a given thing. Cost can be classified as follows

Direct Cost (prime):- this is a cost which is obviously traceable to a unit of out-put or a segment of business operation. e.g raw material/wages/salaries

Indirect Cost:- this is a cost which is not is obviously traceable to a unit of out-put or a segment of business operation. e.g. accidents at work.

Fixed cost: – this is a cost which does not change in total as the rate of output varies within a specific range e.g. land, buildings

Variable cost: – This is a cost which changes in total with changes in the rate of output e.g. electricity/water

 

Cost of production (factors)

–          Raw materials –inputs to which value will be added

–          Labor- human effort needed

–          Depreciation on equipment/ machinery (wear & tear)

 

B)    WHAT IS A COST UNIT

This is a unit of production or service, in relation to which the costs are collected and controlled. The following are the cost units for certain industries:

 

Industry                                                           Cost Unit

Bricks (building trade)                              per 100.000etc

Furniture making                                      per unit of output/production (per chair/desk)

Auto-mechanics                                        per job done

Oil changes/engine mount

Hotel/catering                                          per portion produced

Plate; a serving/etc.

 

Think of the nature of your products /services? Think of the distance, storage problems between producer and consumer. What are some of the disadvantages and advantages of using middle persons (agents, retailer, and wholesaler?)

 

CASE STUDY

1)      See the Amue Shoe Company in chapter 3. What marketing mix strategy would you recommend to Mr. Kome and why?

2)      Mary Lou is 25 years old woman who completed school six years ago. She has two children but not married. Her father owns a business 9sale of food and drinks). The shelves are not well arranged. Mary Lou is the manager. She combines the cash intake of food and drinks. She is not on a salary but does all cooking, buying and selling for the business. When her child is sick, she buys drugs from cash sales. She gives credit to all her neighbors who repay her at will. There are two other drinking spots in the same area. Her sales fluctuate such that some days she does not sell anything and cannot purchase to replenish her stock. You have completed from CM marketing workshop. Mary Lou has asked you to join her and help make the business to flourish.

What are your suggestions?

3)      You are the sales manager of Mola stores INC. Your sales have been very good because of your quality products and good location. Recently, many stores selling similar products have located in your neighborhood. Their products come fromNigeria,KoreaandTaiwan. What should you do?

C)    WHAT IS A COST CENTER

Cost center is a place, location, equipment or a group of persons with reference to which cost is accumulated for the purpose of control. For example; production cost center, service cost center, suitable for large companies.

D)    ELEMENT OF COST

The element of cost is the sum total cost components groups. That is purchase price of materials, the cost of time of labor, and the values of other expenses.

The following is a chart showing elements of cost:

Material cost = Direct materials + Indirect materials

Labor cost   = Direct labor      + Indirect labor

Expenses      = Direct expenses   + Indirect expenses

Format of a cost sheet                                                              

  1. Direct Material                   –
  2. Direct labour                      –
  3. Direct expenses                  –

 


Prime Cost

  1. Factory Overheads             –

 

Factory Cost

  1. Administrative overheads  –

Cost of Production

  1. Selling and distribution      –

Total cost (or cost of sales)    –

  1. Add-% margin of profits (mark-up or entrepreneurial addition usually 10% to 30% of cost of production).

 

Selling price                       –

CASES

Do costing for and determine the price of:-

  • A plate of food is your restaurant
  • A service performed

–       teaching

–       health

–       Salon etc

  •           A taxi service (drop)
  •           Any more ideas? Be my guest!

One does not just enter into business to get out next day/next year. The following are tools utilized by a businessperson in order to assist him/her stay in business.

a)            Cost/benefit analysis

b)           Break even analysis

 

Cost/benefit analysis

Goal: – As a control tool this analysis is to show the relationship between expenditure and income of your business.

Objectives: – to determine when loses are acceptable and profit should be expected.

Definition: – This is an analysis, which helps us to determine the break-even point of our business. To break even means one is either not making profit or not making loses. Before we determine all the above, one has to engage in costing a product/service. This will lead to cash flow projections, which are necessary ingredients in business plan write –ups.

If the production of a plate of food is 300 FRS CFA and you re selling if for 450 CFA. Prepare a cost/benefit analysis for 15 plates of food sold. (See table0

 

 

COST BENFIT
a)      Cost of one plate                      300

b)      Cost of 15 plates                   4.500

c)      Price of one plate

d)     Price of 15 plates

 

 

450frs

6.750frs

                                                         4.500FCFA

6.750FCFA

 

Cost of producing 15 plates of food                      = 4.500 FRS

Sales derived from selling 15 plates of food         =   6.750 FRS

Net Profit                                                               =   2.250 FRS

 

At sales of 4.500FCFA your business is said to be breaking-even. (10 plates of food is your break-even quantity).

The BEP is where your business is neither losing nor making profits. It shows you where you are and generates thought on……….what you should be doing in order to stay in business.

 

 

CONSUMER BEHAVIOUR

a)      Food for Thought

“To understand how any society functions you must understand the relationships between the men and women”.

 

b)     Goal:

To understand the buying patterns of consumers and how a business can utilize the marketing mix too positively influence consumer behavior.

 

c)      Objectives:-

At the end of this chapter, we should be able to:-

  1. Define consumer behavior
  2. Know some facts associated with buying
  3. Understand the marketing mix(4p’s or 5p’s?0
  4. Appreciate the use of the marketing mix in order to positively influence consumer behavior

 

Content

  1. Consumer behavior is simply trying to understand the way people decide to spend money, credit or time. What products /services, ideas attract people. Why, when, where and how consumers purchase and use goods. Who and what influence their decisions. Understanding consumer behavior will guide the business person in positively influencing that behavior. The tool to use is the marketing mix (4P’s) however, let take a look at buying.
  2. What is buying? It is the exchange of money for goods, service or ides. Why do people buy? Well, we buy to re-sell (buyam-sellam) we buy because we cannot produce all we want/ need and we buy to satisfy human needs.

Based on where we find ourselves in the above setup, Abraham Maslow says we spend and buy services associated with the level in which we are. However, most human beings (95%) never go above the affiliation needs. We buy our products, services or ideas through cash payment, credit,

by check or markets or through third parties (agents). The buying publics consist of two major consumers. The one is institutional consumers comprising of businesses, professional offices. Non governmental organizations, non-profit making organization, schools and government. The second group is the ultimate consumers (everybody). We either buy for personal use (shirt) for family use (house clock) or buy for someone else’s use (gift). Our buying may be influence by psychological or sociological reasons. The formula to keep in mind is:

 

We buy (choice) because there is a need, the purchasing power (ability to buy) and our prejudices towards the variety of products/services/ideal in the market. Our decision to buy may also be rational (bases on cost, dependability and usefulness) or it could be emotional (sensory satisfaction, fear, pride, sociability and emulation).

Now that we have successfully discussed the art of buying let us turn our attention to the marketing strategies which can be utilized in order to positively influence buying buyers.

 

 

The above picture offers a working knowledge of forces and mixes which together and in different ways influence the buying public.

 

EXTERNAT FORCE:-

These are set of uncontrollable forces, which influence the business person (adversely or positively) and he/she has very little control over them. Let us shed some light on each

  1. i.        Legislative Force :-

Sometimes called the regulatory force, theses are laws passed by the legislature (National Assembly) which dictate the way the government wants businesses to operate e.g. No tow pharmacies to be located within a particular area. Think others?

 

  1. ii.      Legal Forces

These are decision handed down by the courts of law and the said decisions may not favour a businessperson.

Think of a customer taking you to court

How about an employee you laid –off

 

  1. iii.    Political Forces

Politics will always influence business. A bad political set up will not create an enabling environment for business to flourish. Similarly you can belong to an opposition party and find your contracts seized or not funded by the party in power. You may not even be allowed to bid for the contract if it is known that you do not subscribe to the party in power. A good business person should therefore be very careful as to his/ her political sentiments.

 

  1. iv.     Technological Forces

Here we find machines and equipment changing everyday. The typewriter is fast making way to the computer. Machines now mould blocks. Cars have telephone just in case you haven’t notice! The businesspersons have no choice but to keep abreast

 

  1. v.       Economic and Competitive Forces

The fact that the economy is experiencing a depression, recession, boom, inflationary conditions, cut in salaries, reduced purchasing power, devaluation does not mean the business world should disappear. You might not be able to control the above but you’ve got to keep going. What about your competitors. Some may engage in price wars and cut throat advertisements! Can you control them?

 

  1. vi.     Societal Forces

We live in a world of tribalism and nepotism. People can decide to buy from their tribesman or friend or relative. Can you control them? I’ll surely like to know how! This is the external environment, which may be friendly, or hostile depending on how you fit in. however, do not lose hope. The businessperson can use the marketing mix to survive in business.

 

WHAT IS THE MARKETING MIX:-

Otherwise called the 4P’s (Product, Price, Place, Promotion) theses are a set of controllable variables utilized by a businessperson in order to positively influence consumer behaviour.

A businessperson must study the target very carefully for the characteristic of the target market determine the make-up of the marketing mix. Let us study the 4P’s very closely.

A. Product Mix:-

Here we attempt to determine consumers’ needs wants and translate them into desirable product/services. What product will appeal to the market?

  • The need for fruits all year round= food preservation
  • The increase in working women= increased in “ dress for success”
  • The increase in working women=increase in day care centers

Remember the basic product qualities of quality, style, features/ options/services, packaging, warranties, color, brand name which has to fit the product, image which has to fit the user. What product is needed? How and when? What opportunities exist? Are you reevaluated existing product lines? Are you diversifying into related product lines?

Is it a single product appeal (shoe?)

Is it one basic product line (dressing, shirts, blouses and trousers?)

Is it diversified product lines (skincare, food items, dresses etc)

Is you’re an old or new product? Remember the basic steps in new product development. Generation of ideas, screening, concept testing, business analysis, test marketing and commercialization.

In all above never loose sight of the risks and benefit involved. Remember that adding-value to products/ services ideas will go a long way in guaranteeing sustainability of your business. The product life cycle concept (PLCC) is a tool used by business to prolong their life span.

 

THE Product Life Cycle Concept (PLCC)

 

TIME /SCALE

A= Introductory stage: A new business is known

You spend huge sums of money to acquire land, building, equipment, machinery, and workers. There is huge cash outflow.

B= Awareness stage: Advertising and promotion are very necessary at this stage. Little sales but more expenditure

C= Growth stage: Here the business begins to experience huge sales (Economies of scale). There is competition. Promotion is reinforced.

D= Maturity stage: The business is enjoying huge profit margins, diversification should be considered. Machines and equipment re old and needing replacement. More sales promotion

E= Peak Stage: The highest level of sales output is reached and maintain it means diversify, reinforce current operating levels ,pump in new ideas , new energy and reinforce sales promotion

F= Decline stage: There is cut throat competition. To avoid decline you should take note of D&E above.

 

B. PRICING MIX:-

What is price? It is the value of something expressed in monetary terms. How is it determined? By adding cost of production to mark you get price. It is that easy? Well , let take a closer look….setting prices is affected by the external economic environment and by the companies’ internal policies. Price policy is guided by returned on investment (ROI) where  profit are calculated as percentage of investment.

How high a price will we charge?

  • Above the market? (low volume, luxury goods)
  • Below the market? (discount stores willing to capture markets share/turnover)
  • With the market? (price leader)

 

  1. i.                    Price skimming:-

Increase price initially and reduce it later when competition heats up. This is good because you recover development cost early in the game

  1. ii.                  Price penetration:-

Low initial price, recovers initial investment through large sales volume. This is good because rapid sales discourage competitors

  1. iii.                Price lining:-

Here we offer merchandise at a limited number of set prices

If you buy quality 15 at 500 FRS

If you buy quantity 10 at 750FRS etc

This is good because it makes the selling job easier for sales representative and an easier choice for the consumer

  1. iv.                 Psychological pricing:-

Reducing a few francs from the rounded figure to make the consumer feel that he/she is paying less e.g. 485,4975 and 9,950 respectively to 500, 5.000 and 10.000

  1. v.                   Suggested retail price:-

Stating categorically that the price has no mark-up from sales representative  makes the consumer feel that he/she is getting his/her money’s worth.

Some handy pricing problems are:

  • Prices keep changing readily due to changing technology, poor economic ,environment,(inflation, devaluation, reducing incomes)
  • Competition (local/foreign including dumping)
  • Legal environment (cost of safety from law suits.)

The price you charge is yours. But think again……….someone has to pay …..demand and supply cannot be forgotten.

 

PROMOTIONAL MIX:

You cannot sell a cat in the bag”. Every business must as a rule promote itself/image and its products/service. Promotional mix includes advertising, personal selling, publicity and sale promotion. Let us define each:

  • Advertising – Any paid, non-personal presentation made by an identified sponsor through mass communication. Example? Why not!
  • Personal selling:- face to face interaction between a business (usually through sales representatives) and the potential consumer of its products/service
  • Publicity: Non paid information relating to goods/services. Usually through moving vans, fliers etc.
  • Sales promotion:- any attempt to increase sales by showing good will. Through sponsorship of sporting events (Guinness MountCameroonRace). Also by offering various forms of discounts/gifts etc.

In advertising we talk of the media mix. We will see this in a later chapter on advertising. The question at this juncture is what is the most effective way of promotion? You have to think of your business? Is it a small one? Then maybe personal selling is what you need. It is flexible, develops a personal report, and allows for demonstrations, which can be more convincing to the customers. What are your strengths and weaknesses? It is important to know. For a big company, which covers a wider area, maybe TV/Radio adverting will be more appropriate. A non-profit, non governmental organization may utilize a combination of mix above but more of publicity.

D. PLACE (DISTRIBUTION) MIX:-

What is the strategy for reaching the final consumer? Is it by air, sea, land or rail? What channel of distribution are we going to use?

CUSTOMER RELATIONS

 

a)      Food for Thought:

“Life has two rules:

  1. Never Quit
  2. Always Remember Rule 1”

Human beings (customers) are complex to deal with; however, your business should never quit trying to satisfy the customer.

b)     Goal

To expose the business person to the relationship between his/her business and the customer (consumer)

c)      Objectives

At the end of this chapter, we should be able to:

  1. Know the definition and importance of the customer to any business
  2. know how to analyze his/her customer
  3. know how to find out ,what customers want and how they perceive you
  4. Appreciation the important of customer satisfaction and its relationship to profitability.

 

  1. I.       Definition and importance of a customer

A customer is anyone who purchases (buys) your product /services or idea. The customer can be a middle person or the final consumer. For importance of customer see Gandhi quote

The relationship between your business and the customer.

“…………….. A customer is the most important visitor in our premises. He/she is not dependent on us. We are dependent on him/she. He /she is not an interruption in our work. He/ she is the purpose of it. He /she is not an outsider in business. He/she is part of it. We are not doing a favour by serving him/her. He /she is doing us a favour by giving us the opportunity to do so.”

MAHATMA GANDHI

 

The customer is the king/queen of business

The customer is always rights

A business should do everything to satisfy a customer as well as to make a profit

  1. II.                How to analyze your customer

A good business person needs to know his/ her customer consequently; you have to ask yourself the following questions:

  • Who are your customers?
  • Where are they?
  • What do they want?
  • What are their interest, habits and purchasing power?
  • How did you serve them?
  • What are their future needs?
  • How frequently are they going to purchase?
  •  What can you do to get more business?

 

Remember that the more narrowly you define market, the more effectively you can target those markets. Things are always changing so you have to keep you with the changing habits of your customers. The answer to the above question will tell you the visible side of your customers.

  1. III.             How to find out what customers want and how they perceive you
  • Ask some existing clients about your products or service in terms of prices, quality and the competition
  • Prepare a brief questionnaire (survey) which will reflect consumer feelings about your products/services
  • Attend trade shows and association conference, set you workshops/seminars.

 

Try to identify the right audience in order to get honest feedback.

Try to find out from customer

Why you lost business with them, remember that customer quit because:

  • 1% die
  • 3% move away to other locations
  • 5% make other friendship (change tastes)
  • 9% due to competitive reasons (price)
  • 14% due to product dissatisfaction (quality)
  • 685 due to the attitude or indifference towards the customer by some employee
  • Are you 100% sure that you have the right attitude
  • What can you do to get them back?
  • What can you do to improve business with them?
  • Listen without becoming defensive
  • From your existing customers find out:
    • Why they buy from you?
    • How are your service
    • What major problems do they encounter when conducting business with you?
    • Always give incentive to your customers in other to improve business with them
  1. IV.    The importance of customer satisfactory and its relationship to profitability

Customer satisfaction is important because he/she will come back for repeat purchases which mean that you sell and make more profits. (Remember the marketing concept)Customer satisfaction has a Win-Win relationship with profitability (positive relationship) in that the more satisfied your customer, the more he/she will buy then you will sell hence the higher your profits

  1. V.     The importance of good human relation in business is that it helps you to generate sales, builds goodwill, creates interpersonal satisfaction and enhances your status in society.

It is necessary to know how to handle customer grievance at all levels.

The don’t include:-

  • Don’t conclude for the customer
  • Don’t argue with the customer
  • Don’t interrupt the customer when he/she is speaking
  • Don’t loose your temper (always be in control)
  • Don’t talk too much.

They do’s include:

  • A smile will take a million steps
  • Give your best service at all times
  • Give greetings /good wishes/polite words
  • Offer customer benefits of your products /services/ideas.

TIPS TO REMEMBER:

  • Society has turned from a product world to a customer world consequently; the need for marketing has increased.
  • Marketing must be based on a customer orientation. What the consumer needs may suggest a product/service to fill that need. But only when the need is transformed into a want can there be a sale.
  • Marketing requires successful relationships and interaction amongst the producer, the consumer and the middle person.

 

HOW TO INFLUENCE OTHERS

  1. Showing genuine interest in what they are interested in
  2. Smile
  3. Make others feel important
  4. Be sympathetic
  5. Give away credit
  6. Avoid arguments
  7. Allow face saving
  8. Admit your errors
  9. Praise lavishly but sincerely
  10. Accentuate the positive
  11. Catch the mood (the moment)

CASE STUDY

Mrs. Ade nee Iya Eposi Tambe is a regular customer to your store. Yesterday she walked in your store and collected items worth 7.160 FRS. She was at the counter with many other customers. When it was her turn to pay for the items she said she had given you a 10.000 FRS note. You can not remember having received the money from her. There are several other customers in the store. What would you do and why.

 

 

 

 

 

 

 

 

 

 

 

 

 


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