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Chapter 4: Marketing plan of
Entrepreneurship course
LEARNING GOAL 1
To understand the relevance of
industry analysis and competitive
analysis to the market planning
process
the market planning process
industry analysis and competitive
analysis
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INDUSTRY ANALYSIS
The industry analysis is to provide sufficient
knowledge of the environment (national
and local market) that can affect marketing strategy
decision marking
Competitor Analysis
The information on competitors can be gathered
initially by using as much public information as
possible and then complementing this with a
marketing research project.
Interviews with distributors and customers, and
any other means of getting right information
about competitors 3
Description Competitor A Competitor B Competitor Competitor D
C
product or
Service
strategies
Pricing
Strategies
Distribution
strategies
Promotion
Strategies
Strength &
Weaknesse 4
s
All the information included in Table 5.1 can then
be utilized to formulate the market positioning
strategy of the new venture.
Will the new venture imitate a particular
competitor or will it try to satisfy needs in the
market that are not being filled by any other
company? This analysis will enlighten the
entrepreneur and provide a solid basis for any
marketing decision making discussed in the
marketing plan.
If a more formal data collection process is being
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considered,
LEARNING GOAL 2 :
To illustrate an effective and feasible
procedure for the entrepreneur to
follow in engaging in a market
research study.
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MARKETING RESEARCH FOR THE
NEW VENTURE STUDY
Marketing research study involves the
gathering of data to determine such information as
who will buy the product or service,
What is the size of the potential market, what
price should be charged, what the most
appropriate distribution channel and what is
the most effective promotion strategy to
inform and reach potential customers.
marketing research costs vary significantly, the
entrepreneur will need to assess available
resources and the information needed.
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steps of marketing research
study
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Other objectives may be to determine
the following:
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B. Step Two: Gathering Data from
Secondary Sources
In Somaliland, secondary sources can be
very challenging because little has been done
or published, the internet sources of
secondary data for marketing in
Somaliland is very limited though there
are some reports and publications made
by International Organizations, chamber of
commerce and some of the
Governmental Institutions.
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There are no business data available in the
internet, in libraries, or published magazine
articles, however, in somehow,
the internet can help the entrepreneur to get
similar information from other countries.
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TABLE 5.2 Sources of PRIMARY AND SECONDARY
Market Research Data
Primary Data Sources Secondary Data Sources
Surveys Website
publications
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Observation is the simplest approach.
Table 5.3 provides comparisons of each of
these three methods of data collection. The
questionnaire, or data collection instrument,
used by the entrepreneur should include
questions specifically designed to fulfill
one or more of the objectives the
entrepreneur listed earlier.
Questions should be designed so they
are clear and concise, do not bias the
respondent, and are easy to answer. 16
ABLE 5.3 A Comparison of Survey Methods:
Characteristics of Methods
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ABLE 5.3 A Comparison of Survey Methods:
Characteristics of Methods
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ABLE 5.3 A Comparison of Survey Methods:
Characteristics of Methods
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ABLE 5.3 A Comparison of Survey Methods:
Characteristics of Methods
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D. Step Four: Analyzing and
Interpreting the Results
The results should be evaluated and interpreted in
response to the research objectives that were
specified in the first step of the research process.
Summarizing the answers to questions will give
some preliminary insights.
Then data can be cross-tabulated to provide more
focused results
For example, the entrepreneur may want to
compare the results to questions by different
age groups, sex, occupation, location
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Outlines for types a Marketing Plan
Marketing plan: written statement of marketing
objectives, strategies, and activities to be followed
in business plan
A. Situation analysis
Background of venture
Strengths and weaknesses of venture
Competitor analysis
E. Controls
B. Marketing objectives and
goals
These marketing goals and objectives
respond to the question:
"Where do we want to go?" and should specify
things such as market share, profits, sales
(by territory and region), market penetration,
number of distributors, awareness level,
new product launching, pricing policy,
sales promotion, and advertising Support
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LEARNING GOAL 4:
To explain the marketing system
and its key components
Characteristics of a marketing plan
Table 5.6 facts needed for market
planning
Marketing system
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Characteristics of a marketing
plan
It should provide a strategy for accomplishing
the company mission or goal
It should be based on facts and valid
assumptions. Some of the facts needed are
illustrated in Table 5.6.
It must provide for the use of existing resources
Allocation of all equipment, financial resources,
and human resources must be described
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Table 5.6 facts needed for market
planning
Who are the users, where are they located, how
much do they buy, from whom do they buy, and
why?
How have promotion and advertising been
employed and which approach has been most
effective?
What are the pricing changes in the market, who
has initiated these changes, and why?
What are the market's attitudes concerning
competitive products?
What channels of distribution supply consumers,
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Figure 5.1 the marketing system
External
environment
Economy
Culture
Technology
Demand
Legal considerations
Raw material
Compensation
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Some of the major marketing system
internal environmental variables are as
follows:
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Some of the major marketing system
internal environmental variables are
as follows:
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The marketing mix
Marketing mix Combination of product, price,
promotion, and distribution and other
marketing activities needed to meet
marketing objectives.
The preceding environmental variables will
provide much important information in deciding
what will be the most effective marketing
strategy to be outlined in the marketing plan.
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consist of four important
marketing mix Or four factors are
referred to as the marketing mix
variables See table 5.7
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ABLE 5.7 Critical Decisions for Marketing Mix
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FIGURE 5.2 Sample Flowchart of a
Marketing Plan
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Market segmentation
Market segmentation is the process of
dividing the market into small homogeneous
groups. Market segmentation allows the
entrepreneur to more effectively respond to
the needs of more homogeneous
consumers. Otherwise the entrepreneur would
have to identify a product or service that would
meet the needs of everyone in the marketplace
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The process of segmenting and targeting
customers by the entrepreneur should
proceed as follows:
I. Decide what general market or industry you
wish to pursue.
II. Divide the market into smaller groups based
on characteristics of the customer or buying
situations.
III. Select segment or segments to target.
IV. Develop a marketing plan integrating
product, price, distribution, and promotion.
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II. Divide the market into smaller groups
based on characteristics of the customer or
buying situations.
A. Characteristics of the customer c_
1. Geographic (e.g., state, country, city, region)
2. Demographic (e.g., age, sex, occupation, education,
income, and race)
3. Psychographic (e.g., personality and lifestyle)
B. Buying situation
1. Desired benefits (e.g., product features)
2. Usage (e.g., rate of use)
3. Buying conditions (e.g., time available and product purpose)
4. Awareness of buying intention (e.g., familiarity of product
and willingness to buy) 42
III. Select segment or segments to target.
IV. Develop a marketing plan integrating
product, price, distribution, and promotion.
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Marketing strategy and action plan:
Once the marketing goals and objectives
have been established, the entrepreneur
can begin to develop the marketing strategy
and action plan to achieve them.
These strategy and action decisions respond to
the question: "How do we get there?" As
indicated earlier, these decisions reflect on
the marketing mix variables.
Product or Service
Pricing
Distribution And Promotion
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The product or service definition may
consider more than the physical
characteristics. It involves packaging, the
brand name, price, warranty, image, service,
delivery time, features, style, and even the
Web site that will be seen by most
customers. When considering market
strategy, the entrepreneur will need to
consider all or some of these issues, keeping
in mind the goal of satisfying customer
needs.
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Pricing: Prior to setting the price, the
entrepreneur, in the majority of situations,
will need to consider three important elements:
costs,
margins or markups,
competition
Costs: One of the important initial
considerations in any pricing decision is to
ascertain the costs directly related to the
product or service. For a manufacturer this
would involve determining the material and
labor costs 46
Markups or margins: In many industries,
such as jewelry, beauty supplies, furniture, and
clothing, the retailers of the products use a
standard markup to price goods in their stores.
For example, a standard markup for beauty
supplies is 100 percent on cost.
Competition: Often, when products cannot be
easily differentiated, the entrepreneur is forced
to charge the same price as the competition
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Distribution
Distribution is a factor provides utility to the
consumer; that is, it makes a product
convenient to purchase when it is needed
Major Considerations in Channel Selection
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Major Considerations in Channel
Selection
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Degree of Directness of Channel
Product attributes-Concerned with whether product
is large (direct) or small (indirect), bulky (direct),
perishable (direct), hazardous (direct), expensive
(direct).
Cost benefits-Considers the cost benefits in
selection of channel members; many benefits
(indirect) minimal or no benefit (direct).
Venture attributes-Considers financial strength,
size, channel experience, and marketing strategy
of venture
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• Number of Channel Members
Intensive-Selection of as many retailers and/or
wholesalers as possible.
Selective-Choose only small number of channel
members based on some set of criteria or
requirements.
Exclusive-Select only one wholesaler and/or
retailer.
Criteria in Selection of Channel Members
Reputation
Services provided
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Number of Channels
One channel for one target market or multiple target
markets.
Multiple channels for one target market or multiple target
markets.
Promotion: It is usually necessary for the
entrepreneur to inform potential consumers about
the product's availability or to educate the
consumer, using advertising media such as print,
radio, or television. Usually television is too
expensive unless the entrepreneur considers cable
television a viable outlet.
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END
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