Appropriate Marketing Strategies
The "5 P"
Approach in Marketing
strategy is about developing a good marketing mix. The elements of the mix
are: Product, Price, Place/channel of distribution, Promotion and
Person/process. The mix also involves selecting the target client/market:
Studying the client with respect to his/her buying motive and behaviour,
segmentation of the market using relevant bases, evaluating each of the
segments, selecting the appropriate segment as target market.
development involves decisions with respect to:
product to produce?
should the design, model, appearance and style of the product be?
should the brand name of the product be? Comparison of the product with
its competitors should also be considered. Thus, one should ask questions
like: “Can I produce a product with better quality than others do? Can I
provide warranty for my products? Can the design of my product be better
than others? Can I use quality raw material? Can I label my product?”
Price is a
ratio reflecting the exchange value of a good or a service, measured in
terms of money. The following questions may clarify the idea of pricing:
strategy: Should I go for profit maximisation in the short-term? Profit
optimisation in the long-term? A minimum return on investment? Keeping
parity with competition? Fast turnaround and early cash recovery?
methods: should I follow cost-based pricing? Demand-based pricing?
Competition-oriented pricing? Affordability-based pricing? Or
to the above questions will help setting the selling price for each
of Business and Channel of Distribution
refers to the MSEs’ location of the business and the channel of distribution
chosen to reach potential customers. One should ask questions like: “Can I
get a proper business location not far from my customers and not too near to
my competitors? Can I get proper premises with reasonable price/rent? What
should be the channel of distribution?” Distribution is the physical
movement of goods through a system called the value chain. Distribution
channels include wholesaling, retailing, mail order, catalogue sales,
telemarketing, contracting, or working through brokers.
The role of
promotion is to facilitate exchange between product/service providers and
customers. Commercial enterprises are concerned with attracting customers.
Different types of enterprises will have distinct promotional mixes
utilising a variety of promotional methods. The major promotional mixes are
Advertising: is a
form of impersonal broadcasting through commercial mass media. Advertising
is the pervasive form of promotion because it is one form that captures our
promotion: is a term
used to imply an activity that is specifically designed to induce sales by
enhancing the value for the consumer. This value may be created through
is the result of public service announcements or news generated through
media. Newspaper articles, recognition in public affairs, magazine stories
and talk-show interviews.
(i.e. the entrepreneur) should be competitive enough in terms of:
abilities needed to produce the product/service;
characteristics and situation, commitment, motivation;
Strategies in Relation to
objective of a business organization is to create goods to satisfy customer
needs at a profit; and these needs can be satisfied if consumers get the
right quality products. With more consumer satisfaction there could be
higher demand for a product and consequently, more efficient utilisation of
resources. If the quality of a product is not good, then it may be rejected.
Quality is related to the success of an entrepreneur because, a product with
bring repeat purchase.
In the past
changes in market preference were not frequent. Nowadays, however, market
changes very rapidly reflecting the changing needs of consumers.
Research works by the American Productivity and Quality Centre note that,
happy customers spread good news to about five people while, unsatisfied
buyers spread the bad news to about nine to twenty people. There is a saying
that, "bad news travels fast."
Strategies with regard to Training [top]
MSEs need to
receive regular training on how to:
carry out simple
attain a better
attract and satisfy
get known in the
use credit facilities
and any other funds;
costing for finished
products and set sales
budget allows, during the training period covering about 60-80 % of the
expected sales value could be used as an incentive for participation.
Nevertheless, this strategy should be employed only for a given period of
time and with a purpose of encouraging MSEs to attending the session and
benefiting from the training. A comprehensive and continuous training can be
provided on how to use money efficiently and on how to correctly invoice the
money earned from sales. Besides getting knowledge, training sessions have
the advantage of facilitating MSEs into sharing ideas and discussing how to
In the event that some MSE
owners cannot understand the training to be provided, teaching their adult
children can be an alternative, since it may be much easier to change the
attitude of young children.
Relation to Competition [top]
micro and small enterprises have competitors. Therefore, the enterprises
have to strategically stress their strengths over competitor offers. For
instance, if one enterprise has lower costs in comparison to its competitor,
then its pricing strategy can be based on selling at lower price.
If the MSE has a broader
selection of goods as compared to its competitors, then he/she should
emphasize this issue and take advantage of more sales.
If the competitor's
store area is unattractive, a strategy can be set to make one’s own store
more attractive for potential customers. In this way competition can be
beaten. Joining chambers and trade associations is one way of interacting
with competitors and learning how successful enterprises do business.
If the enterprise
suffers from different rivals, it could use a strategy that provides it with
a competitive advantage over others as part of the sales deal.
strategy would be to try to be good in some
MSEs need to select a few areas, in which they can excel in the competition,
since it is difficult to be good in all areas.
competitors sell on a door-to-door basis then those who have no buyers at
home can develop delivery to "x" buyer's premise. The strategy has to look
into aspects that the buyer cares about.
best strategy would be a strategy that separates micro
and small sized enterprises from its competitors.
The issue of
getting data and information is relevant, not only to competition, but to
all other marketing mixes. Besides, information is a knowledge source of
what is going on or what competitors are doing. In relation to the shortage
of data and information already mentioned earlier, the service providers can
play a role in establishing centres for data and information that the MSEs
can effectively use in their proximity. It obviously requires a good budget,
but with the assistance of some financiers the topic can be considered.
micro and small enterprises, the more the stock
of data and information the better they can do business.
of considering price decreases for market entry can be carefully applied and
based on study. However, under-pricing without studying the market can be a
dangerous risk. Since a small decrease in cost structure leads to high
improvement in profit, the best tactic would be to minimize costs.
With due consideration
to the profit margin, temporary price reduction can be used as a strategy to
increase sales or to sell products in high stock. Reduced offer
announcements encourage customers of purchasing larger quantities. The
tactics of decreasing cost would be the safest way to improve profit
The pricing strategy has to
regard the profit margin. In view of this fact, the volume of sales has an
important meaning. Some enterprises focus on unit sales and not too much on
profit margins, which can be risky.
The price being the most
common strategic element of marketing, some related schemes will be outlined
below. Offering reduced prices is a valuable tool to attract customers as
well as to try a product. However, this should only occur for a given period
reductions do not have
to be as low as throw-away prices.
small enterprises that are engaged in selling their products to
organizations or companies can send price reduction notices in attractive
envelopes. This is the cheapest means.
A strategy to produce
good quality products and charge an appropriate price is a practical
approach to pricing. A more practical approach to the micro enterprises
could be to produce a lower quality product and charge a lower price.
Nonetheless, the market has to be segmented first, since this can be unsafe,
if applied to the wrong market. The best and most preferable pricing
strategy is to lower costs and consequently to minimize profit margins,
which will both benefit the manufacturer as well as the buyer. For instance,
if a micro or small enterprise has a profit margin of 10 % and lowers its
costs by that extent, it will automatically be able to increase its profits.
In this case raising profits by increasing sales would require a 100 percent
increase in sales.
Offering special store/retail
shop discounts to loyal customers is a workable strategy that is also
of the marketing segment could be carried out to identify the target
customer and to get to know how best to appeal to the respective customer.
Some strategic elements are recommended below.
Most MSEs may require
retail stores to sell their products. Although, location means a lot in
retailing, a viable location usually costs a lot. A small shop with an
attractive set-up and front can be a good selling location. Establishing a
retail shop is a necessary activity, but it is not easy. Joining chambers
and trade association can help in doing so. The study notes that the
attainment of retail areas can be enhanced in its processes by using
chambers and associations, as compared to a single micro or small enterprise
operator on his/her own. If the vicinity markets are not large enough to
support daily sales, then the whole sales strategy can be an alternative.
If sales staff is not
trained in handling customers, they are up to shift to other firms. Even
window shoppers can be potential buyers. Therefore, sales forces need to
cater also for them and show them that they are also interested in them as
customers. However, this issue should be handled very carefully.
Building clientele is the best way of keeping
customers loyal to micro and small enterprises.
giving away the store to family and social visitors is crucial. Other wise,
over a period of time, a good amount of profit will be realized with every
visitor consuming part of the products that should have been for sales.
collaboration with highly visible and well-respected supermarkets or
distributors is a further alternative. In such cases buyers do not ask
whether the products are of good quality or not. They assume that the
product is of good quality, which is connected to the high profile of the
partner. This does not however imply that the MSE that uses this outlet
should offer low quality products as this would have a negative repercussion
on the supermarket which it uses as an outlet Therefore, this approach can
boost the enterprises sales and attract more customers. An example of this
would be, if we could take the 'Meskerem' supermarket or 'Fantu Gebeya' as
well known supermarkets and allow micro and small enterprises, that sell
things such as kitchenware, pottery products, handicraft, small furniture,
shoes, or woven products, to place their products in the shop and indirectly
introduce their products, need not compete with the supermarket products. If
the market place is regional, then the products can be distributed or
promoted by means of a compatible retailing shop that is also regional.
sales person with good communication skills is good selling tactics.
Socializers sell by means of building friendships. Although friendship is an
integral part of selling, the product should be the right one, both in its
performance and pricing.
important and basic for micro and small enterprises to attain superior
handling customers. It does not cost them much.
easier sales can be reached by selling on a gross or bulk basis. However, it
has to be noted that the profit margin can be thin. In such cases, the
selling strategy should include tactics on how to introduce efficient
selling systems with a minimal number of staff. The scheme should consider:
how to make
collection control more efficient;
how to make credit
sales system tighter;
how to maximize sales
volumes so that overhead costs can be spread reasonably.
of Sales Shop [top]
As a retail
shop is an essential linkage within the marketing channel, the location has
to be chosen strategically. Even if it is a micro or small enterprise the
location is a deciding factor.
The premise can be chosen by
making a comparison analysis between the costs and benefits to be gained.
Before choosing a location for the retail shop carrying out simple research
concerning the potential buyers and the nature of the product could be
advantageous. The study should identify the following:
of potential buyers (attitudes towards the product and habits);
the product type (e.g.
durable, perishable, for low income, for adults, for girls);
whether the product or
service is in high competition or not;
the method with which
the retailer intends to attract the purchaser;
of time in which buyers
prefer to do their shopping.
Based on the
result of the above research, the shop location can be selected by putting
some criteria such as the ones cited below:
product is consumable, such as food and beverages the shop can be located
in residential neighbourhoods;
if the product is meant
for student consumption, then the shop can be located near schools and
if the product or
service is aimed at tourists, it can be any busy location of interest to
if the service is for
young girls, such as hair dressing, the shop can be located in areas that
can be reached easily and comfortably;
if shoppers are from
the upper class, the best location for the shop may be in a clean and safe
if many competitors are
situated in the same area, then this may be an advantage or
disadvantage, all depending
on your products and buyers – so please analyse this!
number of handled steps is much more than a product should be handled, the
product could be easily damaged. Accordingly, the strategy should be to
handle only one merchandize at a time and to treat it delicately. This can
be applied especially for perishable and restaurant products.
Product storage has to
be appropriate. Due to the nature of the micro enterprise’s market area,
rats, insects and other rodents can be expected, in which case the products
have to be protected from damage related to this problem.
appropriate distribution network is necessary; besides it is also tactical
to give the enterprises' product literature to the distributors, if any is
Distributing in gross
deliveries to other outlets is a tactical alternative. As is the case with
bread merchants and glue factories, it is preferable to sell bread to
breakfast serving houses respectively glue to shoe and wood companies. This
approach can bring forth advantages, such as:
related to the receiving of orders has to be designed in such a manner that
the order can be processed as soon as the customer places one. Customers
having to wait for an order to be processed with staff doing something else
leads to a bad customer relationship.
The bread, 'dabo' and
milk business enterprises can distribute door-to-door instead of selling
in-house. There could be some consumers who prefer these products to be
delivered to their houses. MSE operators are not in the position to directly
improve the situation with regard to their poor infrastructure. The relevant
government offices can effectively handle this issue. Since this topic is
important, the service providers should play a role to that effect.
a competitive tool and an important factor in strategic marketing. The use
of appropriate packaging can improve sales and transporting aspects related
to the product. Therefore, setting packaging
strategies is of
importance. The packaging strategies for MSEs have to be very much cost
oriented due to the limited access to finance they have. Some strategies
will be discussed below.
A strategic packaging container
would be one that can communicate a message of quality, convenience and
In the event of the enterprise
considering a new packaging, a strategic container will be the one that can
be used over a longer period of time. This is due to the fact that
constructing a new one can be an expensive venture for MSEs. A package,
which has a relevant design on the container, is an expressive receptacle.
The design does not have to be an expensive one. The packaging should have a
relevant graphic design on its outside. With respect to the MSEs the design
need not be expensive, but should be one that can convey the 'Quality
earlier some buyers are impulsive and make their shelf-choices quickly.
Hence, the brand mark has to be clearly written. Most buyers in developed
countries are brand-oriented. Manufacturers have to give much consideration
to the quality of the product and equally good consideration to the
branding. In most cases it is difficult to try or taste the quality and
standard of a product at the point of sale. Therefore, buyers concentrate on
brands of packaging or label design.
intended for export markets has to travel a long distance and changes in
atmosphere. It passes rigorous climate, various rail, sea and air
conditions. Hence, the protection function of the package requires serious
attention. An exporter has to study the transportation means and condition
of the expected voyage. It is necessary to introduce an appropriate
packaging to reduce damage, theft and material handling during physical
transportation. For example milk, butter and oil are more exposed to damage
and theft compared to other products. If the target market appreciates
reusable containers then developing a suitable, portable and reusable
package will likewise be appropriate. In the case of competition being
stronger in his packaging, then before a new container is developed it is
necessary to analyse the competitor’s packaging situation.
there are several issues on solid waste and they are becoming important
agenda in international trade because of their implication in global
competition and also because it can be a trade barrier, especially in the
case of food and beverage products.
Lack of important target
market knowledge can lead to serious consequences. Some of the end results
can be the rejection of products and the formation of a bad image.
materials could be totally banned or restricted because of certain
ingredients in the material. Presently, importers and even some final
consumers are conscious of the various different types and quality of retail
packaging. Certain countries give great attention to the rules and
regulations concerning consumption products such as food and drinks. This is
because poor packaging can directly affect the health and safety of the
final consumers. Some countries require the weight (both net and gross), the
specification listing of ingredients, colour, method of usage and size to be
written on the label clearly.
For more information, please
contact the Chamber of Commerce of the importing country and have a look at
specimen products from competitors who are already in the foreign market.
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