Small Business Development - Research Paper Example

DEMOGRAPHIC INFORMATION AND MARKETING STRATEGY ENTREPRENEURSHIP ADVICE TO CRUISER BY WIN TO WIN CONSULTANCY Table of Contents Page Abstract 3 2 Introduction 4 3 Segmentation 5 4 Marketing Strategies 6 5 Product Strategies 8 6 Promotional Strategies 9 7 Integration of Communication Strategies 10 8 The Critique 11 9 The Ground Realities 11 10 Demographics 12 11 Budget 13 12 Recommendations 13 13 Bibliography 15 1 Abstract Market strategies depend upon segmentation of the markets to determine the ideal group of customers demographically for best results. This data is available mainly through the Office for National Statistics as well as other agencies. Accurate segmentation is possible with the use of this data. Segmentation is carried out on a variety of criteria and they have been examined. The consumer behaviour is dependant on the 4P’s of marketing to which another 3 P’s have been added for better understanding of the consumer. The case of Cruiser, a small business of fashion retail in Brighton, has been examined and recommendations have been made for a turnaround of the company. A budget has been provided for execution of the strategies suggested by Win to Win, the consultants. 2 Introduction Cruiser, a small business having one fashion retail outlet in Brighton has been under pressure from larger retail establishments that have recently come up in its area. Over the last 12 month period it has lost sales to the extent of 30% and is worried about the future. They have retained us, Win to Win Consultancy, with a mandate to suggest a strategy for revival and continuation. We have come up with a marketing strategy for Cruiser but for its appreciation we wish to provide a background on facts as well as the Marketing Strategy Theories to enable the management to evaluate the recommendations made by us. To understand markets, we begin with understanding what a Market means in this context. A Market is the demographic and/or geographic group or groups of buyers for products and services on offer. It may be limited to a small area or may be worldwide but that is dependant on the type of product or service on offer. Preceding the marketing exercise the organization needs to do market research to determine its marketing strategy. This is a three stage effort in which data is required about potential customers. With this data it is possible to segment the market and subsequently to determine the target customers for the organization’s products. Once this data is available, the serious exercise of Segmentation begins. This data on consumers from various sources contains the following information. Demographics like age group (teens, retirees, young adults), gender, education level, ethnicity, income, occupation, social class and marital status Geographics like location (national, regional, urban/suburban/rural, international) and climate Purchasing habits by identifying brands used, purchase frequency, current suppliers Local Environment like cultural, political, legal framework. Benefits sought by buyers by price, overall value, specific feature, ease-of-use, service, etc. Knowledge of how the product is used, situation when used, etc. Purchase Conditions by studying time of day/month/year of purchase, credit terms, trade-in option, etc. Characteristics of Individual Buyer by observation of purchase experience, how purchase is made, influencers on purchase decision, importance of purchase etc. 3 Segmentation Markets are heterogeneous and are created by reasons of different values, needs wants, constraints, beliefs and incentives. Customers differ in their values and perceptions and want to purchase things that have value for them. Value is not just the monetary part, but also the usefulness and emotions that with go with it. The need and want play a great role in determining this value. The price actually determines the location from which this purchase will be made. Service and reliability are other important determining factors. Therefore a market segment is a set of customers that have a common approach to above questions and have a common desire to purchase a common set of goods and or services. They also respond to such offers in a common way. There are many variables of demography and geography that help to determine segmentation. The company needs to consider if the segment is large enough to support its intended sales by price and quantum. Then is there a growth possibility or is it restricted or even declining by nature. It consists of variables that can be easily identified through demographics (i.e., statistics that describe a population), geographics (i.e., location issues) and financial information The company’s own skills and those of its workers are important too in being able to service the segment being carved out. Both knowledge and communications skills have to be developed and training must be carried out for improvements. Finally it must also be borne in mind that such segmentation must be within the scope of the company and stakeholders policy. Marketing success depends largely upon the ability to divide the segments of different class of customers and catering to their particular and peculiar requirements at the lowest cost. What determines the customer motivation and behaviour is normally determined by the 4P’s, viz, Product, Price, Promotion and Place. (Dibb, Simkin and Bradley) 4 Marketing Strategies A B2C Marketing In the retail Industry Internet plays a vital role today. Most users go online to search for their requirements and almost all information is available here. A company will miss out a large chunk of prospective customers if does not have a web presence. It has thus become a necessity not only to have a pleasant website but ways and means have to be adopted to get noticed on the web. Use of search engines and keyword/tag tracers will be essential. The website has to be very attractive as the surfer is literally surfing the web and will stop at a site only if it attracts him in the first 15 or 20 seconds. The site must be interactive and the customer should be able to order his needs on line. This means the B2C or Business to Customer management has to be fast and accurate as this is like a counter sale and immediate response and confirmations are a must. B Customer Relationship Management The website provides a good exposure to business and customer. While the customer is able to place an order the business gets to know and record customer behaviour, his preferences, his choices and decisions. All this is recorded and the software helps the business to retain and correlate this information in its databases. Now this information should be used for informing the customer on his preferences when available and he can be kept informed of other developments and promotions of his interest. Also whenever he logs in the software will recognise him, greet him and remind him of his preferences, last purchases and offer his product or service as per these. This sort of customer relationship garners goodwill and creates customer loyalty and retention of brand awareness. C Customer Profiling Profiling requires certain pre-conditions and they are that a group of customers need specific products and there is nominal variance in their expectations. This will result in effective and profitable Targeting. Customers, by nature are of three distinguished types and a company needs to handle each with great care. They are purchase decision makers and they must be cultivated according to their outlook and preferences. There is the ultra-conservative type. This segment is highly consistent with their way of doing things. In their case any deviation might alienate them therefore it is very important to cater to them repeatedly in the same form and manner as the last time. Once established they seldom change preferences. They become wary if discounts are offered or premium charged as for them it translates into loss of consistency. Cost effectiveness is acceptable if it does not disturb the status quo and bulk offerings are acceptable on similar conditions. They are very negative towards complex offerings. Then there are the conservative ones who will veer towards the new or unknown only if it involves low risk and competitive pricing. They are neutral to complex offerings and prefer to stay within a wide band of preferences, making few experiments. Lastly the Liberals who would like to try anything new and willing to take up a challenging offer. For them the price is secondary and the end result is foremost. They are the daring types who will experiment with new offerings. 5 Product Strategies A Product Strategy A product should be placed in a way that conveys value for money offers. It is extremely important for a company to place the product differently to different segment that it wants to cater. Each segment should be satisfied with what is in offer to them. The offers should also march or better those offered by competition in an equal playing field. There must also be flexibility to change strategies or to take advantage of prevailing circumstances to convince the customer of the genuineness of the offer. B Brand Management The brand is about customer recall. Products or services must be remembered to enable the customer to make a decisive choice in their favour when he is inclined to accept or use them. This is created by adequately projecting the benefits and values attached to them through promotions, campaigns, advertisements, special offers and above all through after sales service. C Publicity Strategy Media advertising and other communications strategy by a company can change the perceptions of the customers. Exaggerated promises and absence of correct information effect the customers’ perception about the quality of service. It is important that the company and its staff are conscious of what they are telling the customer as any mismatch will boomerang with vehemence and will negate the expense and effort of such communications. 6 Promotional Strategy A Integrated Marketing Communications With focus on the customer it needs to be figured out how integrate the company’s marketing communication effort. It is important to define and prioritize objectives. A hard look at business strategies and customer-relationship goals and realignment of customer knowledge management is required here. B Advertising, Sales Promotions, Public Relations Advertising is not publicity. It conveys the inherent qualities and benefits of the product and service. It also conveys the usefulness and attempts to either fuel the desire of the customer or to fulfil it. It must force or induce the customer or even excite him to buy or use the product or service. Sales Promotion on the other hand deal with offers like discounts or specials deals and are usually used in lean seasons or times when sales are sluggish. Public relations are company releases that are given through the print or electronic media about the company’s objectives or achievements. They serve as reminders to the customers of the company’s wish to serve them better or reports performances to enhance the company image. This is a different approach and is more subtle and carries depth and shows a company’s command over other resources. C Employee Management A very important aspect of communication strategy is the company’s efforts with relation to inter-departmental communications. Co-ordination and integration of departments within the company ensures the achievement of the company or management objectives. The most important role is to lay down well conceived policies and rules for each department and then integrating them to reach common goals. The communication and indeed the training of these are equally important and employees must be made aware of these objectives. D Supply Chain Management The external factor that affects quality of service depends largely on the cooperation and coordination of various suppliers. Their quality of service improves, or depreciates, the company’s own service to its customers. A good but firm relationship with suppliers with pre-determined quality parameters will ensure that down the line there will be no shortcomings and the customer will eventually get what has been promised. 7 Integration of Communication Strategies Adoption of above policies will not guarantee fruitful results unless there is an integration of communication strategies. Leveraging marketing and communications to a strategic level is the required for this exercise. This means analyzing goals as to how they relate to the use of marketing communications. 8 The Critique Segmentation offers great advantages to a company. The obvious ones are: 1. Reduction in expenses – direct result of targeted customer strategies. 2. Improved cash flow – advertisements are segment oriented only. 3. Improved productivity – easier to produce for specified products. 4. Improved manufacturing quality – this is a result of standardization of products. 5. Improved service delivery – schedules for fewer goods are easy to achieve. 6. Improved employee working conditions/benefits – employees with skills will benefit from this. 7. Improvement in market share – result of customer loyalty. Segmentation improves the image of the company and customer recall is higher. This is the ultimate benefit the managers look for. This is also to the advantage of the stakeholders, both employees as well as shareholders. 9 The Ground Realities Cruiser is faced with following problems. Firstly it has one retail outlet spread over 10,000 sq. ft which is used as 80% for the showroom and 20% for administrative offices. Its rivals have set up establishment three and four times the size and have a range of other personal care products other than fashion clothing. Secondly the prices at Cruiser are higher due to its dependence on few established suppliers who are more upmarket manufacturers. The rivals offer a much larger range along with accessories to match. Thirdly it showroom has not been renovated for a long time and has a drab look. The rivals have come up with very nicely made up showrooms with pleasant fittings. Fourthly it has an old fashioned sales-staff that does not offer any help to customer in choices and have a laid back attitude. Comparatively the sales-staff at the rival places is younger and more interactive with customers. Lastly they do not have any web presence and the only sales that take place are physical at the showroom only. 10 Demographics The resident population of Brighton & Hove at the 2001 census was 247,817 persons, comprising 114,479 households: 48.4% male, 51.5% female and 26% of the population in Brighton and Hove is aged between 20 and 34. (Office for National Statistics). Households are usually single person in rented flats and about one third are student households and there is high turnover occupancy in a fast changing environment. People tend to live close to place of study or occupation. Few people own cars. The population is predominantly white and of lower middle and middle class. It is a highly computer literate generation although not many own a PC’ but use of Internet is very high. The population is fun loving, fond of sports and outings, love socializing and dancing. They are regulars at coffee shops and fond of theatre, cinema, or clubbing. Listening to music or reading books and magazines are in things. Preferred food is fast or take-away. People are generally aware of current news and events. (UpMyStreet.com) 11 Budget Cruiser has allocated a budget of £ 10,000/- as total outlay for advertising Publicity and Promotion, inclusive of our fees for preparation of this Consultancy Report. We suggest following outlays. Advertising in local media £ 3,000 Distributions of Catalogues 1,500 Hosting Maintenance of Website 5,000 Our Consultation Fees 500 Total 10,000 12 Recommendations We recommend the following to Cruiser. Keeping in view the demographics we recommend that the fashion clothing range should be more suitable for youth and stress should be on labels of medium range but fashionable covering sport and casual wear. Accessories are a must these days and these should be included. Since a website will be hosted for B2C business, a formal catalogue, updated regularly, should be hosted. CRM software should be included in the Web designing and hosting package and will be adequately covered within the budget allocated for the purpose. For orders on the net, home deliveries on same day or next day must be organized, and in view of the small area this should pose no problem but will boost sales tremendously. The sales staff should be trained in house to be more attentive to customers. A little refurbishing will be enough in the showroom and can be done on a larger scale when sales pick up and the company can afford the same. Local media advertisements should be planned on a fortnightly basis to keep interest in the products live and updated information should be provided by quarterly issues of a well planned catalogue of products. Following this advice we expect a turnaround of Cruiser within six months to cash profits and they should recover the previous sales figures in a one year period. 12 Bibliography Office for National Statistics available at: http://www.statistics.gov.uk/census/ UpMyStreet available at: http://www.upmystreet.com/local/l/Brighton-3549.html accessed on 11.October 2007 7 Bibliography AMA, Available at:  http://www.marketingpower.com/content24159.php BCC available at: : http://www.quicksilvermailing.com/datasrvcs.htm Dibb, Simkin and Bradley) The Marketing Planning Workbook (Dibb, Simkin and Bradley), both originally published in 1996 by Thomson, London. NCOA available at: http://www.quicksilvermailing.com/datasrvcs.htm Suppression Services available at: : http://www.quicksilvermailing.com/datasrvcs.htm Read More