Abaarso Tech UNIVERSITY

:FACULTY OF Business or
Entrepreneurship

course: Entrepreneurship for

Business part two
Lecturer : MUKHTAR ELMI

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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

A. Step One: Defining the Purpose or

Objectives
B. Step Two: Gathering Data from Secondary
Sources
C. Step Three: Gathering Information from
Primary Sources
D. Step Four: Analyzing and Interpreting the
Results
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 A. Step One: Defining the
Purpose or Objectives
A. Step One: Defining the Purpose or
Objectives
 The most effective way to begin is for the
entrepreneur to sit down and make a list of the
information that will be needed to prepare the
marketing plan.
 For example, the entrepreneur may think there is
a market for his or her product but not be sure
who the customers will be or even whether the
product is appropriate in its present form. 9
 A. Step One: Defining the
Purpose or Objectives
 Thus, one objective would be to ask people
what they think of the product or service and
whether they would buy it,
 And to collect some background
demographics and attitudes of these
individuals
 This would satisfy the objective or problem that
the entrepreneur defined earlier.

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 Other objectives may be to determine
the following:

 How much would potential customers be

willing to pay for the product or service?
 Where would potential customers prefer to
purchase the product or service?
 Where would the customer expect to hear
about or learn about such a product or
service?

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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

Interviews/Personal Census data if available

Surveys Website

publications

UN and International Organization

reports

Somaliland Chamber of Commerce

Ministry of Trade and Industry of SL

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C. Step Three: Gathering Information
from Primary Sources

 Information that is new is primary data is

Gathering primary data involves a data
collection procedure -such as
 observation, networking, interviewing,

focus groups, or experimentation-and usually

a data collection instrument, such as a
questionnaire

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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

Methods Costs Flexibilities Response speed

rate
Telephone Can be Some flexibility; Good response Least detailed
inexpensive, possible to rate rate because of 8-to
depending on to clarify or possible 10 minute time
telephone and explain (Possible 80%) limitation
distance questions. depending on
and length of not-at-homes
interview or refusal.

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 ABLE 5.3 A Comparison of Survey Methods:
Characteristics of Methods

Methods Costs Flexibilities Response speed

rate
Mail Can be No flexibility since poorest Some depth
inexpensive, questionnaire is self response possible since
depending on administered. rate since respondent
number of Instrument needs to respondent has completes
units mailed and be self-explanatory choice of questionnaire at
weight whether his or her
to complete leisure
questionnaire

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 ABLE 5.3 A Comparison of Survey Methods:
Characteristics of Methods

Methods Costs Flexibilities Response speed

rate
personal Most expensive Most expensive Most Most
Most flexible Most expensive expensive
of The most flexible of The most Most flexible of Most flexible
Somewhat Somewhat slow The of The most
slow Most most Somewhat
Most detailed detailed Somewhat slow
slow Most Most detailed
detailed

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 ABLE 5.3 A Comparison of Survey Methods:
Characteristics of Methods

Methods Costs Flexibilities Response speed

rate
internet Inexpensive. Inexpensive. No Inexpensive. Inexpensive.
No flexibility flexibility Good No No flexibility
Good response response Very fast flexibility Good Good
Very fast Some depth response Very response Very
Some depth fast fast Some
Some depth depth

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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

 Market opportunities and threats

 Competitor analysis

B. Marketing objectives and goals

C. Marketing strategy and action programs
D. Budgets 22

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

 Figure 5.1 the marketing system

 The marketing mix

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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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and how do they function?

 Table 5.6 facts needed for
market planning
 Who are the competitors, where are they located,
and what advantages/disadvantages do they
have?
 What marketing techniques are used by the most
successful competitors? By the least successful?
 What are the overall objectives of the company
for the next year and five years hence?
 What are the company's strengths?
Weaknesses?
 What are one's production capabilities by
product? 27
Marketing system
 Marketing system: Interacting internal and
external factors that affect venture's ability
to provide goods and services to meet
customer needs.

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 Figure 5.1 the marketing system
External
environment
Economy
Culture
Technology
Demand
Legal considerations
Raw material
Compensation

Marketing Marketing Purchase

Entrepreneur strategies
Planning decisions of
directed
Decisions customers customers
Internal environment
Financial resources
Supplies
Goals and Objectives
Management team
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 Some of the major marketing system
internal environmental variables are
as follows:
 Financial resources:
 Management team:
 Suppliers:
 Company mission:

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 Some of the major marketing system
internal environmental variables are as
follows:

 Financial resources: The financial plan should

outline the financial needs for the new venture.
Any marketing plan or strategy should consider
the availability of financial resources as well as
the amount of funds needed to meet the goals
and objectives stated in the plan.
 Management team: It is extremely important
in any organization to make appropriate
assignments of responsibility for the
implementation of the marketing plan. 31
 Some of the major marketing system
internal environmental variables are
as follows:
 Suppliers: The suppliers used are generally
based on a number of factors such as price,
delivery time, quality, and management
assistance. In some cases, where raw
materials are scarce or there are only a few
suppliers of a particular raw material or part,
the entrepreneur has little control over the
decision.

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Some of the major marketing system
internal environmental variables are
as follows:

 Company mission: Every new venture

should define the nature of its business. This
statement helps to define the company's
mission and basically describes the nature of
the business and what the entrepreneur
hopes to accomplish with that business.

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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

Marketing Mix Variable Critical Decisions

Product Quality of components or materials, style,

features, options, brand name, packaging,
sizes,
service availability, and warranties

Price quality image, list price, quantity,

discounts, allowances for
quick payment, credit terms, and payment
period
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 ABLE 5.7 Critical Decisions for Marketing Mix

Marketing Mix Variable Critical Decisions

Channels of Use of wholesalers and/or retailers, type

distribution of wholesalers or
retailers, how many, length of channel,
geographic coverage,
inventory, and transportation
Promotion Media alternatives, message, media
budget, role of personal
Selling/advertasing , sales promotion
(displays, coupons, etc.), and media
interest in publicity 37
 To define the steps in preparing
the marketing plan.

 Situation analysis: Describes past and

present business achievements of new
venture
 Target market: Specific group of
potential customers toward which venture
aims its marketing plan

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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

 Degree of Directness/honestly of Channel

 Number of Channel Members.
 Criteria in Selection of Channel Members
 Number of Channels

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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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