Tutorial MGM4187 Ch 14 17

Chapter 14 Marketing Plan

Explain the importance of building relationships with customers.

ANSWER: Today, retaining and maintaining current customers is more important than
spending money to find new customers. It has been reported that 65 percent of a
company's business comes from current customers and of those customers, 20
percent will be the source of most of the business's profits. Because it costs five to
ten times more to go after a new customer than to serve an existing one, getting
the right customers is critical. Furthermore, with good customer profiles, a
company can match demographic information about current customers with
demographic data in the geographic area of interest to find prospects more
effectively. Information contained in the database can be used in advertising, sales
promotion, public relations, direct mail, and personal selling.
One huge benefit to building relationships with customers is that if a problem
occurs, a customer who has a relationship with the company won't automatically
shift their loyalty to a competitor. Often their loyalty is actually strengthened
when a problem-solving session with the company results in a satisfying
conclusion. Perhaps the most important benefit of establishing lifelong customer
relationships is that over time, the full value of customers is revealed. Customers
are no longer viewed as a series of transactions but as bona fide, contributing
members of the team who bring value to the bottom line. The more a company
learns from its customers, the better it will become, and the more difficult it will
be for a competitor to attract these customers.
List some various ways to attract customers to a website.

ANSWER: There are many effective ways to attract customers to a website, including the
following:

 Assure customers that their private information will not be sold.

 Give customers something free to entice them to discover more.
 Offer customers more, beyond the free information, that they will have to
pay for.
 Use electronic gift certificates as a way of getting customers to try
products or services.
 Provide a toll-free number for people who need to hear a human voice to
overcome resistance.
 Offer to accept payment for items in as many ways as possible: credit
cards, checks, debit cards, PayPal, and so on.
Briefly explain when a company should consider giving something to customers for free.

ANSWER: A company should consider giving away information, consulting, or samples of a

product when:

 The customer is likely to return.

 The cost for each additional item is low and margins are high.
 Customers need to try the product or service in order to risk the money to
buy it, especially if it's unproven technology.
 Samples of the product or service can be offered at a large event such as a
conference or trade show.

 To-do-list (foc or with charges) if achieve 10,000 viewers: to sing, to

dance, to perform/draw/demonstrate, to cosplay a character, etc.

Chapter 17

Briefly describe how franchising works. What risks are associated with franchising?
ANSWER: Franchising enables a business to grow quickly into several geographic markets at
once. The franchiser sells to the franchisee the right to do business under a
particular name; the right to a product, process, or service; training and assistance
in setting up the business; and ongoing marketing and quality control support once
the business is established. The franchisee pays a fee and a royalty on sales,
typically 3–8 percent. For this fee, the franchisee may get:

 A product or service that has a proven market

 Trade names and/or trademarks
 A patented design, process, or formula
 An accounting and financial control system
 A marketing plan
 The benefit of volume purchasing and advertising

Although it is a popular vehicle for growth, franchising a business is not without

its risks. It is much like creating a whole new business, because the franchiser
must carefully document all processes and procedures in a manual that will be
used to train the franchisees. Potential franchisees need to be scrutinized to ensure
that they are qualified to assume the responsibilities of operating a franchise.
Moreover, the cost of preparing a business to franchise is considerable and
includes legal, accounting, consulting, and training expenses. Then, too, it may
take as long as three to five years to show a profit.

Briefly discuss some of the supply chain risks.

ANSWER: The common practice of outsourcing the upstream activities of a business—raw
materials, manufacturing, assembly, inventory—presents advantages and risks to
entrepreneurs. The financial health of a supplier is critical to the stability of the
business. When a supplier faces financial hardships and cannot provide supplies,
raw materials, and so forth in a timely manner and the entrepreneur has no
backup, the results can be loss of customers and, in some cases, the failure of the
business. Here are some additional supplier risks:

 Supplier capacity is a constraint. When demand fluctuates or increases

precipitously, suppliers may not be able to ramp up quickly enough to
meet the demand.
 Quality-related risks and the inability of suppliers to keep up with
technological change can raise the cost of producing a product.
 Changes in customer needs can affect product design and, by extension,
the types and quantities of supplies needed. When suppliers are unable to
make required changes in product design, the entrepreneur incurs a risk.
 Disasters—floods, fire, earthquakes—can disrupt supply chains and affect
an entrepreneur's ability to manufacture and distribute products.

List some events that cause a company to go bankrupt.

ANSWER: What forces a company into bankruptcy is difficult to pinpoint. The precipitating
cause is usually the failure to pay debt; however, myriad other events contribute to
that cause. Here are a few of them.

 A lack of understanding of economic and business cycles

 Carrying excessive debt and surplus overhead
 Shifts in market demand
 Excessive expenses
 Poor dividend policies
 Union problems
 Supplier problems
 Poor financial management