Economical & Marketing Analysis

– Discussion on Marketing Components

– Workbook for Marketing Plan
– Example of Business Plan

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 Introduction
• What is Economics
• What is economical plan in the business plan?
• What is Marketing?
• What are the Marketing Components?
• What are Economical Marketing Components?
• Why is it important to perform/prepare
economical and marketing plan?
• What are the disadvantages of Economical and
Marketing plan?
• What are the limitations of E&M plan?

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 Economical & Marketing Components
1. Product Description
• Draw or describe your product emphasizing the characteristics
that make it better than what is now sold in your area; Check
whether you can make the existing products … easier to use,
pleasant, safer, healthful, comfortable, cleaner, cheaper,
attractive and smarter, as well as disposable.
• Then try: Substituting existing materials with ones that are
cheaper and more locally available, Combining or adding
more functions, uses and features in the existing products.
Maximizing or increasing the size, range, colours, or materials
in existing products. Maximizing or reducing or rearranging
product size, range, colours, or materials. Multiplying
purpose or changing the purpose of existing products
• Product name, branding, label
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 Economical & Marketing Components
Understanding Product Dimensions;

• These are A Human Need, Want and Demand

• A Human Need is a state of felt deprivation of some basic

satisfaction such as food, clothing, shelter, safety, esteem,
belonging, and a few other things for survival.
• Note that these needs are not created by their society and
marketers, they are biological requirements.

• Wants are desire for specific satisfiers of these deeper

needs. An American needs food and wants a hamburger,
needs clothing and wants a Pierre Cardin suit, needs
esteem and buys a Cadillac. In other societies, these needs
are satisfied differently. People’s needs are few, but their
wants are many.
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 Demand

• Demands - are wants of specific products and

services that are backed up by an ability and
willingness to buy them (purchasing power).

• Many people want a Mecedenz Benz or Land

cruiser station wagon (shangingi) but only a
few are able and willing to buy one. Is not
only how many want your products and
services, more important, how many would be
willing and able to buy it.
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 Customer needs determine utility
• Form utility is provided when someone produces something
tangible-for instance, a bicycle.

• Task utility is provided when someone performs a task for someone

else for instance, when a bank handles financial transactions.

• Time utility means having the product available when the customer
wants it.

• And place utility means having the product available where the
customer wants it.

• Possession utility means obtaining a good or service and having the

right to use or consume it. Customers usually exchange money or
something else of value for possession utility.
 Economical & Marketing Components

Product Positioning Atlas - Quality/Price Strategies

High Quality
A

High Price
Low Price

D
C

Low Quality

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 Economical & Marketing Components

Quality/Price Strategies

Product Price
High Low
Product Quality

1. High Quality / High Price 2. High Quality / Low Price

High
(Premium Strategy) (Super-value Strategy)

3. Low Quality / High Price 4. Low Quality / Low Price

Low (Rip-off Strategy) (Economy Strategy)

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 Economical & Marketing Components
Extended Quality/Price Strategies

Product Price
High Medium Low
Product Quality

High
1. Premium 2. High-Value 3. Superb-value
Strategy Strategy Strategy
Medium
4. Overcharging 5. Medium-value 6. Good-value
strategy Strategy Strategy

Low 8. False-economy 9. Economy

7. Rip-off Strategy
Strategy Strategy

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2. Comparison of the service with Competitors
• Explain about quality of services offered by other competitors
and how will you beat the competitors. Features, price
comparisons etc.

3. Business Location
• Strategically where do you locate your company and why?
• Proximity to raw materials? Availability Competitors,
proximity to markets, etc.

4. Market Area/Customers Location

• Where are the potential buyers that you can easily reach-out
located (mention the names of towns, villages, communities,
etc.)
• Why do you think they are the best places for your product?
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 5. Main Customers
• You have two types of buyers—individuals and
institutional (groups of people).
• Briefly describe the behaviour of your potential
buyers; specify their
– needs,
– wants,
– location,
– preferences,
– income level, etc.
• Consult your market survey results.
• In fact, you can also annex the summary of your
market survey results

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 6. Total Demand
In estimating the number of buyers, you need to know:
• Locations: The towns, villages, communities, etc. that you
identified earlier. You can get the figures from the local DC
or SIDO offices, etc. Please note where you got the figures.
• Target (in % Population): This is your very conservative
estimate of the percent of the population that can really buy
your products and services. To estimate this figure, check
with the results of your market survey.
• Potential Buyers: Multiply the Estimated Population with
the Target (in %) to get the estimated number of potential
buyers for each market location.
• Output: Table of Total Demand Estimate

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 • Table of Total Demand Estimate
• The number of potential buyers consisting of both
individual and institutional for the product is estimated in
the table below
• Note 1: What is the usage rate of your product or service
or how often will the average buyer per year__ ? Will the
usage rate increase with time? Yes or No.

• Note 2: How much are they willing to spend for your

product per unit?_____
Locations Estimated Target (in % Potential Buyers
Population Population)
A
B
C
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 7. Demand Forecast
• Potential Buyers: By multiplying the usage
Rate with the Potential Buyers, you get the
future demand estimates.
Usage
Produ Year Year Year Year Year
rate/Increase
ct 1 2 3 4 5
demand rate
A 10%
B 20%

Note: remember that the forecasted demand

customers are all not yours in sense if you are
new in business unless you use your own data

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 DECISION GUIDE ON MARKET SHARE
Market Share
• What ______% of the total demand is your share?
• Try to justify your answer you can carry out supply-demand
gap survey and indicate what percent you can concur the
market.
Number of competitors Their Size Product Features Market share
Many Large Similar 0 - 2.5%
Few Large Similar 0 -2.5%
One Large Similar 0 – 5%
Many Large Not Similar 0 – 5%
Few Large Not Similar 5 -10%
One Small Similar 5 -10%
Many Small Similar 10 - 15%
Few Small Not Similar 10 - 15%
One Large Not Similar 10 – 15%
Many Small Not Similar 20 – 30%
Few Small Similar 30 – 50%
One Small Not Similar 40 – 80%
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No Competition 100%
 8. Selling Price
• What pricing strategies and product strategies
are you going to use??
• Some of practical pricing strategies are
– Cost-plus method,
– Comparative Method (Competitors prices) and
– What the Market Will Bear Method
• Please should write down the exact price for
each product if many and check later this value
should be little greater than unit production cost
in Operations Analysis.
• Based on Quality/Price strategies and product
positioning discussed you can decide where to
position your product in the market
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 Pricing Strategies
• Cost-plus method
• Competitors prices, and
• What the Market Will Bear
Method

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 Cost-plus Method
• Is achieved by adding a reasonable profit
margin (say 30%) to the final total product
cost (i.e. marketing cost, plus production
cost, plus administration cost, plus finance
cost).
• The final product cost per unit is
determined by dividing the total product
cost by the number of units produced.
• To this figure you may add a profit margin
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 Competitors prices
• This method compares your
product with others in the
market and then, based on your
product’s quality and other
features, you may fix your price
lower, higher or the same as
your competitors
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 What the Market Will Bear Method
• This method is based on supply
and demand of the product;
• If is seller’s market set the price
of the product ‘higher’ and
• If is buyer’s market set the price
of the product ‘lower’
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 9. Sales Forecast
• Since market share for potential Customers
and selling price are already known then we
can forecast the sales as shown in the table
below. However for practical purposes, only
we can say 70% of the projected market size
will be considered for sale forecast.
Product Measures Year Year Year Year
Name Customers/Quantity 1 2 3 4
A
B
C
D
Total
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 10.Sales Strategies
• What intermediaries will move your products from your
factory to the potential buyers. Consider costs for transport,
storage, inventory carrying, etc. The following (or their
combination) are your choices:
• Direct Selling; You (or your salesperson) will actually do the
actual selling, delivery, sales collection, and servicing of sales
to the buyers.
• Retailers; You can rely on several small and independent
retailers to actually do the selling to your potential buyers.
• Wholesalers; You can also rely on big wholesalers to sell your
products to several small retailers and then to your buyers.
• To select the right channel, you should consider the cheapest
way to reach your buyers.
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 11. Marketing Strategy/Promotional Measures
• Product Strategy
– Our label will contain logo with a meaning
– The name of the company
– Consider Quality/Prices strategies discussed in Product
• Pricing Strategy
– The price will be a bit lower compared to others and
– Giving discount to permanent customers.
• Promotion Strategy
– Word of mouth advertisement, TV, Radio, flyers, posters and
stickers.
– Free delivery of same products
– Buy with free attachments or Certain quantity.

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 11. Marketing Strategy/Promotional Measures
• Marketing – Concepts
– The Production Concept
– The Product Concept
– The Selling Concept, and
– The Marketing Concept

• The production concept holds that consumers will favour

those products that are widely available and low in cost.
Managers of production-oriented organizations concentrate
on achieving high production efficiency and wide distribution
coverage

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 • The product concept holds that consumers will favour
those products that offer the most quality or
performance. Managers in those product-oriented
organizations focus their energy on making good
products and improving them over time.

• The selling concept holds that consumers, if left alone,

will ordinarily not buy enough of the organization’s
products. The organization must therefore undertake an
aggressive selling and promotion effort.

• The Marketing concept holds that the key to achieving

organizational goals consists in determining the needs
and wants of target markets and delivering the desired
satisfactions more effectively and efficiency than
competitors.
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 12. Marketing Budget
• Provide the budget for each item or activity planned in 11
above.
• When filling the table below convert all costs per annual,
e.g. If Tv advertisements will be 50,000 Tsh once per month
then total cost would be 50,000*12 (600,000 Tsh)
• Output: Table: Marketing Budget Allocation
S/N Activity Budget/Month Budget/Year

1 Product Flyers
2 TV Advertisement
3 Newspaper Advertisement
4 ……………….
Total Marketing Cost

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 What are Final Thoughts in Marketing???
❖ Is your product really better than those available ?
❖ Do your really know your buyers and can you
separate them from non buyers?
❖ Did you check the costs of labels, packaging,
sales person’s salary, retailers’ margins, transport,
etc.?
❖ Do you now have a sales contract from a buyer?
❖ Can you really make the sales everyday?

❖NOTE: If your answers are YES, then you can

now proceed to the next step.
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