Small Business Management Study Set 3
Quiz 13 :
Small Business Marketing
Introduction of the case - Big-Box or Specialty shop LF invents an MP3 player designed especially for the athletes who need tunes while swimming, waterskiing, or snowboarding. LF's MP3 player is a light weight type with a 40-hour battery. The selling price projected is $180. LF approached GH who is a sales consultant; GH made a demo, and the feedback was really good with retailers, and top retailers were interested to buy the product. LF was amazed and even sacred since distribution of the product via mass retailers is not his initial plan. GH convinced the partners and the vendors and the LF name is given for the mass production settlement. One of the partners advised LF to negotiate with retailers for discounts; otherwise, prices will kill the margins. The partners also raised questions such as "If LF is going for mass distribution, he would require noteworthy capital investment and maintenance of quality is also a question and also how to compete with giant MP3 brands". Justification: LF cannot say no to the retailers, since GH convinced the vendors and gives his name to the mass production settlement. He is planning to launch the product in the holiday season and make a big splash at the show.
Location of the business: The location is the most important aspect of the business. The consumer buying perception is entirely based on the location. They are three types of locations: a) Central business districts b) Shopping centers c) Stand alone locations Customer's perception of store image Customer's perception of the store refers to what exactly customers think of a store when they visit. The store representation depends upon the customer's experience and display of products in the store and the service provided. The store image is something that always needs changes as the shopping behavior also changes. A well managed store is important since it influences the store location in the mind of the consumer, customer faithfulness, and their change of preference. Effect on products The physical environment exerts an evident influence on the perception and behavior of the consumers. This influence is very powerful for luxurious or designer products. Effect on services The outcome of the location on clientele is stronger for service interactions in the absence of products. The customer expects the highest quality of the services offered, as in restaurants.
Distribution channel A distribution channel is defined as a chain of intermediaries involved in the process where the product reaches the final customer. Channels of distribution a) Direct channels b) Indirect channels c) Dual distribution channels The intermediaries include: a) Agents b) Brokers c) Retailers d) Wholesalers The small business owners have a competitive advantage by having good distribution and logistics methods. To succeed in selling, they need to sell the product with dual distribution channels. Dual distribution channels: The dual distribution channels are defined as the owners of business and use both direct and indirect ways to sell the product with the help of intermediaries. In the case of small business owners, wholesalers and retailers play a major role in creating competitive advantage. E.g.: Selling FMCG Goods.