Business Skills Workshop #5
Wednesday, March 10, 2010 & March 17, 2010
Business Skills
Training Handbook
Livelihood Development via Agro-Processing
SFA2006 (GCP/RLA/167/EC) Location: Grenada
Dr. Reccia Charles
Business Skills Training, Page 1
Marketing Basics
What is Marketing? Marketing is managing profitable customer
relationships. The twofold goal of marketing is to attract new
customers by promising superior value and to keep and grow current
customers by delivering satisfaction.
Hence, marketing is defined as the process by which companies
create value for customers and build strong customer relationships in
order to capture value from customers in return.
Dr. Reccia Charles
Business Skills Training, Page 2
Today, marketing must be understood not in the old sense of making a
sale but in the new sense of satisfying customer needs. If the
marketer understands consumer needs; develops products and
services that provide superior customer value; and prices,
distributes, and promotes them effectively, this goal will be achieved
easily.
The most basic concept underlying marketing is that of human needs.
Human needs are states of felt deprivation. They include basic
physical needs for food, clothing, warmth, and safety; social needs for
belonging and affection; and individual needs for knowledge and self
expression. These needs were not created by marketers; they are a
basic part of the human makeup.
Wants are the form human needs take as they are shaped by culture
and individual personality. Wants are shaped by one’s society and are
described in terms of objects that will satisfy needs.
When backed by buying power, wants become demands.
Given their wants and resources, people demand products with
benefits that add up to the most value and satisfaction.
Needs
•  States of deprivation
•  Physical—food, clothing, warmth, safety
•  Social—belonging and affection
•  Individual—knowledge and self-expression
Wants
•  Form that needs take as they are shaped by culture and
individual personality
Demands
Dr. Reccia Charles
•  Wants backed by buying power
Business Skills Training, Page 3
Dr. Reccia Charles
Business Skills Training, Page 4
The 4 Ps of Marketing
The four Ps of marketing are: product, price, place, and promotion.
Product means the goods and services combination the company
offers to the target market. Price is the amount of money customers
pay to obtain the product. Place includes company activities that
make the product available to target consumers. Promotion means
activities that communicate the merits of the product and persuade
target customers to buy it.
The 4 Cs of Customers
The four Cs—customer solution, customer cost, convenience, and
communication—describe the four Ps from the customer’s viewpoint.
By examining products and services using the four Cs, marketers
may be better equipped to build customer relationships and offer true
value.
The Marketing Mix
The marketing mix is the set of controllable, tactical marketing tools
that the firm blends to produce the response it wants in the target
market.
Dr. Reccia Charles
Business Skills Training, Page 5
Product means the goods-and-services combination the company
offers to the target market.
Price is the amount of money customers pay to obtain the product.
Place includes company activities that make the product available to
target consumers.
Promotion means activities that communicate the merits of the
product and persuade target customers to buy it.
Dr. Reccia Charles
Business Skills Training, Page 6
An effective marketing program blends all of the marketing mix
elements into a coordinated program designed to achieve the
company’s marketing objectives by delivering value to consumers.
The Basic Five Marketing Strategies:
The five alternative concepts under which organizations design and
carry out their marketing strategies are: the production, product,
selling, marketing, and societal marketing concepts. The
production concept holds that consumers will favor products that
are available and highly affordable. Therefore, management should
focus on improving production and distribution efficiency. The
product concept holds that consumers will favor products that offer
the most in quality, performance, and innovative features. Under this
concept, marketing strategy focuses on making continuous product
improvements. The selling concept holds that consumers will not
buy enough of the firm’s products unless it undertakes a large-scale
selling and promotion effort. The marketing concept holds that
achieving organizational goals depends on knowing the needs and
wants of target markets and delivering the desired satisfactions
better than competitors do. Under the marketing concept, customer
focus and value are the paths to sales and profits. Instead of a
product-centered “make and sell” philosophy, the marketing concept
is a customer-centered “sense and respond” philosophy. The societal
marketing concept questions whether the pure marketing concept
overlooks possible conflicts between consumer shortrun wants and
consumer longrun welfare. The societal marketing concept holds that
marketing strategy should deliver value to customers in a way that
maintains or improves both the consumer’s and the society’s
wellbeing.
Dr. Reccia Charles
Business Skills Training, Page 7
Want to Grow?
Growing your base
The four product/market expansion strategies
are: market penetration, market development,
product development, and diversification.
Market Penetration
Market penetration
involves making more
sales without changing the original
product. This can be achieved through
marketing mix improvements, such as
adjustments to its product design,
advertising, pricing, and distribution efforts.
Market Development
Market development strategy involves
identifying and developing new markets for its
current products. New markets could be new
geographic markets or other markets defined by
demographics, lifestyle, or product use.
Dr. Reccia Charles
Business Skills Training, Page 8
Product Development
Product development by offering modified or
new products to current markets.
Diversification
Diversification by starting up or buying
businesses outside of its current products and
markets. In this strategy, the marketer offers an
entirely different product
to a completely different
market than currently served.
Dr. Reccia Charles
Business Skills Training, Page 9
Consumer Behavior
Consumer buyer behavior
Consumer buyer behavior refers to the buying
behavior of final consumers—individuals and
households who buy goods and services for
personal consumption.
The central question for marketers is: How do
consumers respond to various marketing
efforts the company
might use?
Marketing stimuli consist of the Four Ps:
product, price, place, promotion.
Other stimuli include major forces and
events in the buyer’s environment:
economic, technological, political, and
cultural.
The marketer wants to understand how the stimuli are changed into
responses inside the consumer’s black box, which has two parts.
The buyer’s characteristics influence how he or she perceives and
reacts to the stimuli.
The buyer’s decision process itself affects the buyer’s behavior.
Dr. Reccia Charles
Business Skills Training, Page 10
Types of buying decision behaviors
Complex buying behavior occurs when
consumers are highly involved in a purchase and
perceive significant differences among brands.
This is probably the buying behavior most
consumers would use when making the decision
regarding a laptop computer because they
probably have much to learn and perceive
significant differences among brands.
Dissonance-reducing buying behavior occurs when consumers are
highly involved with an expensive, infrequent, or risky purchase, but
see few differences among brands.
Habitual buying behavior occurs under conditions of low consumer
involvement and little significant brand difference. This might be the
behavior of consumers selecting a fast food restaurant because they
may perceive little or no difference between McDonald’s, Wendy’s,
Burger King, and so on.
Variety-seeking buying behavior is undertaken in situations
characterized by low consumer involvement but significant perceived
brand differences. Students may indicate this buying behavior when
selecting a restaurant because they want something other than fast
food.
Dr. Reccia Charles
Business Skills Training, Page 11
The impact on brands and packaging:
The buyer decision Process:
The buyer decision process consists of five stages:
need recognition,
information search,
evaluation of alternatives,
purchase decision, and
postpurchase behavior.
Need Recognition
The buyer recognizes a problem or need.
The need can be triggered by either an:
internal stimuli or
external stimuli.
Dr. Reccia Charles
Business Skills Training, Page 12
Information Search
Information search may or may not occur.
Consumers can obtain information from any of several sources.
Personal sources (family, friends, neighbors, acquaintances),
Commercial sources (advertising, salespeople, Web sites dealers,
packaging, displays), Public sources (mass media, consumerrating
organizations, Internet searches), and Experiential sources
(handling, examining, using the product).
Commercial sources inform the buyer.
Personal sources legitimize or evaluate products for the buyer.
Evaluation of Alternatives
Alternative evaluation: how the consumer processes information to
arrive at brand choices.
How consumers go about evaluating purchase alternatives depends
on the individual consumer and the specific buying situation.
In some cases, consumers use careful calculations and logical
thinking.
At other times, the same consumers do little or no evaluating; instead
they buy on impulse and rely on intuition.
Dr. Reccia Charles
Business Skills Training, Page 13
Purchase Decision
Generally, the consumer’s purchase decision will be to buy the most
preferred brand.
Two factors can come between the purchase intention and the
purchase decision.
Attitudes of others.
Unexpected situational factors.
Postpurchase Behavior
The difference between the consumer’s expectations and the
perceived performance of the good purchased determines how
satisfied the consumer is.
If the product falls short of expectations, the consumer is
disappointed; if it meets expectations, the consumer is satisfied; if it
exceeds expectations, the consumer is said to be delighted.
Dr. Reccia Charles
Business Skills Training, Page 14
Case Examples
Miss Meena’s Starch Production
Miss Meena wants to start her own business. She thinks about
processing potatoes into starch. In September she wants to buy an
electric grinder at $600; three basins at $50 each; and three sieves at
$30 each. In October she plans to buy 500 lbs of potatoes at $0.4 per
lb. After processing she will sell the starch within the same month. In
November and December she plans to do the same.
Since she only needs the grinder for one week a month, she agreed to
rent her grinder to her neighbour, who will pay $50 rent at the end of
each month.
Miss Meena's fixed assets can be used for 10 years, except for the
sieves, they need to be replaced every 3 years.
Miss Meena has only $350 in savings of her own, and needs to borrow
$800 from the credit union to be able to realize her plan. She will
borrow the money in September and plans to repay the full amount
on January 1. The duration of the loan is 4 months. The credit union
charges 2% interest per month.
To improve the quality of the starch Miss Meena will use a chemical.
To process the 500 lbs of potatoes, 0.5 lb of the chemical will be
enough. This chemical is only sold by the lb, at $30 per lbs; so she has
to buy 1 lb in September.
Miss Meena thinks she can produce a total of 150 lbs of starch out of
500 lbs of potatoes. She will sell this to the local macaroni factory.
The factory's price depends on the quality. Miss Meena thinks she can
sell 80 lbs of the highest quality at a price of $3/lbs; 40 lbs of medium
quality at $2/lbs and 30 lbs of low quality which sells at $1/lbs. Each
time she sells, a total of $80 of other expenses, such as for
transportation are made.
Dr. Reccia Charles
Business Skills Training, Page 15
Miss Meena invited you to come and review her preliminary business
plan with her. She wants to know whether this is a good business and
wants your advice on how to proceed.
Tasks:
Compare and contrast customer needs, wants, and demands. Describe
the need versus the want for the following products: Potato Starch,
Cabbage, and Herbal Tea.
Explain how Ms. Meena can design a customer-driven marketing
strategy? (hint: What customers will we serve (what’s our target
market)? and How can we serve these customers best (what’s our
value proposition)?)
Dr. Reccia Charles
Business Skills Training, Page 16
Ms. Meena’s Starch vs.
Ms. Meena’s Starch
Ms. Meena’s Starch
Ms. Meena’s Starch
Potato Starch
(USA)
Potato Starch
(USA)
Potato Starch
(China)
Potato Starch
(China)
Potato Starch
(China)
Potato Starch
(China)
Dr. Reccia Charles
Business Skills Training, Page 17
Case Examples
Lin's cabbage world
Lin is a farmer in the Birchgrove village in Grenada. She has 2
children. Her husband works as a store worker.
Lin tills 5 acres of banana land. For many years she has been
harvesting bananas and has not made good profits.
Because of her very low profits from cultivating bananas, she thought
about planting vegetables. But before she made a decision, Lin made a
careful survey in the market of which types of vegetables are in
demand and commands higher price. She went to several market
places and found out that cabbage sells at a very high price and were
in high demand.
She went to an agricultural technician from the Ministry of
Agricultural and asked how cabbage is grown. Fortunately there was
a workshop to be given on cabbage for 2 days. She attended the 2 day
workshop and learned how to raise cabbage. Since the workshop was
basically conducted through demonstration and field practicum, Lin
learned how to plant, water, fertilize, weed and harvest cabbage. She
also learned that on 5 acres of land, she will need $2,000 for land
preparation, fertilizers, chemicals, labor and other incidental
expenses.
Lin has only $1000. She went to her parents and requested for a loan
of $1000 at 2% interest per month. Then she went to the market
place and secured the commitments from buyers for her cabbage
produce. With a ready market for her cabbage, she started to grow
cabbage in her land. She religiously followed what she had learned
Dr. Reccia Charles
Business Skills Training, Page 18
from the workshop at the Ministry of Agricultural. Lin recorded all
her production expenses on cabbage production.
After 3 months, she started harvesting cabbage and selling them to
her buyers. She also recorded all her sales. Her total sales amounted
to $6,000. She made a profit of $4,000. Out of the profit, she paid her
loan of $1,000 to her parents including the interest. All the rest of the
profit, she reinvested in cabbage production by renting an additional
5 acres of land.
Tasks:
Compare and contrast customer needs, wants, and demands. Describe
the need versus the want for the following products: Potato Starch,
Cabbage, and Herbal Tea.
Explain how Ms. Lin can design a customer-driven marketing
strategy? (hint: What customers will we serve (what’s our target
market)? and How can we serve these customers best (what’s our
value proposition)?)
Dr. Reccia Charles
Business Skills Training, Page 19
Ms. Lin’s Cabbage vs.
Ms. Lin’s Cabbage
Ms. Lin’s Cabbage
Ms. Lin’s Cabbage
Competing Cabbage
Competing Concept
Competing Concept
Competing Cabbage
Competing Concept
Competing Concept
Dr. Reccia Charles
Business Skills Training, Page 20
Case Examples
Netty’s Herb Tea Processing Project
Ms. Netty is one of the active members of the women's group in the
Victoria village, a farming community with rolling terrains located
some 20 miles from the George’s town. Like other households in the
village, her husband is engaged in farming. She's 33 years old and
takes care of the household work and their three children.
Since she joined the group she has been thinking how to help her
husband generate additional income for the family. At first, upon
discussion with other women members, she thought of a small scale
furniture workshop. But the start-up capital required was $50,000
and she could not afford such capital.
She finally decided on a herb-tea processing project. The raw
materials (herb leaves) are readily available in the village since most
farmers, including her husband, grow herbs in the village. Moreover,
she learned from the sales-van traffickers who often visit their village
looking for herbs, that processing herbs would earn her good income.
She learned from them that if she sells in George’s Town, she can
make a gross profit of $2 per lb and or even higher at $20 if she sells
in the U.S. Also, she has a younger sister who used to work in a herbtea processing factory in the U.S. and she was confident she could
learn the techniques required in such activity.
Encouraged by the potential of the project she obtained a loan from
the women's group. In addition, she had some savings of her own and
she was able to start the project in March 1993.
In dry season the herb crops produce the best quality tea leaves. Ms.
Netty decided to process herb-tea only during this season For the
whole season she was able to sell 56 lb. In selling at George’s Town
she later learned that there are different prices depending on the
quality of dried tea and the appearance of the packaging.
Dr. Reccia Charles
Business Skills Training, Page 21
Nevertheless after investigating which among the three
supermarkets in George’s Town offered the best price, she settled into
one supermarket.
She however incurred losses when she tried to sell in the U.S. About
20 lbs was not paid for at all.
She personally took care of the project. Her husband and children
assisted her in some of the activities of the project like preparing the
stove and stirring the leaves on the pan. They could process 5 lbs of
wet leaves per day. She had minimal expenses for the project. She
bought about 50% of the wet tea requirements from the village. The
rest of the wet herb-tea leaves, she obtained from their own harvest.
She also had sufficient cooking gas which was already good for the
whole season She did not buy the needed pans as she had already two
before the project and these were enough for the quantify she has
been processing.
She was not able to keep records of the financial transactions but she
is confident she was able to earn from her business. Although the
income of the project is mixed with their other household income, she
was sure that the whole net profit could be used to invest in another
project, a furniture-manufacturing project. At the same time, she is
planning to expand her herb-tea processing project for the whole year
that is including during dry and rainy seasons. She also plans to hire
workers so that she can process more.
Tasks:
Compare and contrast customer needs, wants, and demands. Describe
the need versus the want for the following products: Potato Starch,
Cabbage, and Herbal Tea.
Explain how Ms. Netty can design a customer-driven marketing
strategy? (hint: What customers will we serve (what’s our target
market)? and How can we serve these customers best (what’s our
value proposition)?)
Dr. Reccia Charles
Business Skills Training, Page 22
Ms. Netty Herb Tea vs.
Ms. Netty Herb Tea
Ms. Netty Herb Tea
Ms. Netty Herb Tea
Lipton Herbal
(UK)
Celestial Herbal Tea
(USA)
Good Earth Tea
(India)
Stash Herbal Tea
(USA)
Bigelow Herb Tea
(USA)
Yogi Herbal Teas
(USA)
Dr. Reccia Charles
Business Skills Training, Page 23