Chapter Seven

Marketing and New venture Expansion Strategy

7.1 Preparing for the launch of new venture

7.1.1 Managing a growing venture

It is obvious that
Smaller companies go through identifiable stages of growth
so;
Increased specializations in tasks of staff
Increased delegation on part of founder
Increased systematization and formalization of information reporting
and accounting procedures

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Cont’d…
Every business, whether it’s big or small, goes through the 4 stages
of business growth:
Start-up
Growth
Maturity
Renewal or decline
Each of the stages of the business life cycle, also known as maturity
phases, growth phases or growth stages, have unique challenges and
your business will need to find creative approaches to overcome
them.

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Cont’d…

Therefore,
The growth of any business is closely tied to the
application of good management skills and
techniques. Learn all that you can about sound
management principles.
– Is your business strong enough to consider
growth?
– How fast should you grow?
– How should growth be financed?

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In managing the business, the following are crucial to
consider:
1. Leadership
Leaders are larger than life in many ways.
Personal traits play a major role in determining
who will be effective leaders. However, it's
important to remember that people are forever
learning and changing.

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2. Marketing
Marketing is all about satisfying customer needs.
Learn how to better understand customer needs
and ways to satisfy those needs.

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3. Financing
An expanding business offers the potential
for numerous growth opportunities.
Managing this growth can be very
challenging to your financial resources. It is
important that you educate yourself about
financing opportunities.

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4. Strategic planning
To many people, strategic planning is something
meant only for big businesses, but it is equally
applicable to small businesses. Strategic planning
is matching the strengths of your business to
available opportunities.

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5. Technology
Today’s constantly changing economy, with
pressures from global competitors, demands
that small businesses understand and apply
new and advanced technologies.

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6. Managing change: the basic
Return to the basics
Change is natural so…
– What resources do I have?
– How can I combine these resources (land, labor,
capital and management) to achieve my goals?

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Cont’d…
Make changes in the direction you perceive you need
to go, not in the direction that others say you have to
go.
Not all change or new technologies are good for us.
Evaluate them carefully and do what works for the
individual circumstances.
No matter how much we change, some things remain
the same. There is no substitute for good, basic
management.

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 Ways to grow a business
Open another location Target other markets
Offer your business as Win a government
a franchise contract
License your Buy or acquire, another
product(s) business
Merge/Align yourself Expand globally
with a similar business
Use e-marketing such as
Diversify internet

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7.1.2 New venture expansion strategies:
Mergers, Acquisitions, franchise
 Types of mergers-consolidation of companies
– Horizontal: Similar products / services
– Vertical: Different but related firms
– Conglomerate: Completely different industries

 Acquisition
– Purchase of a company- identify, screen, evaluate,
negotiate, and structure payments

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 Franchising
• Franchise
– License to operate an individually owned business
as though it were part of a chain of outlets or stores
– It is the business itself.
• Franchising
– Actual granting of a right to produce/sell/distribute a
service/product.

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 Cont’d----Franchising
Done by:
• Franchisor-who provides the right
– Supplies a known & advertised business name
– Supplies management skills
– Supplies training & materials
– Supplies method of doing business
• Franchisee-who obtains the right
– Supplies labor & capital
– Operates the franchised business
– Agrees to abide by the franchise agreement

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 Franchising Advantages
• Franchisor
– Fast, Selective Distribution
– Expanding the business
• Franchisee
– Opportunity to start a business
– Obtain Support
– Business Experience of others
– Nationally recognized name/accepted product
– National promotional campaigns

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 Franchising Disadvantages
• Mainly from Franchisee’s Viewpoint:
– Less freedom/Franchisor’s contract can dictate
every aspect of the business
– Pay for security/royalty fee
– Continuity problem-franchise is depends on
franchisor-can terminate it
– Competition from same company

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 7.2 Marketing and new venture
development
7.2.1 Market Research
Marketing success depends on design of a distinctive
marketing plan
A small entrepreneur should not try to compete on a
product-to-product basis with large firms (same goods to
same customers through same channels at same prices !!)
Instead, try to do “something different”.

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7.2.2 Marketing Intelligence
Marketing intelligence includes the procedures and data
sources used to obtain information from the business
environment for decision making. This information can be
external or internal. This data usually pertains to various
political, economical, technological and socio-cultural elements.
It also can include information on customer demographics and
competitors.

Small companies often use competitive intelligence to conduct

analyses of strengths, weaknesses, opportunities and threats
(SWOT). A company usually uses a SWOT analysis to
compare its strengths and weaknesses against key
competitors. It then uses those advantages to identify various
opportunities in the marketplace.

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Cont’d…
So the function of market intelligence is to:
• Gather information from primary & secondary sources
• Upgrade information to intelligence incorporating
analyst’s perspective
• Generate insights and suggestions
• Disseminate to decision makers who take action that can
gain a competitive advantage for the firm. This can be
done:
• Market Reports
• Competitive Information
• Internal Databases

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Marketing intelligence can be done through:
Small companies often want to determine how they are faring in
certain markets.
Competitive Information
Another type of marketing intelligence is competitive information.
Business owners usually use industry reports, articles, newsletters and
personal observation to study their competitors. They may also
collect competitive brochures or study their websites/assess through
social media.

Internal Databases
Marketing managers also use market intelligence they obtain from
customers. This information goes far behind the typical name, address
and emails of customers. For example, a marketing manager may
have detailed information about key customers, including their
average age, income, education. Interviews with internal experts,
customers,
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7.2.3 Competitive Analysis
Analyzing key competitors allows entrepreneurs to:
Avoid surprises from existing competitors’ new strategies and
tactics
Identify potential new competitors and the threats they pose
Improve reaction time to competitors’ actions
Anticipate rivals’ next strategic moves
Improve ability to differentiate your company from competitors.
Techniques do not require unethical behavior:
–Monitor industry and trade publications
–Talk to customers and suppliers
–Listen to employees, especially sales representatives and
purchasing agents
–Attend trade shows and conferences

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7.2.4 Marketing Strategies
Developing a strategic plan is crucial to creating a
competitive advantage- the aggregation of factors that
sets a company apart from its competitors and gives it a
unique position in the market.
It is crucial to build a successful business.
Step 1: Make a SWOT analysis/Scan the environment
Step 2: Analyze competition.
Step 3: Create goals and objectives.
Step 4: Formulate strategies.
Step 5: Translate plans into actions.
Step 6: Establish a strong control system.
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Types of market strategies

1.Cost Leadership

Goal: to be the low-cost producer in the market (or

market segment).
Low-cost leaders have an advantage in reaching buyers
who buy on the basis of price, and they have the power to
set the industry’s price floor.
Works well when:
 buyers are sensitive to price changes.
 competing firms sell the same commodity products.
 a company can benefit from economies of scale.

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Cont’d…

2. Differentiation
It is the process of making a unique feature on the product or service
that provide unique value for the customers.
Company seeks to build customer loyalty by positioning its goods or
services in a unique or different fashion.
The idea is to be special at something customers value.
It is used to build basis for differentiation on a distinctive
competence, something that the small company is uniquely good at
doing in comparison to its competitors.

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Cont’d…
3. Market Segmentation/Focus

Dividing a broad target market into subsets of consumers,

businesses, or places/countries who have common needs and
priorities.
Company selects one or more customer segments in a market,
identifies customers’ special needs, wants, or interests, and then
targets them with a product or service designed specifically for them.
Strategy builds on differences among market segments.
Rather than try to serve the total market, the company focuses on
serving a niche (or several niches) within that market.
The segmentation can be geography, demography/customer,
product, etc.

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7.2.5 International Market
Business owners can expand their market to abroad either by integrating or exporting.
This is obviously the easiest and most risk-free way to expand. This tactic may
require a bigger location, different pricing strategies, new/improved marketing
techniques - but it will be in a customer group with whom you already have a
relationship. If you get off track, your present customers will let you know!
Some of the rules of international marketing are:
Identify the specific market place/area you intend to target.
Be honest.
Be professional.
Be diligent/hard worker.
Be prompt/punctual.
Be respectful of cultural differences.
Plan for long lead times.
Be patient.
Maintain your sense of humor.

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 d !
h e En
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Department