NCV 2 Entrepreneurship Hands-On Support Slide Show - Module 2

Entrepreneurship Entrepreneurship - Level 2 Future Managers

Module 2: Marketing and customer relations Entrepreneurship - Level 2 Future Managers

Module 2: Marketing and customer relations
Identify potential customers for a new venture
Survey opinions for products of the new venture
Promote product/service of new venture
Discuss customer relations
Entrepreneurship - Level 2 Future Managers

1. Identify customers for a new venture
At the end of this outcome, you should be able to:
Identify basic needs common to all people and rank them in order of importance
Compare the basic needs of people for different socio-economic groups
Discuss the possibilities of introducing a new product/service to an existing market
Explain, using examples, the concept of benefits of product/service
Identify factors that may motivate people to buy the product/service of a new venture
Identify attitudes, values and other factors that could prevent people from buying a product/service of a new venture

Marketing
What is marketing?
Main components of marketing include:
Identify the target market
Determine the needs and wants of this market
Develop a suitable product range
Promote this product
Sell the product/service
Distribute the product
Provide after-sales service

1.1 Identify the needs and wants of your potential customers
Brainstorm all the potential needs of your customers
Need for food
Need for clothing
Need for security
Need for social contact
How would these needs be satisfied?

Activity 1
Draw up your own list of products/services (at least 5 examples)
Write this list on a worksheet that you have divided into two columns. In the left-hand column, write the name of the product or service. In the right-hand column, write down one or two reasons why you think it is a product or a service
Try to find advertisements for at least three of the products and bring these advertisements to class
In class, discuss your list (5 items) and your list of advertisements with your classmates.

1.1 Identify the needs and wants of your customers
How do needs influence buying behaviour?
Businesses can’t influence needs
However, businesses can influence want for a product
Branding
A brand is not the product, symbol, company or logo itself; it is what the customer decides he/she wants it to be – a person’s gut feeling (emotion) about the product, service or company. in their minds that will satisfy that need.

A logo helps you to build an image and a brand of your business that is bigger than yourself
It makes you memorable. 40% of people remember what they see better than what they hear or read. An attractive logo will help to keep your business in customers’ minds
A logo helps to explain your company’s name
A well-designed logo on company stationery makes your business a serious business in customers’ minds

Activity 2
Following are two diagrams. The first is the top ten coolest brands in South Africa and the second is the top ten coolest Hi-tech gadgets in South Africa
In your group, identify any two brands from each category
Make a list of the needs you think these brands address
What “emotion” does that particular product create within you? Give only one word. If your group consists of 5 members, you will have 5 words to describe the emotion
Explain how the marketer of each of these products is trying to turn a need into a want for his/her specific product

Activity 2 Entrepreneurship - Level 2 Future Managers

How do the needs of various socio-economic groups differ?
Poor people may want something but not be able to afford it
Rich people may be able to afford something, but may not be willing to pay for it
Demand is therefore, what people are willing and able to pay for the product

Business plan activity
Write the various features and potential benefits of your own product in your business plan workbook. Take care when you determine the benefits of your products. You will need these benefits when designing an advertisement for your business.

1.2 Potential customers
What is the target market?
The people who are most likely to buy your product
It helps you to:
decide how and where to advertise
determine the right of your product
select the different types of products you want to sell

1.2 Potential customers
What criteria would you use to determine your target market and why?
Age
Income
Gender
Education
Location

Activity 3
Describe the target market at which the following products are aimed by using one or more of the “ways” of describing a target market
Pay-as-you-go cellphone package
The Sowetan
BMW Z4
Nando’s
Diesel

Complete the worksheet that deals with your target market in our business plan workbook. You may not be able to complete all the different criteria of defining a target market. If you cannot, give a reason why it is not possible.

1.3 Factors influencing buying patterns of new customers
What are the four Ps of marketing?
Product
Features versus benefits
Price
Promotion
Place

Activity 4
Within your group, review the list of 5 products each member had to collect (needs and wants). Pick one member’s list which the group feels is the “best” or “most exciting”. Make a list of all the features of the products. Then make a list of all the potential benefits.

Make a list of all the features and benefits of your own product or service. Discuss your list with other members in your group and listen very carefully to their comments.

1.3 Factors influencing buying patterns of new customers
Marketing Checklist
Does it focus on the benefit you provide?
Does it have a clear message?
Is it focused on a specific group?
Does it feature your Unique Selling Proposition (USP) – the one thing that sets your product apart from other products?
Does it have one strong message?
Does it offer methods to respond?
Do you have a specific objective that you can measure?

1.4 Attitudes, values and other factors that will prevent people from buying
How might the following attitudes affect a new business venture?
Competition
Nature of your products
Environmental
Political
Create employment

General values
Different cultures have different attitudes
Businesses should be sensitive to differing values
Some offensive products might be:
Selling of alcohol
Selling of pornography and related products
Opening a night club
Certain types of food
Products that encourage violence (toy guns)

Ubuntu values
Speak and act truthfully
Treat others as you would want them to treat you
Recognise and respect diverse religious and spiritual cultures
Act comprehensively to ensure fair compensation and humane working conditions
Ensure that economic activities support and promote human development.

2. Survey opinions for products of the new venture
define a questionnaire
explain the different components of a questionnaire
compile a questionnaire
identify at least 3 people to be surveyed for marketing information
interview the people in the sample using the prepared questionnaire
estimate the likelihood of success
present the information

2.1 Reasons for doing research
Why do entrepreneurs need to do research?
to understand the various business environments
anticipate any changes within the environments
forecast the impact and direction that any change might have
make changes to their business plans as a result of these changes in the business environment.

Marketing research can be used to:
Investigate whether customers will buy a new product
Investigate why existing products are not selling
Investigate better methods of marketing existing products
Investigate the changes in customer needs
Minimise the risks of a new competitor

Activity 5
What kind of information do you think would be valuable for the success of your college/business? Ask the following questions in the group:
What made each one of you decide to study at this college?
How did you find out about the college?

How would you define marketing research?
Marketing research is the identification, collection and analysing of information to help a business with decision-making. It helps identify opportunities and identify marketing-related problems

Marketing research involves the following:
Identify the marketing problem/opportunity - what you would like to find out?
Identify where you will find the information and how to get the information
Collect the information and see what it tells you
Make a decision, what will you do with this information?
Do you need to introduce new products, open your business in a different place or find a new business idea?

2.2 Element of the research process
The research process helps entrepreneurs to:
Specify the information needed
Design methods for obtaining the information
Identify the type of research to be done
Determine the time span for finishing the research process
Collect and process the information
Analyse the results
Make a decision

2.3 Planning a research project
Identify the question or problem you want to investigate
Formulate an opinion, assumption or “hypothesis”
Decide on the kind of information you will need in order to investigate the issue properly
Identify and choose your sources of information
Collect your data and information from these sources
Analyse, interpret and evaluate your information – does the information support or disprove your hypothesis?
Report your findings

Activity 6
Using the steps to planning a research project, identify what type of food students would prefer in a cafeteria.
What advice would you give a cafeteria owner?

2.4 Collect and analyse data
There are two main ways of collecting data:
Primary data
Secondary data

2.4 Collect and analyse data
What are the main sources of primary data?
Survey
Observation
Experimentation
Researchers cannot interview everyone, so they will take a sample. What is a sample?
A representative number of people from the total population involved in the research

2.4 Collect and analyse data?
Where can one find secondary data?
Government publications and statistics
Libraries and resource centres
Technikon and university research papers and various theses
Media statistics e.g. AMPS (All Media and Products Survey)
Professional and business associations such as the Chamber of Commerce
The Internet

Activity 7
What kind of data (primary or secondary) and what type of research technique would you use for the cafeteria research project?

Activity 8
Read the following extract
Research can be as simple as googling an idea - using www.google.co.za to see if anyone has yet done exactly what we’re dreaming of - or to identify similar concepts and how they’ve turned out. At last count there were approximately 19,435,671 search engines to choose from - with another 43 million under development by people who feel that the current search engines have not quite got it right!
A Google search takes approximately 1 second, and costs nothing - yet will give you more knowledge and background than you could have bought in 12 months for R1million a decade ago. About anything at all!
Even if the idea has been developed - you can see how it’s being marketed by looking at all the players in that arena, and what they’re doing to try and attract customers. Why re-invent wheels that are frantically spinning elsewhere?

Activity 9
Visit www.google.co.za and find out how many documents exist covering the following topics:
Democracy
Branding
Entrepreneur
Ubuntu

2.5 Research techniques
2.5.1 Format of the questionnaire
Section A covers personal information. You need this information to determine your target market
Section B deals with the questions related to the product
Determine the type of information needed
Determine the method of obtaining the information
Determine the content and phrasing of the questions
Decide on the types of questions to use
Decide on the sequence of the questions
Decide on the outlay and reproduction of the questionnaire
Pre-test the questionnaire

2.5 Research techniques
2.5.6 Types of questions to ask
Opening question
Closed questions
Open-ended questions

Activity 10
Study the MTN questionnaire on page 73 of your text book, then answer the following questions:
What is the purpose of this survey (questionnaire)?
Identify the Section A questions
Why do they ask for your cellphone number?
Which questions are
opening questions
open-ended questions
closed questions?
Why do they offer 12 cellphones as prizes.
Identify any other questions you think MTN should have asked in this questionnaire. Explain why you think each of your questions is important.

Activity 11
Design a short questionnaire for the cafeteria research project
Check if your questionnaire will help you get all the information you need
Do you have a Section A and a Section B?
Have you included closed and open-ended questions?
Now go and interview a representative group (sample) of students/employees.

2.6 Evaluate and analyse the data
What is the purpose of evaluating and analysing the data?
Data is analysed through the following processes: editing, coding and tabulation.

Editing of data
Have all the questions been answered?
Can you read the answers?
Accuracy - did you write down what you heard?
Do the answers make sense?
Are the answers consistent?

Tabulation of data
After the raw data has been analysed, it is ready for tabulation
Tabulation is counting the number of answers in each category
This can be done by means of a computer or manually, depending on the volume of data.

Activity 12
You need to edit and tabulate the data you collected by means of your questionnaire.

2.7 Interpret and discuss the data
Once you have analysed the data, you need to interpret the results
Closed questions are easier to interpret than open ended questions
When interpreting open ended questions, group all the answers which are similar together
Write down your findings in a research report

Activity 12
Interpret the data from your cafeteria project and write down your findings

2.8 Prepare a brief report on the findings
What are the reasons for preparing a report?
It organises data and serves as a record of the research
The same research findings can, in future, still have an influence on your business decisions
The quality of the report impacts on the quality of the research

2.8 Prepare a brief report on the findings
Report format
Title page
Table of contents
A list of tables and figures
Proposal
Introduction
Method followed
Interpretation and findings
Conclusion
Recommendations

2.9 Presentation of information
Bar Graphs

2.9 Presentation of information
Pie charts

For your own business plan identify a specific part that you would like to research. Plan the project, collect and analyse the data, prepare and present a brief report on your findings. Include all the information in your business plan workbook.

3. Promote the product or service of a new venture
define promotion
present suitable ways in which to promote the product/service of the new venture
provide examples
explain how the promotion will be implemented

3.1 Promotion
What are the main components of promotion?
Advertising
Personal selling
Sales promotions
Customer relations

3.1 Promotion
What are the goals of promotion?
Tell them about the existence of your business
Get them to visit
Get them to buy
Convince them to come back

3.2 Methods of promotion Entrepreneurship - Level 2 Future Managers

3.2.1 Advertising
What are the main goals of advertising?
Use advertising to produce immediate sales
Make it easy for potential customers to respond to your advert
Be creative
Try to find “clever and creative” methods your competition does not use
Go lean
Reduce the size or colour and advertise more regularly
Share your resources
Identify other complementary (not competitors) businesses and do a combined advertising campaign

3.2.1 Advertising media
What are the advantages and disadvantages of the following media?

Activity 14
Mr John Mahlangu owns a small café in Khayelitsha outside Cape Town. There are many similar Spaza shops in his area and competition is therefore very strong. He was wondering how advertising could help to improve his business. He knows his target market very well and eventually came up with the following idea.
People in his area have great difficulty with their mail. They don’t have postal boxes and mail delivery is very unreliable or non-existent. He went to the Post Office, obtained a Private Bag address and a big red mailbox. The address was advertised (made known) in the area and every day he went to the Post Office to fetch the residents’ mail. He also made pigeonholes in his café with the names of all the people whose mail came to that address.

Activity 14
What do you think happened to his business? Give a detailed description to cover the following topics:
Target market
4 Ps of marketing
Advertising medium
What is the “Big Red Mailbox” of your future business?

Activity 15
Discuss your business in your small group, focussing on the following:
According to the group, where should you advertise?
Are there other forms of advertising not mentioned in the table?
What is the cost of placing an advertisement in your local newspaper?

Developing an advertising plan Entrepreneurship - Level 2 Future Managers Advertising plan Create the message Use the AIDA criteria Measure the results Compile the budget

Developing an advertising plan
Create an advertising message
Design the message which reflects the image of your business
Plan the advert in advance to ensure a consistent appearance and message
Use attention-getting techniques
Design the message to be short, direct and to convey a single idea
Highlight benefits to the customer rather than mentioning features of the product
Choose colours carefully
Let headlines grab the reader
Use pictures that complement the product
Identify your business clearly
Include the price - this is one of the most important considerations for many customers. However if you are not the cheapest, think twice!

Developing an advertising plan Entrepreneurship - Level 2 Future Managers

Activity 16
Study the advertisement and decide whether it is a good advertisement or not. Take all the guidelines into consideration.

Measure results
Keep a record of all enquires about your product
Ask: ‘Where did you hear about our product or service?’

Prepare an advertising budget
Why do you think an advertising budget is helpful?
The advertising budget can be more evenly spread throughout the year
Take advantage of dates such as Valentine’s Day, Mother’s day and Christmas
Become more creative given a limited budget
An advertising medium such as newspapers can be arranged well in advance

Plan an advertising budget Entrepreneurship - Level 2 Future Managers Advertising plan Month Activities for the month Costs Sales March Place an ad in the classified section of the local newspaper R85 R3000 April Organise a demonstration at the local shopping centre plus handling out pamphlets R300 R9000

Plan an advertising budget Entrepreneurship - Level 2 Future Managers

Design an advertisement and complete an advertising plan for your business. The total amount you plan (budget) to spend must be included in your financial plan.

3.2.1 Sales promotion Entrepreneurship - Level 2 Future Managers

3.2.2 Sales promotion
Sales promotion refers to any activity where direct contact is made with the customer while promoting your products or services

3.2.3 Personal selling Entrepreneurship - Level 2 Future Managers

3.2.3 Personal selling
Knowledge about your product
K now the features and benefits of your products or services very well. Not only what the product is or has, but also what it does for the customer
Know your business, delivery times, guarantees, etc
Know all the prices and possible discounts of your products
Read newspapers daily so that you know what is happening in the marketplace
Know all the different selling techniques, including how to approach a customer and eventually how to close the deal

3.2.3 Personal selling
Develop a selling system
Know all the products, prices, your competitors’ prices etc
Treat and greet the person well and create a professional impression
Find out exactly what is in the customer’s mind and start matching the customer’s need with products
First sell the benefits and explain the features later
Handle objections - maybe the customer just needs more reasons to buy
Closing the sale is all about timing and technique. Use indirect methods such as, “Will you take the yellow or the blue?”
Confirm that the customer has made the correct buy and compliment him/her
Call later to enquire if the customer is happy (big orders)

3.2.3 Personal Selling Entrepreneurship - Level 2 Future Managers

3.2.3 Personal Selling
Big mistakes
Don’t give someone your business card unless they ask for it
Try getting to know the person better, they will ask for it
Don’t set up a meeting until you know more about the person
Don’t dominate the conversation, listen more
Don’t say or do too much. Give them a taste of it and let them ask for more
Don’t call them persistently. Remain available once you have given them the information they need. They will contact you when they are ready

3.2.4 Sales Letters
Personalised
Same principles apply as when addressed to an individual

3.2.5 Sales promotion
Why might you have a sales promotion?
To turn slow moving inventory into cash
Hold a sale
Display the item more prominently
Introduce a new product or service to an existing market
Customise or adjust the product
Appeal to a specific target market
Change the attitudes of customers
Price the new product differently
Package it an a way that makes it more appealing

Case study: Cell C
Until a few years ago, MTN and Vodacom were the only cellphone providers in South Africa. The technology was new and both companies offered very similar products. The news that a third cellphone provider was entering the South African market was received with some skepticism. Will they be able to introduce their product into an existing market? Their advertising slogan or pay-off line “Cell C for yourself” clearly targeted the individual and tried to make you feel special. Read the article below and discuss the questions that follow in your group.

Case study: Cell C
Cell C wins award for Joburg city art
CELLPHONE operator Cell C has won an international award for its innovative “For the city” art advertising campaign in downtown Johannesburg.
The award, given by international media monitor group Mediaedge:cia, is entitled the Global Idea Award. Over 70 entries were received from around the world. The competition was launched with the aim of recognising the best media campaigns worldwide.
“ We’re extremely proud of this body of work, it’s a world-class effort, we’re very, very proud to have won,” says Moira Sheridan, Media and Public Relations Manager at Cell C. The campaign was designed to help revitalise the inner city. Cell C launched in South Africa in November 2001 and has so far signed up more than 1.3 million subscribers.

Case study: Cell C
Questions
Compile a list of at least three different Cell C advertisements that the group members are aware of. Exclude the examples in the case study
What strategy or strategies did Cell C use and are they still using to enter the market and to grow its market share?
Ask each member of the group what image or emotion they think of first for each of the four cellphone providers
MTN
Vodacom
Virgin
Cell C
Is your group in agreement with the answers above? What lesson can be learned from these answers?

4. Discuss customer relations
Discuss customer relations practices, e.g. after-sales service, customer surveys to determine levels of customer satisfaction
discuss the process for recording customer information
explain approaches for correct use of customer records in marketing and selling business products / services
describe an implementation plan for customer relations

4.1 Customer relations
How do you build good customer relations?
Build t rust
Create a relationship
Be empathetic
Reciprocate

4.1 Customer relations
What actions can you take to better customer relations?
P rovide better customer service
Make call centres more efficient
Cross sell products more effectively
Help sales staff close deals faster
Simplify marketing and sales processes
Discover new customers
Increase customer revenues

4.2 After sales service
Steps to take to ensure good after sales service
Call a customer a few days after a major sale to ensure that he/she is still happy
Handle customers’ complaints promptly
Always do what you say you will do
Call a customer if you think of something that might solve his / her problem
Call a customer you know received a very good service from your business. It will impress him/her even further

4.3 Dealing with complaints
Acknowledge that the customers have a right to be irritated i.e. “I understand why you are unhappy”
Give an assurance that you will take care of things and then do it
Make a sad-glad statement, i.e. “I am sorry you experienced a problem, and I am glad you told me about it!”
Ask the customer what will make him happy, e.g. “How can I make this better?” Customers often ask for less than you thought it would take to rectify matters
Confirm that you will do it because you want to keep him/her as a customer

4.4 Measuring customer satisfaction
How does one measure customer service
Use a customer service questionnaire, similar to the market research questionnaire

4.5 Keeping records
What is a database?
A database is a record of customers that contains a variety of information
Information contained can include
Current details
Responses to advertising campaign
Courier delivery dates
Sales and purchase dates
Account information
Service and support records
Demographic data
Web sales data

4.5 Keeping records
Reporting customer information

5. Explain the basic principles of negotiation to secure new business
At the end of this outcome, you should be able to
Identify applications to stimulate customer interest in the features of product/service
Identify ways to maintain customer satisfaction by responding objectively to customer queries relating to goods or services
Discuss the process for recording evidence of sales performance
Explain how to achieve professional excellence against targets by using records of sales performance
Prepare information to respond to further customer needs, & update customer records

Applications to stimulate customer interest in the features of product/ services
Creative advertising
Focus on regular “sales”
Get more involved in personal selling, develop an effective selling system
Send out regular sales letters
Put products or a service on “promotion”

Ways to maintain customer satisfaction
Create a relationship with your customers
Be empathetic when listening to them
Reciprocate by giving a little of yourself
Provide an after-sales service. Call them and find out whether they are satisfied
Deal effectively with complaints by adhering to the guidelines dealing with complaints. Don’t pretend you care for your customers. Care about them

Records of sales performances
Link a specific sale to the salesperson
This can be measured against sales targets for each salesperson

Information to respond to further customer needs, and update customer records
Keeping accurate customer information of your customers
Different customer database categories will assist with this. Examples are:
Did they respond to advertising campaigns?
Courier delivery dates
When they bought
What they bought
Demographic data
Did they buy from your website?

Summative assessment
Doran Knight decided to open a gas line installation business in Walmer, a suburb in Port Elizabeth. Municipalities around the country encourage people to switch to gas since it’s cheaper and electricity is now a scarce resource. We all need to save electricity. Doran suspects there is a real gap in the market and decided to investigate.

He discovered the following:
There are two other gas appliance-related stores in the area, but since the demand is growing, things are looking up. Also, not one of them currently does gas installations. The other matter that caught Doran’s eye is the newly introduced Council (municipality) regulations for all new gas installations. It is now a specialised service. A “gas plan” (almost like building plans) must be submitted and approved before a new gas installation is allowed. Doran thinks that he can apply for this on behalf of his customers and once approved, do the actual installation. A typical installation will include a gas line from the gas bottle that must stand outside the house, to the stove, geyser and even a fireplace. A “gas regulator” and fire extinguisher are other safety features to be installed in keeping with the new council regulations.
Entrepreneurship Level 2 Future Managers

2800 families live in the area. The average income is R10 000 per month. Doran estimates that they spend approximately R500 per month on electricity. Doran discovered that at least 10 households per month want to switch to gas. The cost of a typical gas installation is R1200.

Questions
Describe Doran’s target market.
Pick an appropriate name for Doran’s business and explain why you think it is a cool name
How would you ‘brand’ Doran’s business?
Design an advertising strategy for Doran’s business
Draw up a very simple “questionnaire” for Doran’s business to test whether households want to switch to gas. You may only ask four questions under each section of the questionnaire
Calculate the size of Doran’s market
Design a poster for Doran’s business. Use the name you picked earlier as part of your design.

Recap
Can you Identify customers for a new venture?
Identify basic needs common to all people and rank them in order of importance?
Compare the basic needs of people for different socio-economic groups?
Discuss the possibilities of introducing a new product/service to an existing market?
Explain, using examples, the concept of benefits of product/service?
Identify factors that may motivate people to buy the product/service of a new venture?
Identify attitudes, values and other factors that could prevent people from buying a product/service of a new venture?

Recap
Can you survey opinions for products of the new venture define a questionnaire?
explain the different components of a questionnaire?
compile a questionnaire?
identify at least 3 people to be surveyed for marketing information?
interview the people in the sample using the prepared questionnaire?
estimate the likelihood of success?
present the information?

Recap
Can you promote the product or service of a new venture?
define promotion?
present suitable ways in which to promote the product/service of the new venture
provide examples
explain how the promotion will be implemented

Recap
Can you discuss customer relations?
Discuss customer relations practices, e.g. after-sales service, customer surveys to determine levels of customer satisfaction
Discuss the process for recording customer information
Explain approaches for correct use of customer records in marketing and selling business products / services
Describe an implementation plan for customer relations
If you can, congratulations, you are ready to move onto the next module

NCV 2 Entrepreneurship Hands-On Support Slide Show - Module 2

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