Small Business Marketing

Small business marketing 0
Small business marketing
Student’s Name
4/17/2019

Small business marketing 1
Chapter 6: Small Business Marketing, Product and Pricing Strategies
1. Small business marketing includes the activities of identifying the target market,
analyzing the opportunities and the potential target market while communicating
and delivering satisfaction to the customers. The scope of small business
marketing is limited because of the limited budget, human resource, limited
adoption of technology and the luxury of creativity is limited. The scope of small
business marketing is broadened in recent years due to the more involvement in
digital marketing and increasing the opportunity to target a niche market. The
increasing awareness through digital platforms has helped small businesses to
expand their sales and target potential customers (Burns & Dewhurst, 2016).
2. Market segmentation refers to a process of forming a group of consumers who
have similar needs and wants. The variables of market segmentation include:
Demographic segmentation
In this segmentation is done on the basis of shared demographic or personality
quality which includes age, income, occupation, marital status, gender.
Geographic segmentation
In this segmentation targeting of customers is done on the basis of climate,
population density, and size (Venter, Wright & Dibb, 2015).
Psychographic segmentation
In this segmentation, the emphasis is laid upon attitude, behavior, and interest of
individuals. It is characterized by shared values, opinions and values of customers.
Benefit segmentation
Segmentation of the consumers is based on what particular benefit of the
product appeals to them.

Small business marketing 2
The segmentation is largely based upon the size of the business. In a small
business, the different variables of segmentation remain limited to small areas
while the larger business covers large geographic segmentation areas and other
segmentation are also wider as compared to small business (Venter, Wright, &
Dibb, 2015).
3. Penetrate pricing technique is the one in which new product is offered initially at a
low price to attract more customers while in skimming pricing strategy the firms
set higher prices at the initial stages to reap maximum profits.
The penetration pricing strategy is used to increase market share and increase
sales in a shorter period. It is done when the new product is already provided by a
large established brand. On the other hand, skimming pricing method is adapted to
skim the cream from the market. It charges higher prices at the initial stages
because the demand at the earlier stages in inelastic and earns huge margins to
cover the cost of the new product (Du & Chen, 2017).
4. Contribution = Selling price-Variable cost
= $5-$1
= $4
Break event point= Fixed cost/Contribution
= 10000/4
= 2500 units
5. Yes, the company can keep its price $10 because in this situation there would be
no loss and no profit. On the other hand, if the intention of the company is to earn
higher profits in the short run then the company will have to increase its selling
price.