MGT602 Entrepreneurship Assignment 2 Solution Fall 2012

It is very important for entrepreneurs to carefully handle their marketing mix variables i.e. product, price, placement, and promotion. A smart entrepreneur carefully examines the product’s acceptability, price strategies, product placement at different locations and promotional activities. Promotional activities play an important role in the overall success of a business. Multinational companies and local manufacturers operating large firms allocate millions of rupees to promote their product and snatch a bigger pie of market share. Same promotional pattern is least observed among small business owners. They give least importance to promotional activities and consider promotional budget as unnecessary expense. But proactive entrepreneurs have clutched the importance of promotion in increasing sales and allocate some amount for their promotional activities. In Pakistan, more than 3.2 million small and medium size businesses are operating. These businesses contribute around 30% of Pakistan’s GDP and employ a large number of people. Small businesses are comparatively easy to start and operate. They have great potential for growth but performing below the expected rate. One leading factor responsible for this stagnancy among SMEs is lack of promotional activities. As mentioned above, they are not familiar with the fact that how a simple promotional activity can sustain the competitive edge over competitors. They prefer to follow the traditional methods of running the business. In fact, they are losing a big share of the market due to this lethargic attitude towards promotional methods. REQUIREMENTS Q1. In your opinion which factors hinder the small business owners to stay away from promotional activities in Pakistan? Give sufficient arguments in the favor of your answer. Here are some factors which hinder the small business owners to stay away from Promotional activities.

  1. Most of areas of Pakistan are rural.
  2. Lack of Knowledge and awareness.
  3. Lack of Money.
  4. Poor product quality
  5. Lack of Discipline
  6. Poor Business Planning.

(15 marks) Q2. What methods a small business owner can use to promote his product/service within a small budget? Finding new customers is the major challenge for Small business owners. Small businesses typically

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find themselves strapped for time but in order to create a continual stream of new business, they must work on marketing their business every day. Common marketing techniques for small business include networking, word of mouth, customer referrals, yellow pages directories, television, radio, outdoor (roadside billboards), print, email marketing, and internet. Electronic media like TV can be quite expensive and is normally intended to create awareness of a product or service. Another means by which small businesses can advertise is through the use of “deal of the day” websites such as Groupon and Living Social. These Internet deals encourage new visitors to small businesses. Many small business owners find internet marketing more affordable. Google AdWords and Yahoo! Search Marketing are two popular options of getting small business products or services in front of motivated Web searchers. Successful online small business marketers are also adept at utilizing the most relevant keywords in their site content. Advertising on niche sites can also be effective, but with the long tail of the internet, it can be time intensive to advertise on enough sites to garner an effective reach. Creating a business Web site has become increasingly affordable with many do-it-yourself programs now available for beginners. A Web site can provide significant marketing exposure for small businesses when marketed through the Internet and other channels. Some popular services are WordPress, Joomla and Squarespace. Social media has proven to be very useful in gaining additional exposure for many small businesses. Many small business owners use Facebook and Twitter as a way to reach out to their loyal customers to give them news about specials of the day or special coupons and generate repeat business. The relational nature of social media, along with its immediacy and 24-hour presence lend intimacy to the relationship small businesses can have with their customers, while making it more efficient for them to communicate with greater numbers. Facebook ads are also a very cost-effective way for small businesses to reach a targeted audience with a very specific message. In addition to the social networking sites, blogs have become a highly effective way for small businesses to position themselves as experts on issues that are important to their customers. This can be done with a proprietary blog and/or by using a backlink strategy wherein the marketer comments on other blogs and leaves a link to the small business’ own Web site. A solid public relations strategy that utilizes speaking engagements, press releases, feature stories, events and sponsorships can also be a very cost-effective way to build a loyal following for a small business.