Strategic Planning in the Small Business

Unit 2 HO 2-5 (continued)

unnecessary. In this regard, it may be

useful to compare ad­

vertising and promotion expenditures to those typical of the

industry. Of course, the actions of immediate competitors must

be considered. If they are investing heavily in advertising, sim­

ilar

response may be necessary to ensure market share.

Price

The business should carefully evaluate

its pricingstrategy. Price

can be a difficult and complex factor tc rate

and thus, must be

approached carefully. First, price should reflect

the strategy or

image the business desires to project. A discount store will make

a statement about its image through its pricing structure. A

business stressing

quality, service, or exclusivity will price dif­

ferently to reflect its image. The strength or weakness of a

pricing strategy is strongly

affected by that of the competition.

A business may set its prices based on its costs for raw materials,

assembly, and sales. Given these factors, it may be unable to

lower price and still receive an acceptable return. When a key

competitor lowers price, the firm's inability to respond accord­

ingly may be viewed as a price weakness.

Size of operations,

economies

of scale, and production efficiency may enable a

business to offer products at consistently lower prices than the

competition. Here, price may be rated as a definite strength.

Distribution

The final area of marketing resources to be evaluated is that

of distribution. Here, one must consider the channel of distri­

bution. Are these channels accessible and acceptable? Does the

product flow from the business

to consumers in a reasonable

and cost effective manner? In many cases, the business' product

reaches the individual consumer only

after passing through a

set of intermediaries. For example, the small manufacturer may

distribute directly to retailers or to a wholesaler,

who in turn,

sells to a number of retailers. Each stage of the distribution

process may need to be evaluated to ga;n a cleat notion of the

relative strength of the entire system.

Chapter Two Internal Analysis 77

220