bsbmkg501 ebook v1.1

8/18/2019 Bsbmkg501 eBook v1.1

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eBook

BSBMKG501B Identify and evaluate marketing opportunities

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BSBMKG501

IDENTIFY ANDEVALUATE

MARKETINGOPPORTUNITIES


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eBookBSBMKG501 Identify and evaluate marketing opportunities

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Contents

Introduction ...................................................................................................... 4

1 Identify marketing opportunities ............................................................... 6

1.1 Analyse information on market and business needs to identify marketingopportunities .................................................................................................. 7

1.1.1 SWOT Analysis .................................................................................. 8

1.1.2 The marketing mix .......................................................................... 11

1.1.3 Ethics and regulation in marketing .................................................... 13

1.1.4 Law and regulation .......................................................................... 15

1.1.5 Is marketing the same as selling? ..................................................... 17

1.2 Research potential new markets and assess opportunities to enter, shape orinfluence each market, and the likely contribution to the business ....................... 18

1.3 Explore entrepreneurial, innovative approaches and creative ideas for theirpotential business application, and develop into potential marketing opportunities 22

1.3.1 Tools and techniques for generating ideas .......................................... 25

2 Investigating marketing opportunities ..................................................... 30

2.1 Identify and analyse opportunities in terms of their likely fit withorganisational goals and capabilities ................................................................ 30

2.2 Evaluate each opportunity to determine its impact on current business andcustomer base .............................................................................................. 31

2.2.1 Knock out factors ............................................................................ 32

2.2.2 Present value analysis ..................................................................... 33

2.2.3 Forecasting..................................................................................... 34

2.3 Use an assessment of external factors, costs, benefits, risks and opportunitiesto determine the financial viability of each marketing opportunity ....................... 38

2.4 Determine probable return on investment and potential competitors ........... 40 2.4.1 The risk versus benefit ..................................................................... 44

Media differences ....................................................................................... 46

2.5 Describe and rank marketing opportunities on their viability, and likelycontribution to the business ........................................................................... 47

3 Evaluate required changes to current operations ....................................... 49

3.1 Identify and document changes needed to current operations to takeadvantage of viable marketing opportunities .................................................... 49


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3.2 Ensure organisational changes to service an increased or different customerbase including provision for continued quality of service to existing customers ...... 50

3.3 Estimate resource requirements for changed operations ............................ 52

3.4 Determine and communicate viability of making changes to current operationsto key stakeholders ....................................................................................... 54

3.5 Document newly identified marketing opportunities and required changes ... 56

Appendix - Useful templates and guides ............................................................. 57

Conclusion ...................................................................................................... 60

Appendix - Types of marketing strategies ........................................................... 61

The marketing mix ..................................................................................... 64

Product ..................................................................................................... 64

Price ......................................................................................................... 69

Place ........................................................................................................ 74

Promotion ................................................................................................. 80

References ...................................................................................................... 83


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IntroductionThis unit describes the performance outcomes, skills and knowledge required toidentify, evaluate and take advantage of marketing opportunities by analysing marketdata, distinguishing the characteristics of possible markets and assessing the viabilityof changes to operations.

It applies to individuals working in senior marketing management roles that, togetherwith a marketing team, identify, investigate and evaluate marketing opportunities todetermine whether they meet organisational and marketing objectives. Based on thisevaluation, changes to current business operations can be determined to takeadvantage of marketing opportunities.

Let’s consider a few important facts about marketing before we continue.

Principles of marketing

Marketing is an organisational function, and a set of processes for creating,communicating, and delivering value to customers, and for managing customerrelationships in ways that benefit the organisation and its stakeholders.

Kotler et al (2007).

What is value? How does understanding this benefit a business?

Value is generally determined by a customer’s needs, wants and demands.

Needs = a state of felt deprivation

Wants = the form taken by human needs as they are shaped by culture andindividual personality

Demands = human wants that are backed by buying power

Kotler et al (2007).

Answering these questions about what we need and want can be complex. Marketinghas historically been considered a creative discipline. In reality, marketing is scientificand follows a common scientific method:

Marketing is a social science related to why humans behave the way they do, andhow we can work with or modify that behaviour to make a profit for our business.

What makes people purchase goods? To answer this question you need to undertakethe above steps.

Ask a question Do background

research

Construct a

hypothesis

Test yourhypothesis by

doing anexperiment

Analyse yourdata and draw a

conclusionCommunicateyour results


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Customer satisfaction

This depends on a product’s perceived performance in delivering value relative to abuyer’s expectations. In other words:

What do buyers expect? What was the perceived performance of the product? How did these two compare?

If the (perceived) performance is higher than the expectation, the customer issatisfied. If not, the customer is dissatisfied. The key is to match customerexpectations with product performance, because satisfied customers make repeatpurchases and tell others about their good experiences with the product and thecompany providing the product.

Example We don’t expect much from a wooden train set. It costs $10, and we

may be very satisfied with it. Electric sets cost more but it also doesmore. Because our expectations are higher we may not be satisfied.

Exchange is the act of obtaining a desired object or service from someone byoffering something of value in return. Exchange is not the only way we can get thingsthat we need/want.

If we are hungry we can hunt, fish, plant, harvest, beg or steal. By exchanging,people can concentrate on making things they are good at, and trade them forneeded items made by others thus creating a wider variety of products.

Exchange is central to marketing, and requires a few important conditions:

Two parties must be involved Each must have something of value to the other Each must want to deal with the other Each must be able to accept or reject the other’s offer They must be able to communicate with each other

If all conditions exist, both parties can exchange, and hopefully be satisfied.

Transaction is the unit of measurement used in marketing. A transaction is a tradeof units of value between two parties.

In a transaction, we must be able to say that one party gives X to another party andgets Y in return. Not all transactions involve money. Sometimes we exchange goodsor services (barter).

Beyond just transactions, marketers today need to build and maintain relationshipsbetween themselves and other important parties. This is what is known asrelationship marketing.

Relationship marketing is the process of creating, maintaining and enhancing strong,value-laden relationships with customers and other stakeholders.


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1 Identify marketing opportunitiesA marketing opportunity is considered to be an identified need, want or demand abusiness can work with because the need, want or demand is not being addressed bycompetitors.

Needs that are unmet are marketing opportunities.

Needs - can be those need that are unmet or which are the result of change. Changein consumption, use of technology, attitudes and behaviours of consumers, or manyother factors which cause a need to exist.

Before business can begin to determine marketing opportunities it is important tounderstand information regarding two areas:

Internal impacts on the business itself. Where are we going? What are the

objectives of the business? In short we need to conduct a business review sothat we understand what the business needs to do External impacts for the market: What is happening in the market itself? Are

their more innovations being developed that will impact on the existing buyers?How does the industry or competition impact on the sales of your business?What are the external forces that will impact on the business within thatmarket?

In general we could consider the following to be the principles of marketing: Clarify your business objectives

Use innovation and creativity to know and understand:o Your target group and your customers behaviouro Your USP (unique selling proposition) unless you can do this you

cannot target your marketing properly and effectively - understandwhat makes your business or product different or unique

o The business purposeo The market needs and how they will access your product, company

and brand Segment your customers, where do they belong, what matters to them? Know your consumer buying behaviour – successful brands encourage the

participation of their customers

What does theorganisation want to

achieve?How will we do

that?

Understand thesituation, our

customers andenvironment we

operate in

How will we knowthat?

Research andgathering ofinformation

Information comesfrom customers and

from industry.Examin behaviour

from many sources


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Marketing is a decision making process where business and marketers decide onstrategies to make sure the long terms objectives of the organisation are met. Thereare many different strategies that may or may not work for your business, there is acomprehensive list of possible strategies in the appendix of this eBook.

Planning for the marketing of your business is an important step in understandingyour customers and what you are able to do to meet their needs. It is important toassess the marketing environment. Consider undertaking an analysis of strengths,weaknesses, opportunities and threats (SWOT).

1.1.1 SWOT AnalysisSWOT is a method for considering the pros and cons of a situation:

Internally we look at strengths and weaknesses (factors that belong to theorganisation)

Externally examine opportunities and threats (factors that belong to thesituation and environment)

SWOT analysis is used as a first step to developing a strategy for achieving specificobjectives and is useful for generating new ideas and opportunities.

In marketing we need to consider the impact of current strengths and weaknesses ofour operation. What will help us to develop and market products that successfully

meet the needs of our customers? What will prevent us achieving our goals?

Potential market - all thepeople who could buy

your product

Available market - allthe people who canafford your product

Qualified available market- those who can legally

buy your product

Target market- peopleyour business wants to

service with yourproduct

Penetrated marketcurrent customers


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Current opportunities and threats help us to understand the external influences thatcan help us or stop us from achieving our goals. What are our competitors doing?What changes can impact on our success? In this table there are several genericSWOT examples that can be applied to a wide range of business applications:

SWOT analysisStrengths Weaknesses

Corporate governance

Experience and knowledge

Capabilities and innovation

Competitive advantages

Operational capacity and efficiency

Experienced sales force

Advertising networks

Existing quality management systems

Financial reserves and capabilities

Accreditations

Reputation and branding

Cost advantages

Total dependence one supplier or source

Gaps in supply chain management

Limited finances and cash flow

Operational limits and inefficiencies

Lack of competitive positioning

Unsustainable deadlines

No accreditation or certification

Under developed processes and systems

Lack of experience and knowledge

High turnover of staff

Inadequate marketing

Opportunities Threats

New partnerships and distribution channels

Improvements to business technology

Implementation of social media networkingstrategies

New product research and development

Improved sustainability and environmentalimpact

Global market reach

Changes to demographics and target marketneeds

Loss of financial backing

Loss of staff

Competitor impact

Decrease in market share

Changes to legislation or regulations

Restricted supply

Cancelled contracts or partnerships

Global financial impacts

New technologies or advances

You can audit your strengths and weaknesses against quality, time, cost, competitoror industry benchmarks or performance indicators.

SWOT analysis can be used in many situations such as:

Commercial viability Product positioning Branding Sales forecasting Acquisition strategies Risk management Organisational design


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Marketing planning requires us to know the answers to many questions regarding thedirection to be taken as a business and the attitudes of our target audience.

We need to consider the impact of attitudes to a wide range of attitudes and beliefs.These can include but are not limited to:

Environmental considerations what attitudes will our customers adopt in relationto manufacturing of certain products What do we do better than our competition? Where might new customers come from? How will technology help us, or not? With our products with our business in

general or with the way we operate? How will the political landscape affect us and our customers? What legal factors will impact on our production or operation? What are the needs of specific groups of customers?

There is not one size fits all in marketing consider the needs and attitudes of a rangeof customers.

Strategy in marketing refers to the long term direction the organisation chooses to takeso they can meet their objectives and plans. The plan to ensure the success of thebusiness. Forming a strategy that works for your organisation will take into account:

How people in the organisation think, are they willing to think creatively tomake sure the objectives are met?

Actively search out new opportunities and ways of performing in the business

and the market place Understanding what your customers want and how to deliver, which of the

opportunities to fill those needs work and which may not? Areas that provide high yield improvement deserve the most resources Maintain competitive advantage What kind of media campaign is being used? Can it be expanded to include

cross media (includes more than one media eg: television, print, web, directmail and in house promotions)

Are your plans inclusive of social media? This is an important area to markethow will you address your strategy to capture this opportunity?

Promotional strategies allow for sampling of products, if this works for yourproduct how will this roll out across the organisation? Who needs to beinvolved?

How are you going to manage Loyalty of your customers? Is there a loyaltyprogram? Does it work well? How do you know?

Alliance marketing is a strategy where more than one entity joins together topromote and sell products, services, ideas. All parties in the alliance stand togain as much as the other


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Whether your business decides to pursue heavy web based marketing or print mediaor social media, it is important to decide on a strategy or strategies which meets theobjectives and goals already determined by the organisation. Your marketing needs todrive business to your organisation. How will your customer reach you? Consider allthe elements of the marketing mix in your strategy.

1.1.2 The marketing mixThe marketing mix is the set of controllable marketing variables that the companyblends to produce the response it wants in the target market . Kotler et al (2007)

It refers to the various elements making up the practice of marketing in its totality.Often referred to as the Four P’s:

Product Quality and features. Why do your customers need what you areselling? What are the perceived benefits of your product? Product is agood service, idea, place or person - whatever is for sale whatever weare selling. Considered to include core - benefits the product offersthe customer, actual which is the physical product and augmentedthe whole package including warranty, delivery and after salesoptions for example.

Price List price, discounts, allowances etc. what will make them part withtheir money? What the customer is willing to exchange for theproduct that they want. Consider price as well as all the costs, time,social, lifestyle for example.

Place Retailers, locations, warehousing where do your customers go to fulfiltheir needs? How available is the product to your customers? Thisrelates to channels of distribution as well as actual places the productis available from.

Promotion Advertising, personal selling, sales promotions . All activities, actionstaken to let customers know about the product benefits and how thisproduct fits their needs.

The Four P’s are closely linked to the consumers Four C’s:

Product Customer needs and wants

Price Cost to the customer

Place Convenience

Promotion Communication

The extended marketing mix

In recent years, the marketing mix has been extended to include people, process andphysical evidence. This is largely as a result of the marketing of services.

People Important particularly in the marketing of services.

Process Customers migrate to other service providers when theprocess is not providing customer value.


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Physical evidence Examining every aspect that customers use in theirperceptual field to assess such a service.

There is a significant amount of information relating to the marketing mix. There isadditional content in the appendix of this eBook.

When you are considering the information available to you regarding the market andyour own business make sure you answer questions regarding the marketing mix.

You have a new product to sell, is it enough to create a product and launch it onto themarket to sell?

The simple answer is of course not. You need to understand why your customerswould want to buy your product. What motivates and interests them, who are they?What alternatives are available in the market place already?

Case studyLet’s assume you are intending to open a café in a suburban area to cater for stay athome mums and their children. There will be a crèche in the café to give the mothersa break while the children are looked after by qualified child care staff.You would be foolish to begin a business based on what you think? Ask yourself whatother cafes are in the area? Why would someone choose to come to your café overthe alternatives? Do your potential customers want to go out with their children or is

it easier to stay at home with them.It is important to understand some particular questions about your customers,otherwise known as the target audience.

What price are customers prepared to pay to come to your café? If the neighbourhood is a relatively low socio economic area there may be

problems with paying for the service you intend to provide Are there fathers who stay at home in this area? Perhaps they want different

kinds of outings in the day for them and their children to mothers and children What kinds of promotion opportunities will work with your audience? Are they

all social media users or not? If they are not your work may be lost if youchoose to market via social media exclusively

Is the location you have chosen convenient? Since customers will be comingwith prams is there space for them in the café or is there a pram parking lot?

Targetmarket

intended

position

Price

People

Product

Process

Place

Physicalevidence

Promotion


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Is your business able to support this idea, is the marketDoing this initial planning and research is critical to the success and identification ofmarketing opportunities. Remember a marketing opportunity is considered to be anidentified need, want or demand a business can work with because the need, want ordemand is not being addressed by competitors.

Ask the hard questions to gather the answers to help you with your planning.

1.1.3 Ethics and regulation in marketingMarketing imposes a great deal of influence on the social landscape. The onus is onyou to behave in a responsible way to use your power wisely. Your decision as abusiness owner or operating in business is to be ethical and to do the right thing,always. Competition is one thing, using your competitive advantage is differentmatter. You cannot use your position to disadvantage any person or group of people.For example:

Children who are inexperienced and vulnerable Elderly who may not understand the intricacies of technological change

Manufacturing a product which is unsafe or defective

Poor ethical practice can also involve: Providing misleading information Fixing prices to reduce competition Exploitative behaviour in any way

There are a range of ethical and legal boundaries in the Australian marketing

landscape: Unfair pricing Financial responsibility and accountability Planned obsolescence and deceptive practices Consumerism Environmentalism Globalisation Corporate social responsibility

Unfair pricingConsumers often complain of high prices as a result of the high costs of distribution,high advertising and promotion costs and excessive profit margins of middlemen.There is the argument (rightly or wrongly) that intermediaries in the marketingchannel, mark up their prices beyond what is fair so as to make excessively highprofit margins. As a result, the distribution costs too much and consumers are forcedto pay the price.

Marketers are also accused of pushing up prices to cover the costs of inflated orineffective advertising media.

Example A heavily promoted brand of aspirin is 10 times more expensive than aless promoted brand. Differentiated products e.g. cosmetics, detergents


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or toiletries include promotion and packaging costs, sometimes up to 40%of the manufacturer’s price to the retailer. These are passed on to theconsumer. Additional charge occur when margins are inflated to extremelevels. E.g. it is common in the pharmaceutical industry to sell a pill thatcosts 5 cents to produce at between 40 and 90 cents. Some of this isinvested in research and development of new drugs, however, thearguments continue.

Financial responsibility and accountability

Making sure marketing expenses relate to the appropriate activities means we areable to measure the impact on the profit margin. Is the percentage of expense spenton marketing the product reasonable and able to be justified?

Planned obsolescence

Another criticism often levelled at businesses is that they develop products with builtin obsolescence. That is, that products are designed to break down so that consumersneed to buy a new product earlier than is reasonable, or that products are releasedwithout certain features so new models can be released that are more desirable thanthe previous model. This concept is most often applied to electronic and computergoods manufacturers.

Deceptive practices

Refer to any practice that leads consumers to believe that they will get more valuethan they actually do. They usually fall into one of three categories:

Consumerism

The increased involvement of government agencies and consumer interest groupspushing and monitoring regulations designed to protect consumer rights.

Environmentalism

We must become increasingly aware of the impact on the environment of marketingdecisions ranging from product design and development through to promotionalstrategies. As more and more people are demanding sustainable options we need tobe ahead in all aspects of business, not just marketing.

Globalisation

The increase of globalisation explains why competition is stronger, communication isbetter, we have an increased access to cheaper labour and materials, and transport is

Deceptive pricing

• May relate to falsely over orunder stating factory orwholesale prices, or a largereduction in a fakeRecommended Retail Price(RRP)

Deceptive promotion

• Relates to the overstatementof a products features orperformance, attractingcustomers to the store for a

‘bargain’ that is out of stock,or even running riggedcompetitions

Deceptive packaging

• Can include exaggerating thecontents of the product usingunrelated or unrealisticimages or design, not fillingthe package to the requiredlevel, misleading terms orlanguage


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more efficient. In short the world is becoming smaller and we need to consider thiswith our marketing approaches.

Increasing global connectivity and integration in economic, social, technological,cultural, political and ecological spheres causes issues in marketing.

There are two schools of thought, globalisation may result in: A convergence of patterns of production and consumption and a

homogenisation of culture The potential to take many diverse forms

Often considered in this context is the concept of exploitation of third world ande merging economies to benefit the wealthiest 10% of the world’s population in firstworld economies. These third world countries provide lower costs in terms ofresources and labour but also open up broader markets of people with disposableincome to become consumers of all manner of goods and services.

Corporate social responsibility

Organisations are obligated to take responsibility for the impact of all aspects of theiroperations. Customers, employees, shareholders, communities and the environmentcan all be impacted positively and or negatively. This obligation is seen to extendbeyond the statutory obligation to comply with legislation and sees organisationsvoluntarily taking further steps to improve the quality of life for employees and theirfamilies as well as for the local community and society at large.

The term ‘triple bottom line ’ has traditionally referred to people, planet and profit.

How we look after the people in our organisation and our customers, how we impacton our community and planet from a social and environmental perspective and ourfinancial responsibility of course needs to be observed in balance with the otherissues. Experts now refer to the quadruple bottom line and includes governance andhow we behave as an organisation. It does seem to be difficult to describe the actualfour, with words like cultural, social, sustainable, economic, spirituality and purpose.Whichever ‘headings’ you subscribe to this refers to an expanded spectrum of valuesand criteria for measuring organisational (and societal) success: economic, ecologicalsocial and responsible wellbeing for all.

1.1.4 Law and regulationMarketing is covered by many pieces of legislation and peak body regulations. Theseinclude, but are not limited to:

Australian Consumer Law 2011 Competition and Consumer Act 2010 is a commonwealth law formerly Trade

Practices 1974 Fair Trading Acts Privacy laws

Protection of Intellectual Property, Trademarks and Copyright Australian Competition and Consumer Commission (ACCC)


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Australian Communication and Media Authority (ACMA) Do Not Call Register Australian Advertising Standards Bureau (ASB) ACMA Australian e-marketing Code of Practice Australian Direct Marketing Association (ADMA) Code of Practice

Australian Marketing Institute (AMI) Code of Conduct Australian Association of National Advertisers (AANA) Code of Ethics Australian and New Zealand Standard Industrial Classification Anti-Discrimination Act National Classification Scheme SPAM Act enforced by ACMA

Consider the organisations that advocate for fair information and legal cases to supportconsumer rights for example, Choice, is a publication by the Australian Consumers

Association and Consumer Action is a consumer based website that takes action againstunfair practices on behalf of consumers who can’t take the fight themselves.

Go to the Advertising Standards Bureau website for the Codes administered by ABSwww.advertisingstandardsbureau.com.au .

Regulation of advertising

Advertising media are regulated by a number of internal and external bodies.

Internal regulators

Australian PublishersBureau APB

An advisory opinion body to its publisher members and theirconstituent publications, on legal and other issues affectingadvertising.

Aust. Assoc. of NationalAdvertisers - AANA

The AANA is the peak advertising industry bodyrepresenting the rights and responsibilities of Australia’smajor advertisers and their industry partners.

Advertising Federation ofAust. - AFA

The AFA is the peak body representing companies inadvertising and marketing communications to industry,government, media and the public.

Federation of Aust. RadioBroadcasters - FARB

FARB is the national industry body representing theinterests of Australian commercial radio broadcasters. FARBprovides a forum for discussion of industry matters and actsas a political advocate on behalf of the industry

Commercial TelevisionIndustry Code of Practice

Regulates the content of free-to-air commercial television.

Codes of practice are important guidelines which dictate how industry should behavetowards its customers.

Example ‘The objectives of the code of practice of the Australian DirectMarketing Association (ADMA) are to:

• Ensure business and consumers have access to the product and serviceinformation they need to make informed choices

http://www.advertisingstandardsbureau.com.au/http://www.advertisingstandardsbureau.com.au/http://www.advertisingstandardsbureau.com.au/


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• Minimise the risk of members breaching the Trade Practices Act 1974, PrivacyAct 1988 including the National Privacy Principles (NPPs), Spam Act 2003 orState fair trading legislation

• Promote a culture among members of conducting their businesses fairly,

honestly, ethically and in accordance with best practices; and increase businessand consumer confidence in doing business with ADMA members' (ADMA 2012)’

The Free TV Australia Commercial Television Industry has a code of practice whichregulates marketing on commercial television. It ‘... covers matters prescribed inSection 123 of the Broadcasting Services Act and other matters relating to programcontent that are of conc ern to the community ...’ (Free TV Australia 2010).

The Australian Guidelines for Electronic Commerce (Attorney General's Department2012), which replaced the Australian E-commerce Best Practice Model, offer guidelinesfor fair trading and protection of both consumers and traders who are engaged in e-

commerce or online trading.

External regulators

Aust. Competition andConsumer Commission -ACCC

The ACCC promotes competition and fair trade in themarket place to benefit consumers, business and thecommunity. Its primary responsibility is to ensure thatindividuals and businesses comply with the Commonwealthcompetition, fair trading and consumer protection laws.

Competition and ConsumerAct 2010 - replaces TradePractices Act 1974

Promotes competition and fair trading to protectconsumers. The Act deals with almost all aspects of the

marketplace: relationships between suppliers, wholesalers,retailers, competitors and customers. It covers unfairmarket practices, industry codes, mergers and acquisitionsof companies, product safety, product labeling, pricemonitoring, and the regulation of industries such astelecommunications, gas, electricity and airports.

Privacy legislation

Australia’s privacy regimes involve a range ofCommonwealth and state/territory enactments, judicialdecisions, industry codes of practice and action byindividual players (consumers, businesses, other entities).

Aust. Communication andMedia Authority ACMA

ACMA is responsible for regulating online content, including

internet and mobile phone content, and enforcingAustralia's anti-spam law.

1.1.5 Is marketing the same as selling?Analysis of the information gives the organisation a base on which to build futuremarketing activities.

Marketing is not exactly the same as selling Rix (2011, p.11) says:

‘Under the sales approach, a company first makes a product and then uses variousselling methods to persuade customers to buy it. Just the opposite occurs under the

marketing approach i.e. the company finds out what the customer wants and thentries to develop a product that will satisfy that want and still yield a profit. ’


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Bangs (1989, p. 27) modifies this by saying,

‘That's fine if you have the luxury of choosing your target market andproduct/service mix. Most of us, though, are limited by our experience andinterests, to say nothing of other limitations such as money, family obligations and

so forth. ’ These two statements sum up the theory and the practical reality of marketing.Marketers in the real world must collect and analyse data so they understand therequirements of their markets and find products which match them. They must alsoconstantly search for new markets which require their existing products. Bangs(1989, p. 27) advocates that it is advisable to:

‘Change gradually to a marketing orientation. Understand your target markets in depth,and measure the products/services you offer against the demands of those markets. ’

Marketers use data analysis to refine existing marketing and suggest newactivities.

1.2 Research potential new markets and assessopportunities to enter, shape or influence eachmarket, and the likely contribution to thebusiness

Finding new markets can provide opportunities to improve sales volume, growth,market share and profitability. Before entering a new market, thorough researchmust be done to balance potential advantages against risks in entering the newmarket. New markets can be similar to, or radically different from the existing marketthe organisation currently operates in.

What is a new market? It is a market your business has not previously trade into. Orit is a brand new opportunity. The internet and online sales was a new market formany businesses at the beginning of the technology boom. Now if your businessdoesn’t have an online presence there is a problem!

The internet provides opportunities for organisations to enter the e-commercemarket. Within the e-commerce market which is huge, we need to target effectively.

Example Amazon and Cars guide both operate in the e-commerce market, but theirtarget markets, even though they could have large numbers of commoncustomers are very different. An individual consumer might buy booksone day and a car another day, but for marketing purposes they are partof two separate markets.

E-commerce should not be viewed as a market, but as a tool which opens uppreviously unreachable markets. Small retailers have traditionally had their marketslimited by geography and storage space. E-commerce removes restrictions by givingthem access to any market connected to the internet and allowing them to shipgoods directly from the wholesaler without the need to first stock it in their store.


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If an organisation traditionally markets only within its own country, export marketscan be a source of new markets. Exporting is another tool rather than ahomogeneous market. Japan and the United Kingdom could both be export marketsfor Australian canned tuna, but they are clearly not one market because of theirgeographic separation and cultural differences. Exporting can be a rewarding tool foropening up new markets.

Regardless of which tools they use, organisations can develop new markets bytargeting market segments they have not yet penetrated. Marketers subdivide thewhole market into groups or segments, whose members have something in commonthat marketers can use.

‘The members of a group or segment will be similar to each other, with respect towhat influences their demand for the particular good or service. ’ Rix 2011, p. 116

There are many ways to segment the market; the final choice for any organisation

will depend on products and culture. Most marketers make a fundamental divisionbetween business markets, which buy goods and services to use in a business or tore-sell, and consumers, who buy goods and services for their own personal use.

When organisations target demographically based segments they must ensure thatthey do not breach anti-discrimination legislation.

Example A halal restaurant is likely to target Muslim people, while a female friendlymechanic would target women. Both can say positive things about theirtarget markets and indicate that the target groups can trust them toprovide good, friendly service and not take advantage of them in any

way. They must not denigrate or exclude other groups.Organisations seeking to penetrate new markets must first define the market andresearch its characteristics. They must then find new or existing products whichmatch the requirements of this market.

Example A hardware store currently supplies mainly to the local consumer marketand decides to market to tradespeople. Tradespeople is too broad asegment (it can include all building trades as well as trades likehairdressers, mechanics and bakers etc.). The target needs to be limitedto building trades. Even building trades is very broad. Carpenters,plumbers and electricians all have some common requirements, but eachtrade also has unique requirements.

After defining the market it is time to research requirements:

Acquire a database of potential customers from your target market. Businesscan do this in a number of ways, including finding details from the Yellow Pages,using competitions and questionnaires in the store, sending a representative tovisit specific areas or employing a market research organisation

Promote suitable products from its current range to the market and also obtainnew products if research shows that lines which are not currently stocked wereimportant to the market


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Conduct your SWOT analysis, consider a PEST analysis – Political, Economic,Socio-cultural and Technological factors that can affect your opportunities toenter markets

Organisations can start with a product and find new markets for it.

There are several methods of research:

Primary- this is information gathering for your own data. You may conduct aquestionnaire or contract someone to survey your customers for you. This kindof research may be as a result of information you found out at the stage ofconducting secondary research. This level of research allows us to focus on aspecific issue. It can be somewhat expensive and time consuming

Secondary research focuses on the analysis of the results of primary research. As amarketer we need to ask if the information we need has already been gathered byothers. If it has we can gather that information from a range of sources to draw apicture of our audience, their needs and of our market or industry. Secondaryresearch refers to the analysis of the information already available

Sources of information can come from:

Tailor made surveys and questionnaires and market research specificallytargeting your issue (primary)

Records of company performance – historical and financial records, academic

research, specialist information (secondary). Analysis of the figures will provideyou with performance based results, understand the impact of profit, cash flow,earnings per share, return on equity will be discussed further in the eBook

Government research – Australian Bureau of Statistics gathers informationevery 5 years and aims to measure each household and their occupants, thisprovides information for marketers regarding the population, where they live,how much money they earn, family size and structure, the level of informationis comprehensive and valuable (secondary)

Creative workshops using focus groups and brainstorming sessions with adiverse group to come up with potential opportunities to evaluate and consideras options for your business (primary)

What does theorganisation want to

achieve?How will we do that?

We need to understandthe situation, our

customers andenvironment we operate

in

How will we know that? Research and gatheringof information

Information comes fromcustomers and from

industry. Examination of

behaviour from anumber of sources


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Example In 2011 (the last census) Brisbane had grown by 11.5% since the 2006census information. The next census will be held in August 2016.

Case study

In the case of the café this may be providing a different slant on the café experience in thearea. It may have been established that no competitors are offering the same service andthat this is considered to be valuable by our target audience.

At this stage we would conduct a SWOT analysis to determine the strengths, weaknesses,opportunities and threats of our plan.

We should also conduct a PEST analysis.

Through your research (which may mean looking at census results for your intended locationand area, focus groups and brainstorming) you may discover that the target market caresabout the environment and about growing and eating healthy food with no preservatives.This will inform your menu choices, organised activities and approach you offer to child care.If you weren’t aware of these opportunities you may provide options for your customers thatare at odds with their values. Plastic disposable cups may aggravate your target marketinstead of providing a choice to reuse all cups for coffee which may be a basic expectationfor them.

Be prepared and understand what is happening for the community, your competitors andyour target audience.

Your primary research may lead to an opportunity to work with an organic fruit andvegetable supplier to hold a market onsite each Saturday, a chance to develop a newbusiness opportunity to support your business and fill a need for your clientele.

A hardware store could obtain the agency for a line of trade quality battery operatedpower saws. The combination of portability, power and battery life make it ideal foruse on building sites.

Analysis of the market might show that carpenters use portable power saws morethan all the other trades combined on a building site, and therefore have most to gainfrom a safer, more efficient product. The store could embark on a marketingcampaign promoting the benefits of no power leads or air lines, time saving,increasing safety and improving profitability. Research has already identifiedcarpenters have the most to gain from these benefits so the initial campaign could bedirected at them. Expansion to other trades may be an offshoot from this.

A large retail business could consider advances in technology to improve theiroutcomes. They would need to take into account weaker consumer demand (byanalysis of financial results). Understand the actions of the competition and why theyare doing what they are, is it working, can you incorporate changes to youropportunities? If you have a large checkout element to your organisation considerhow improvements to access, technology and process can improve the outputs. Forexample do self-service checkouts help your business? Using the marketing mix inthe appendix how do these important marketing considerations help you with your

planning and when identifying new opportunities?


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Organisations sometimes create new opportunities by entering a marketwith deliberate intentions of changing it .

Example Apple's introduction of the iPad. Apple introduced the iPad into thepersonal computer market with the intention of changing the market.

Another example, on a much smaller scale, is a cooperative called The People'sSupermarket, which was established in London in May 2010. It entered the local foodmarket with the clearly stated intention of winning customers from the majorsupermarket chains and changing their shopping habits and expectations. Its missionstatement says:

‘We seek ... to create a community supermarket that highlights the possibilities ofconsumer power and challenges the status quo ’ (The People's Supermarket 2012).

Social media, such as Facebook, Linked In or Twitter, are other tools to develop newmarkets. It would be appropriate to use social media to target products developed forsingle people in their twenties. Facebook advertisements can be specifically targetedto be seen specifically by the target market.

There are entire libraries dedicated to the statistical analysis of data. You must dowork on making sure your research is reliable and valid, these are statistical termsreferring to how likely it is that the data can produce reliable and useful results. Didthe research measure what it was supposed to? This is a measure of its validity. Youalso need to be sure your data is free from errors.

Remember to keep your original question in mind when looking at your research.

1.3 Explore entrepreneurial, innovativeapproaches and creative ideas for theirpotential business application, and developinto potential marketing opportunities

Thinking differently and innovatively is an essential driver for creating solutions thatmaximise potential for new and improved marketing opportunities. The followingdiagram has been adapted from the websitehttp://www.dukeven.com/Home/Evaluation/Market-Opportunity

http://www.dukeven.com/Home/Evaluation/Market-Opportunityhttp://www.dukeven.com/Home/Evaluation/Market-Opportunityhttp://www.dukeven.com/Home/Evaluation/Market-Opportunity


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Consideration of these factors will assist your business in making the right decisionsfor their innovative thinking and approaches. Can any of these areas be useful to workon to fit with the overall strategic direction?

Consumer demand (change in consumer needs) Changes in technology Impact of international players competition in local area Diversifying to increase/protect market share Reducing cost of labour

If any areas increase the potential for profit, it is worth exploring further.Case study

Our café is getting organised, they believe they have a good idea of who the target marketis and what they want. Now it is time to challenge the ideas they already have.

Their current thoughts to date are to:

EnvironmentWhat is the potential customer’s

current environment?What behaviour or processes

exist?

What is the need or problem to befilled or solved?

Potential customersWhat characteristics create this

need/problem?How many customers are there?

How does this equate toconsumption? Are there issuesaffecting use and frequency ofuse?

SegmentsAre there important differences

among potential customers(relative to the need/problem you

have identified)?

ValueHow severe is the need or problem

identified? Do your customersrecognize that they have this

need? How can you measure thevalue of a solution?

Buying processHow does your customer buy

from you? Is there only one way?What are major barriers or

obstacles to purchase/use of asolution to the identified need or

problem?

Is the solution completelyindependent or are other,

complementary products/servicesrequired? If the latter, whosupplies these products and

services? Can you integrate thiswith your proposed solution?

Is any part of the process affectedby monopoly or concentrated

power?If so, how does your proposed

solution align with the powerfulfirms?

Are any people or groupsthreatened by your product orservice? Are any relationships

threatened? Are you relying onother industries and/or productsor technologies to be adopted?


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Case study Employ a child care expert to manage the crèc he and a café manager to run the café. They won’t

need an overall manager because the other two can report to the owner easily enough

The crèche is to be open from 9 – 3 pm. The rationale is that most people have afterschool sport and other children to look after

The café will close at 3.30 pm. The menu will be quite complex to cater for breakfastand lunch as well as snacks

At the moment the café has to decide if they have a solution to a problem for their customeror a change in need and use of a product. Does the potential customer for the caféunderstand that they have this need for an uninterrupted conversation and cup of coffeewith other adults? All while their children are being actively amused by a qualified carer?

The owners and managers hold a brainstorming session with the team and other selectpeople from the community they ask the following questions (italics) and receive thefollowing information:

How do your customers buy from you? Is there only one way? Parents need a place toget good healthy options for afternoon tea and coffee to take to the sporting field,closing at 3.30 causes a problem for those customers

What behaviour or processes exist? They don’t want too much choice and love to eatbreakfast all day, with a few healthy and gluten free cakes for a treat

Is the solution completely independent or are other, complementary products/services required? If the latter, who supplies these products and services?Can you integrate this with your proposed solution? The crèche could do morebusiness with after school care assuming they are licensed to do this, closing earlyhowever will put a stop to this activity. After school activities are highly sought after,there is an opportunity for older children to take part in art classes in the crèche, itmay require another provider but this is an additional service which could be verylucrative, especially in the holidays

What does our customer want but cannot buy? Customers indicated that they wantedto be able to take home roast dinners especially after late school based sportingevents

As you can see there are many other options than the traditional café approach. Thinkinnovatively to solve the new marketing opportunities creatively.

Ask and watch. Observe research and brainstorm alternative approaches to solutionsto best suit your target audience and what is important to them. The stage of marketresearch are predominately these. Understand your customer by watching and

listening. Talk to them and others to determine what is important to them. Payattention to the overall environment, the closeness of another business may promptan opportunity to work with them to build both businesses. Only an aware businessperson is willing to think creatively to provide solutions to the needs of theircustomers.

Consider how many people are available to take up your idea? Are their enoughcustomers to make it viable and successful? How can you be sure of your figures?What will make them take up your opportunity? What will stop them?

What if your opportunity is a great idea but not one people are willing to pay for? Aretheir cultural issues to be overcome before this can be used fully by your audience?


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Are their barriers to the technology? Perhaps there are too many alternatives availablefor your options to be attractive.

The first step is to develop a conscious mind set of looking for ideas andopportunities because without this there will be fewer ideas and many

opportunities will pass unnoticed. Entrepreneurs do not have a magic gift. They train their minds and practice focussingtheir awareness. They are observant and prepared to take calculated risks, knowingthat some of their ideas could fail. Entrepreneurs have ideas and see new options andopportunities to be developed into businesses. Anyone can adopt an entrepreneurialapproach to their marketing by developing their ideas and being prepared to take onnew opportunities.

Example In 1938 Heublein purchased the United States rights to Smirnoff vodka.Sales were very slow until they changed the product to use whiskey

corks.... In Kentucky sales rocketed as the distributor started marketingSmirnoff as ‘white whiskey, no taste, no smell ’ (Wikipedia 2012).

1.3.1 Tools and techniques for generating ideasEntrepreneurial ideas come from creative thinking.

Professional marketing organisations have creative teams, whose function is togenerate new, creative ideas. It is possible to use idea generation techniques insmaller teams to learn creative thinking and use your team to come up withinnovative solutions.

In order to manage marketing for your business or organisation you sometimes needto think ‘outside the box ’ . This is not always easy to do. Being proficient in using somewell-known strategies to generate ideas is a critical management skill.

The goal of idea generation is to come up with a variety of new approaches orsolutions to an issue at hand. Whether done alone or in groups, idea generation ismore productive when you follow a few guidelines and use various techniques thatencourage divergent thinking (suggesting many different options) and deliberatemental processes of attention, escape (challenging an existing concept), andmovement (generating ideas freely).

Brainstorming

Alex Osborn, the developer of the brainstorming technique, suggests basic guidelinesfor generating ideas:

Criticism is not allowed, participants are encouraged to express any idea The more ideas, the better, each idea is explored in detail to see whether there

is potential to develop it into a new marketing opportunity All ideas are recorded without regard to their relevance or usefulness, even

ridiculous, irrelevant ideas expressed by one member can trigger valuable ideas

in another member, outlandish ideas are welcomed, the wilder the better


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The whole list is examined. Silly, irrelevant or unworkable ideas are removed(and set aside in case they are valid at another time) so the final list containsonly ideas which have potential to be developed

Building on and improving ideas is encouraged

Brainstorming is a popular tool that helps you generate creative solutions to aproblem by gathering a list of ideas spontaneously contributed by a group or anindividual.

It is particularly useful when you want to break out of stale, established patterns ofthinking, to develop new ways of looking at things. This also helps overcome many ofthe issues that can make group problem-solving a sterile and unsatisfactory process.

It asks that people come up with ideas and thoughts that can at first seem to be a bitcrazy. Some of the ideas can be crafted into original, creative solutions to a problemyou're trying to solve, others can spark still more ideas. This approach aims to get

people unstuck, by ‘ jolting ’ them out of normal ways of thinking.While group brainstorming is often more effective at generating ideas than normalgroup problem-solving, there have been many studies showing that when individualsbrainstorm on their own, they come up with more ideas (and often better qualityideas) than groups of people who brainstorm together.

Partly this occurs because, in groups, people aren’t always strict in following the rulesof brainstorming, and bad group behaviours creep in. Mostly, though, this occursbeca use people are paying so much attention to other people’s ideas that they're notgenerating ideas of their own – or they're forgetting these ideas while they wait fortheir turn to speak. This is called ‘blocking ’ .

Brainstorming does have limitations however. A number of studies have found that alarge quantity of ideas/solutions does not necessarily lead to quality ideas orsolutions. Groups have been found to perform better than individuals when theemphasis is placed on finding a quality idea rather than a large number of ideas.

There is also evidence that brainstorming actually performs poorly in terms of ideageneration compared with other techniques or variations due to:

People interrupting each other

The effect of the group on the individual (like attention seeking behaviour andshyness)

Self-interested laziness (like social loafing and free-riding)

To avoid productivity losses associated with brainstorming it is suggested that:

Brainstorming groups are kept small in size

Authoritative observers should not be present

Group members write down ideas rather than vocalising them

Group members should still generate ideas together rather than alone

Evaluating is an important part of the generation of quality ideas/solutions


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If ideas are to be vocalised, group participants must be aware of rules dealingwith interruptions, shyness/attention seeking behaviour and laziness

Mind maps

Mind Maps were popularised by author and consultant, Tony Buzan. They use a two-dimensional structure, instead of a list format conventionally used to take notes.

Mind maps are more compact than conventional notes. They help you makeassociations easily, and generate new ideas. If you find out more information afterdrawing a mind mapyou can easily integrate it with little disruption.

More than this, mind mapping helps you break large projects or topics down intomanageable chunks, so you can plan effectively without becoming overwhelmed orforgetting something important.

A good mind map shows the ‘shape ’ of the subject, the relative importance of

individual points, and the way in which facts relate to one another. This means thatthey're very quick to review, as you can often refresh information in your mind just byglancing at one. In this way, they can be effective mnemonics - remembering theshape and structure of a mind map can give you the cues you need to remember theinformation within it.

Scenario analysis

Scenarios are stories about the way the world might turn out if certain trends continueand if certain conditions are met. A simple five step method is:


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Scenario planning is a useful way of challenging the assumptions you naturally tend tomake about the situation in which your plans will come to fruition.

By building a few scenarios, you can foresee more unknowns that may come to pass,and be able to plan measures to counteract or mitigate their impact.

An organisation's competitors can provide ideas for marketing. The entrepreneurialapproach is not to just copy them, but to ask and answer the question, 'What arethey trying to achieve, and how can we do it better?' It is often easier to lookobjectively at another organisation than at one's own, especially in very smallorganisations with only a few people.

Customers, sales representatives, other personnel and suppliers can also be sourcesof entrepreneurial ideas which have potential to turn into marketing opportunities.

Adopting an entrepreneurial approach to marketing is a very creative activity and it isimpossible to give a set of step-by-step instructions for creativity. Organisations andtheir personnel who wish to adopt an entrepreneurial approach must first analysecurrent circumstances to use as the starting point for future plans.

• Scenarios should look at the future by focussing on a specific issue. E.g.Howcould a change in government policy affect our business operations? Whathappens if the Australian dollar devalued / increased in value?

Define a focal issue or decision:

• Social, economic, environmental, political, and technological factors mostrelevant to the issue being reviewed. They should be prioritised according totheir level of predictability and importance in affecting the desired outcome.

Identify driving forces

• Stories that explain what effects there is on business operations or strategicdirection. Good scenarios combine a solid understanding of present trendswith a focus on outcomes sought by decision makers. To make the scenariorealistic conduct research to obtain relevant data. Data may come frominternal and external sources.

Write scenario plots

• Once scenarios are developed, decision makers within the organisation shouldreview implications that outcomes uncovered by the scenario would have onthe organisation.

Consider the implications

• Once scenarios have been built and refined, they should be written in easy-to-read language. Contingency plans for scenario outcomes should beintegrated into organisational procedures. Use or modify existing systems tomonitor progress toward operational goals as well as changes in the externalenvironment.

Disseminate scenarios


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Once an organisation has explored entrepreneurial, innovative ideas it must developthem into marketing opportunities. This requires them to:

Identify the market and its requirements Specify the product if a new product is being developed

Plan the marketing campaign Test the marketing plan Refine the marketing plan Implement the marketing plan

What is a marketing plan? It is a written plan to describe and direct the marketingactivities of the organisation. It is a road map that helps business decide where theyare, where they want to go and how they will get there. It helps clarify how to appealto your audience and what they need. It can include strategies, budgets and goals.

This is similar to any other marketing campaign. An entrepreneurial approach tomarketing is really only different from other approaches because it uses a morecreative method of generating ideas and has the potential to develop ideas which areradically different from previous marketing campaigns.

We have moved through the first two steps of this process, in the next section we willlook at the evaluation of the ideas to see how they fit within the overall organisationsdirection.

Gather all theideas together

Sort through

ideas. Screen theideas for suitabilityConcept and test

your ideas

Analyse thebusiness andstrategy formarketing

Fine tune yourprototype, developa firm idea of your

businessTest again Proceed after finalchanges

Review again in aspecific time frame


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2 Investigating marketing opportunities2.1 Identify and analyse opportunities in terms of

their likely fit with organisational goals andcapabilities

We need to understand clearly what the organisations looking to achieve. What arethe financial goals, the social aims, the environmental priorities and the brandconsiderations?

You and your team now have determined a list of options for marketing opportunities.Do they fit with the organisations goals? If they don’t , then go back to the drawingboard. If they do then move onto the next stage of realising the value of themarketing opportunities.

Consider the strategic and operating plans for the business. What are the objectivesfor the short term and the long term? How will you be able to plan for long termobjectives with your marketing opportunity?

Is your business capable of working with the increased demand? It iscounterproductive to sell more products if the manufacturing capacity is limited to thecurrent levels. This will not fit with the organisational goals and capabilities, theorganisation would be better to work with increasing capacity first.

Identifying the opportunities for marketing for the business is part one, can thebusiness achieve the objectives within the new direction, what trends will impact onthe new plans or opportunities? What impact will your competition have on yourplans?

Case studyThe initial planning of the café is to achieve the following operational goals:

A 10% net profit in the first 6 months They are hopeful of employing another staff member after this time Hold a local market onsite within 3 months – to become involved in the local market scene to

work on expanding their business

How do the ideas work with these goals?

Remember these results from their brainstorming and idea generation?

Idea : Provide good healthy options for afternoon tea and coffee to take to the sporting field

Solution : Now closing at 4.30, picnic options to be included in the menu.

Idea : Limit choice on the menu, offer breakfast all day, with healthy and gluten free cakes

Solution : Menu is simplified with seasonal changes, makes less waste, simpler planning andmore consistency, works in with the option for takeaway healthy choices

Idea : After school care and activities are highly sought after.

Solution : Offer older children art and cooking classes in the crèche as an alternative to thesport only activity only being offered in the community.

Idea : Customers indicated that they wanted to be able to take home roast dinners


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Case studyespecially after late school based sporting events

Solution : Consider this option in the second part of the first year of trading work on theother ideas first.

Other businesses may look to expand their market share by becoming more visible,more stores, and greater opportunities for online sales for example. They coulddevelop new products in response to consumer demand or changes in trends.

Example Grocery stores could consider the changes in working hours and thefact that many families have both parents working. Healthy, pre-prepared meals could be an important area of growth – a newopportunity. Also home delivery could be another area of growth. Ifthe grocery chains weren’t paying attention to trends anddevelopments they may miss the potential of this opportunity. Many of

the larger grocery chains have expanded into alcohol sales anddiscount stores to broaden their exposure and to provide moreproducts for their customers, more opportunities!

Do your markets value ethics and environmental values in their products? Are organicproducts important to your markets? How do you know if they do or don’t? Payattention once again, ask them and listen to them when they talk. We have alreadydiscussed the importance of ethical and fair behaviour in marketing it is just asimportant to appeal to your customers and help them make fair purchasing decisions.

2.2 Evaluate each opportunity to determine itsimpact on current business and customer base

Each marketing opportunity will impact on your business in some way. The key here isto understand the impact on your business as it operates currently and your existingcustomers.

Armed with all the research you conducted in the first phase to identify the needs andwants of your target audience we can now evaluate the benefit or limitation of eachidea. How do we do this?

This is part of the process of screening ideas for suitability. Will they help or hinderyour business and overall organisational goals and objectives?

One way to evaluate is to provide a ranking for all the ideas that you know fit with theorganisational capabilities and goals. Rank them in order of likely success, mostpotential for profit or most beneficial for the overall brand of the product or business.

Consider if the opportunity performs well in a ranking system against these questions?

How easy will the idea be to implement? From starting to market entry? Does it have strong short term potential or long term potential or both? Will it add value to another product already on offer? How well does it fit with the organisational profit, environmental, image or

social goals?


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How much risk is associated with the opportunity?

An important evaluation techniques is to consider how these ideas will affect thecurrent customers of the business.

Example You own an inner city bar located near many banks and other financial

institutions. Traditionally your customers are middle and senior levelexecutives who come in for lunch meetings, after work drinks and use thebar as a place to network. You have noticed an increase of youngerexecutives out and about at lunch who are becoming active in thenetworking scene. They are much more inclined to drink and become loudand insist on other kinds of food on the menu. Is it cost effective to attractthe younger market at the expense your usual clientele? You will need toevaluate this decision and opportunity for your business carefully to avoidchanging the nature of the business completely.

Remember there is more to the value of the opportunity than purely financial. Maybea different (new) group are more fickle and will move on to the next big thing in ashort time. What if you have alienated existing customers in pursuit of a new marketopportunity?

2.2.1 Knock out factorsNew market opportunities must be evaluated to determine their impact .

It is critical all potential impacts are evaluated, unforeseen consequences of takingthe new opportunity could damage or destroy the business.

Knock out factors must be evaluated. Some would knock out the entire business,while others would only knock out one of its markets. New products can have a knockout effect. Entering a new market could knock out an existing one.

Opportunity What could happen Outcome

A supermarketexamines enteringthe home deliverymarket.

Increase in overheadsrequired to purchase andmaintain suitable vehicles,plus extra staff required.

Reduction in cash flow to anunsustainable level

A greengrocer canbuy all of their eggsfrom a battery farmat a fraction of theircurrent cost.

The supermarket has toagree to stock that supplier'seggs exclusively.

This knocks out the market forfree range eggs and those whooppose battery farming. Supermarket needs to determinesignificance of this knock out.

A music store couldhave the opportunityto enter the teenagemarket as a newmarket.

Teenagers would beattracted to the store inlarge groups to listen tomusic, dance and generallymake a lot of noise, as largegroups of teenagers do.

This might knock out the over60's market, because many ofthese people are annoyed by thenormal behaviour of groups ofteenagers, so would go and buytheir music elsewhere.


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2.2.2 Present value analysisBefore considering new opportunities, organisations often conduct a present valueanalysis in which they evaluate their current business in terms of the criteria whichwill be used to evaluate the new opportunity. This gives a base on which to judge the

new opportunity.

Analysis of information

Information Analysis Value to the organisation

Comparativemarketinformation

Compare performances indifferent market segments,e.g. a fashion retailer couldcompare performances in the teenage market and the 30 –40 year old market.

Can compare performance andprofitability in different marketsegments and plan accordingly.

Competitorperformance

An organisation analyses whatits competitors are doing.

The organisation can compare with itscompetitors and plan ways to competeagainst them.This can also be a source of ideas for future marketing.

Customerrequirements

Collecting and analysing feedback from customers.

Knowing what customers want iscrucial to planning new marketing.Customer feedback can also be asource of ideas for new products.

Legalrequirements

Analysing legislative changesto determine their effects onthe organisation’s marketingstrategies.

Reveals threats and opportunitiesenabling plans to be made for both.

Ethicalrequirements

Analysing marketing activityin terms of the organisation’s ethics.

Provides opportunities to promoteethics and integrity of the organisationinto markets with similar values and ethics.

Market trendsand developments

Making sure that the organisation understandspositive and negative trends inits markets.

Example: weaker consumerdemand, increasedcompetition, rising costs.

Enables the organisation to take advantage of positive trends andminimise impact of negative trends.

New andemerging markets

Identifying new and emergingmarkets. Considertechnological improvements.

Allows the organisation to positionitself, ready to serve these markets.

Profitability Analysing the profitability ofeach market segment.

Reveals opportunities to expand profitable markets and withdraw fromunprofitable ones.

Sales figures Analysing sales figures fromeach market segment.

Used in conjunction with profitability, sales figures aid planning for futuremarketing.


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Marketing activities are monitored in terms of their return on investment (ROI) seethe next section. Assessing new market opportunities and planning campaigns incurrent markets should be evaluated in terms of their expected costs and expectedrevenue. The ROI is the difference between these and can be expressed in dollarterms or as a percentage.

New opportunities must be evaluated against the same criteria as were used for thepresent value analysis. The exact criteria used will depend on the organisation, itsmarkets and its products. They can be evaluated according to their impact and theirimportance. Impact could be measured by a score where -10 is an extremelynegative impact, zero is no impact and +10 is an extremely positive impact.

Example Part of a music store's evaluation of its opportunity to enter the teenagemarket could include the following information.

Criteria Score Weight Comments

Sales revenue +8 Important Bigger market.

Profit +9 CriticalMargins are similar across the board butteenagers on average buy more per sale,which reduces the average overheads per sale.

Impact oncurrent markets

– 10 NeutralWill knock out over 60’s but this will be compensated for by the large increase inoverall market.

Customerservice

standards

– 2 Important

More customers, buying more items willstretch current staff. Can be overcome byemploying casual juniors at peak times. Impactis acceptable.

Overheads – 1 Critical

Increased customers who will be careless with equipment will incur extra repair costs, butthis can be absorbed by the expected increasein profit.

2.2.3 ForecastingThe process of looking to the future and determining what your business will need tosupport your plans. Consider the impact of:

Numbers of employees and their skill levels Investments required in production, capacity and distribution How to promote your activities Resources required Estimate sales levels required to achieve your goals

Forecasting is a process of prediction, as such you need to be able to respond tochanges quickly to remain ahead of your plans. There are two main kinds offorecasting:

•

Macro – Forecasts markets in total, in particular total market demand


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• Micro – detailed sales forecasts, considers market share and what will happento their share of the market in the future

Business needs to consider what will happen in their markets in the short term and inthe long term, how else will they be able to predict or forecast what their future

impact will be?Firstly it is important to fully understand or be able to predict total market demand.For example how many people will go to a café at all, not just our café in our casestudy? Then we need to forecast how many of those people will go to our café. How isour café, service and product positioned in relation to the other cafés our customerscould go to?

Next we predict the forecast sales based on the information we have and the strategywe believe will be the most successful for our business based on our goals.

It is a far cry from using your intuition only. This is an educated process where youuse the research and information carefully to shape a view of the world you believeexists in relation to your product.

Quantitative or qualitative

Interpreting data requires one of two approaches. Quantitative or qualitative:

Quantitative QualitativeQuantitative research is conclusive,and takes a more logical, data-ledapproach.Due to the specific nature ofquantitative data it is particularlyuseful for assessing performance ofthe individual, the team and theorganisation.Generates numerical data orinformation which can be convertedinto numbers.Rates the likelihood as a probabilityor frequency of the risk usingnumerical weighting e.g. 1 in 200

cases will exhibit this behaviour.Quantitative data can be verified andmanipulated statistically.

Qualitative research is exploratory. Itis used when we do not know whatexpect, and need to define or developan approach to the problem.It focuses primarily on the issues ofinterest, looking at how people feel,what they think and why they makecertain choices.Generates non numerical data.Rates the likelihood using words andalphabetical ratings e.g. ExtremelyLikely = A.Examination of non-measurable datasuch as reputation, brand image, or

feelings people may have. E.g. Raterisk in terms of low, medium or high,or not important, important or veryimportant.

Goals Counting and classifying.Constructing statistical models andfigures to explain outcomes.Narrow hypothesis and conclusiveresearch.

Describing and explaining.Complete and detailed descriptionsWhole picture with exploratoryresearch.

Instrumentsfor datagathering

Questionnaires, surveys,measurements, Audits, Points ofpurchase, Click-streamsTrend analysis can only be

Interviews, focus groups, observation ,In-depth interviews, Participation/observation

Tools that are useful include mind


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successfully interpreted using ‘Quantitative ’ style questions thatprovides you with information basedon multiple choice, rank in order ormeasurements such as frequency.

maps, brainstorming.Information derived from qualitative

data (text) on its own may not be allthat useful for trend analysis.

Types ofdata

Numbers, tables. Words, images objects, graphs.Objective . Seeking precisemeasurements and analysis ofconcepts.

Subjective . Researchers seeks tounderstand human behaviour and whywe make the choices we do.

The decision which type of research to use is, of course, dependant on what you areaiming to achieve with your research. If you want to use numerical information tosupport your theory then use quantitative, if you need to explain why something isthe case then use qualitative. In order to analyse market trends, you need to ensurethe correct research is used.

Another consideration with gathering information especially qualitative which ofcourse is based on feelings and impressions rather than numbers and facts, is howyou ask questions to gain appropriate responses that are useful not just answers thatmake you ‘feel’ better about your business.

Open and closed are two types of questions you can use that are very different incharacter and usage.

Open questions

Definition Is likely to receive an answer that is long and detailedExamples Although any question can receive a long answer, open questions

deliberately seek longer answers, and are the opposite of closedquestions.

What did you do on you holidays? How do you keep on track at work? What's keeping you awake these days? Why is that so important to you?

Characteristics They ask the respondent to think and reflect.They will give you opinions and feelings.They hand control of the conversation to the respondent.This makes open questions useful in the following situations:

Pointers andwhy to usethem

To develop a conversation and open people upTo find out more about a person, their wants, needs, problems.To get people to realise the extent of their problems (to which, of course,you have the solution).To get them to feel good about you by asking after their health orotherwise demonstrating human concern about them.

You're looking down. What's up?Using open questions can be scary, as they seem to hand control over tothe other person.Well-placed questions do leave you in control as you steer their interestand enga

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