marketing section. def: individuals or companies that are interested in your particular product or...
TRANSCRIPT
CREATING YOUR BUSINESS PLAN
Marketing Section
TARGET MARKET Def: Individuals or companies that are
interested in your particular product or service and are willing to pay for it (Who & Where)
Put yourself in your customers’ shoes
HOW TO IDENTIFY TARGET MARKET The following are questions you must ask:
Final Consumer Age, Gender, Income, Religion, Race Location How do they spend their time/money Needs or wants satisfied How many live in area Demand for product Where do they currently buy What are they willing to pay Competitive advantage
Business Consumer Industry Location Needs or Wants satisfied
MARKET SEGMENTS Def: Groups of customers within a large market who
share common characteristics
Example: Leisure services market is broken into following segments:
Outdoor Adventurers Frequent Vacationers Couples who eat out often
Targeting the entire market would make ZERO sense. Restaurant segment is broken down further:
Fast Food Sit down Italian Food/Chinese Food
CUSTOMER PROFILE Def: Description of the characteristics of
the person or company that is likely to purchase a product/service
Demographics Psychographics Use-based data Geographic data
SAMPLE CUSTOMER PROFILE
Sporting Goods Store Individual 23 to 52 years of age Participates in sports Wants good quality sports equipment Looks for good prices Lives in Mendham Average household income $42,000K/yr
DEMOGRAPHICS Def: Data that describes a group in
terms of the following:AgeMarital StatusFamily SizeEthnicityGenderProfessionEducation Income
PSYCHOGRAPHICS Def: Data that describes a group of
people in terms of the following:TastesOpinionsPersonality TraitsLifestyle Habits
USE-BASED DATA Def: Data that helps you determine how
often potential customers use a particular service
Ex: If you were starting a travel agency, how often do potential customers travel
GEOGRAPHIC DATA Def: Data that helps you determine
where potential customers live and how far they travel to do business with you
Ex: If you were opening a coffee shop it would be important to know that people are not willing to travel more than a mile for coffee
MARKET RESEARCH Def: A system for collecting, recording,
and analyzing information about customers, competitors, products/services
Can be expensive and time consuming
Primary Data vs. Secondary Data
PRIMARY Information collected for the very first
time Used to identify and understand target
market Options
SurveysObservationFocus Groups
DisadvantagesTime consuming and Expensive
SECONDARY DATA Found in already published sources Places to find it:
Publications issued by government or community organizations US Census Bureau Chamber of Commerce
Books on industryWebsites for Government or BusinessBooks on EntrepreneursTrade Magazines and JournalsNewspaper articles and statistics
6 STEPS OF MARKET RESEARCH 1. Define Question
Who is target market? 2. Determine Data Needed
What data do you need to collect 3. Collect Data
How will you go about collecting? 4. Analyze Data 5. Take Action
How will you use data to make decisions 6. Evaluate Results
Gage the decisions you make on data
KNOW YOUR COMPETITION Direct Competition: A business that
makes most of its money selling the same or similar products/services to the same market
Indirect Competition: A business that makes only a small amount of its money selling the same or similar products/services to the same market
COMPETITIVE ANALYSIS 1. Make a list of competitors 2. Summarize the products and prices
offered 3. Strengths and weaknesses of
competition 4. Strategies and objectives of
competition 5. Determine opportunities in market 6. Threats to business of competition
HOW TO COMBAT COMPETITION Build Loyalty
If customers want to only shop at your business you don’t have worry about competition
How to build loyaltyListen and respond to feedbackSuperior serviceMore convenient hoursStore-specific credit cards Personal notes or cards to say happy b-
day/thanxFrequent-buyer programs
MARKETING STRATEGY A plan that identifies how the goals you
wish to achieve through marketing will be achieved
It should addressProduct introduction or innovationPricingDistributionPromotionSales or market shareProjected Profitability
MARKETING PLAN Product or Service Target Market Competition Marketing Budget Business Location Pricing Strategy Promotional Strategy Distribution Strategy
PRODUCT Product Mix
Different products you will offer Features
Colors, Size, Quality, Hours, Warranties, Delivery
BenefitsHealthy, cost effective, safe, reliable, long
lasting Branding
Name, symbol, design used Packaging Positioning
PRICING OBJECTIVES
Before you select strategy, you need to establish objective.
Maximize SalesDiscourage CompetitionEstablish Image Increase ProfitsAttract Customers
RETURN ON INVESTMENT (ROI) The amount earned as a result of the
investment (usually expressed as %)
If you want to receive a 15% return on your investment of $5,000 you would need to price your product so that it will earn $750$5,000 x .15 = $750
MARKET SHARE Business’s percentage of total sales
generated by all companies in the same market
If MiniappleUS sells $192,500 in a market with a total size of $1,750,000, then you have an 11% market share.
If you have a new product then you have 100% market share
MARKET SHARE (CONTINUED)
MARKET SHARE Ways to increase market share:
Lower PricesAdvertisingNetworking
If MiniappleUS wants 40% of the market and a 10% ROI I would need to generate $700,000 of the $1,750,000 of the market (1.75M x .40)
I decide to lower prices to gain traffic and once I increase market share I can raise prices slightly to increase my ROI.
PRICING (GOODS) Demand Based Pricing
Find out what consumers are willing to pay for your product and price accordingly
Cost-Based Pricing Using the wholesale cost and determine price
with markup price. If you chose to markup 40% for artichoke
hearts that cost $1.77 wholesale you would do the following $1.77 x .40 = $.71 $1.77 + $.71 = $2.48
You would then sell your artichoke hearts at $2.48
PRICING FOR SERVICES Time Based Pricing
A plumber charges $100 an hour for a job that is 1.5 hours would take in $150.
You must determine if you want to charge separately for parts and materials.
BundlingCombining under one charge rather than
making customer pay for each part of the service
Internet, Phone, TV
PRICING FOR IDEA Licensing
Process of selling your idea to a company for the development and launch of new product
Payment: Up Front Payment Royalties
Payment on percentage of sales Annual Minimum
You get paid a minimum amount each year regardless of sales
PRICING STRATEGIES Introductory Pricing
Sales will be low, marketing costs high, and little profit will be made at beginning of product life cycle Price Skimming
Used when a product is new and unique and starts with a high price to recover costs for development
As more competitors enter, price may be dropped
Penetration PricingLow prices to build a strong customer baseDiscourages competition
PRICING STATEGIES (CONT) Psychological Pricing
Based on belief that certain prices have impact on how customer percieves product Prestige Pricing
Selling high to create a feeling of superiority Odd/Even Pricing
Suggests that customers are sensitive to certain ending numbers ($29.99 vs $30.00)
Price Lining Different levels of pricing for items Customers go to price they can afford
Promotional Pricing Limited time pricing to increase sales
Multiple Unit Pricing 10 for $10 which suggests a bargain and customers
will buy more than if priced individually
PRICING STRATEGIES (CONT) Discount Pricing
Customers are offered reduced price Cash Discounts
Pay before this time, save moneyCompany gets cash quicker
Quantity DiscountsBuy more and saveCuts down costs on business selling expenses
Seasonal DiscountsUsed for selling seasonal merchandise out of
season