Marketing Section. Def: Individuals or companies that are interested in your particular product or...

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