WELCOME TO THE ENTREPRENEURIALPROGRAM Today – Marketestimation
Agenda QUICK GROUP PRESENTATIONS WHAT ARE YOU WORKING ON HOW WILL YOU WORK ON YOUR MARKET ESTIMATION MARKET RESEARCH DIFFERENT TYPES OF MARKET RESEARCH CUSTOMER SEGMENTS, TARGETING & POSITIONING MARKET ESTIMATION WORKING ON THE PROJECTS PROJECT STRUCTURE GROUP SUPERVISION
DefinitionMarketing Research is: ”The process of designing, gathering, analyzing and reporting of information that may be used to solve a specific marketing problem” (Burns & Bush, 2000)
Beforedoingmarket research, oneshould have: A clear objective as to what the organization is aiming to achieve – both through marketing and corporate objectives A reasonable understanding of the targeted segments, and thus an ability to position the product or service
MARKET RESEARCH TOOLS Primary Research Methods Observations (going native + antropology) Focus Groups In-Depth Interviews (In person, mobile, Skype or by using video conference) Questionaries(personal, mobile, online, e-mail)
MARKET RESEARCH TOOLS Secondary Research Methods (Desk Research) Intern information (sale, payment, inventory) External information (Published or Commercial market research reports, Information about competitors, Government reports, Industry specific homepages
Market Research Ask the customerswhattheywant Ask the customerswhattheydream of Talk to ”non-customers” Talk to competitors Understand the competitors’ business model Know the positioningmap of the industry Talk to distributors TEST!!!
STP) Segmentation Determinations of variables thatwillinfluencewhichcustomer segment youfocuson Targeting Howmany segments shouldyoutarget? Which segment shouldyoutarget? Positioning Which position within a segment do youwant to obtain?
Definition Segmentation is the ability to: ”…divide the markets into groups, or clusters, of customers based upon realistic and meaningful criteria so as to offer clear, targeted benefits to every customer” (Wright, 2004)
SEGMENTING BY MARKET TYPES Mass Market = Undifferentiated Segments = Homogeneous groups Niche = Specialized customer segments Multiple segments = You serve multiple segments at once – examples could be Google or even Golf courses Customized or individual = Dell Local customer groups = You tailor the offering to meet local needs
Targeting Targeting = Which customer segment should we aim at? Can we spot any gaps in the market? Look for fit between strategy and resources
Positioning The percieved position of the brand! Does it differentiate from competitors Is there enough customers in that place? Multiple positioning strategy = Procter & Gamble
Estimating Market Potential Check-List Estimating the market or market potential for a new business or business expansion is critical in determining the economic feasibility of a venture. Estimating the market potential will determine if the market is large enough to support your businesses. What type of customer will buy the product or service? Where are these customers located? How many potential customers (N) are there? How often do they consume or use it? What is the Competition? What are people paying? What is the Potential for the Market to Develop? What is my share of the Market
Estimating Market Potential: Key Steps in Estimating Market Potential: 1. Define your target market and market segments. 2. Define the geographic boundaries of your market. 3. Derive average expenditures for the category. 4. Determine the average household income for the area and state. 5. Estimate market share
Estimating Market Potential: MP = market potential N = number of possible buyers P = average selling price Q = average annual consumption FORMULA: MP = N x P x Q
Estimating Market Potential: EXAMPLE : Agritourism Market Potential Analysis Situation - estimate the market potential for a new corn maze in Wake County, Georgia. The facility will have a maze and hayride. Other activities include pig races, hay bale play grounds, and a petting zoo. The average price for corn mazes in the area is $8.00 per person. They plan to target children 8 years old and under. There are two other competing corn maze operations. These operations have been in business for over five years and have established a clientele. Estimating Market Potential: MP = market potential N = number of possible buyers P = average selling price Q = average annual consumption Number of potential customers (target market) =101,600 people under 9 years of age P - average selling price = $8.00 per person Q - consumption - assumes an average of 1.5 visits per year per child= 1.5 MP= 101,600 * $8.00 * 1.5 = $1,219,200.00
Estimating Market Potential: EXAMPLE :Agritourism Market Potential Analysis Adjustment: It is unrealistic to assume that the operation will capture 100% of the market given they are new and there are established operations in the area. Need to estimate our market share of the corn maze business in the county. Market share = Market potential * percent of the market captured. Assume each corn maze obtains 33% of the market Market Share = $1,219,200.00 * 33% = $402,336 Use 20% and 10% to see how sensitive the market share number is and if these figures will support your business. Market Share = $1,219,200.00 * 20% = $243,840 Market Share = $1,219,200.00 * 10% = $121,92
HOW TO - Calculating The Price: Cost-plus pricing. Used mainly by manufacturers, assures that all costs (fixed and variable) are covered and includes a desired level of profit. 2) Demand pricing. Used by companies that sell their product through a variety of sources at differing prices based on demand. 3) Competitive pricing. Price according to your competitors. Used in competitive markets with little product differentiation. 4) Mark-up pricing. Adds a level of profit to the cost of the product being retailed. Also good for products that are co-packed. Evaluating Price Competitiveness: Investigate your competition. Are your prices in alignment with theirs? What is the value of your product relative to theirs? Do not be a price taker or implement a “me, too” pricing strategy if your product can be differentiated and offers a higher value than competing products. If your price is too high to compete directly in the market, look for a niche market that desires your product’s attributes and charge accordingly.
How do I KNOW IF MY PRODUCT IS DIFFERENTIATED ?
3 criteria needs to be fulfilled Does my value proposition differ from what is currently being offered to the market? Is the segment large enough for my value proposition? Is it hard for competitors to imitate, copy or replace my value proposition?
OK quality – BETTER in price and size OK price – BETTER in design OK service – BETTER in price Ok speed – BETTER in price and size
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