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BSBMKG501B Identify and evaluate marketing opportunities
1 | P a g e M a y 2 0 1 5
BSBMKG501
IDENTIFY AND
EVALUATE
MARKETING
OPPORTUNITIES
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BSBMKG501 Identify and evaluate marketing opportunities
2 | P a g e M a y 2 0 1 5 v 1 . 1
Contents
Introduction ......................................................................................................4
1 Identify marketing opportunities...............................................................6
1.1 Analyse information on market and business needs to identify marketing
opportunities ..................................................................................................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 or
influence each market, and the likely contribution to the business.......................18
1.3 Explore entrepreneurial, innovative approaches and creative ideas for their
potential 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 with
organisational goals and capabilities ................................................................30
2.2 Evaluate each opportunity to determine its impact on current business and
customer 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 opportunities
to 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 likely
contribution to the business ...........................................................................47
3 Evaluate required changes to current operations.......................................49
3.1 Identify and document changes needed to current operations to take
advantage of viable marketing opportunities ....................................................49
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3.2 Ensure organisational changes to service an increased or different customer
base 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 operations
to 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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Introduction
This unit describes the performance outcomes, skills and knowledge required to
identify, evaluate and take advantage of marketing opportunities by analysing market
data, distinguishing the characteristics of possible markets and assessing the viability
of changes to operations.
It applies to individuals working in senior marketing management roles that, together
with a marketing team, identify, investigate and evaluate marketing opportunities to
determine whether they meet organisational and marketing objectives. Based on this
evaluation, changes to current business operations can be determined to take
advantage 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 customer
relationships 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 and
individual 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. Marketing
has historically been considered a creative discipline. In reality, marketing is scientific
and follows a common scientific method:
Marketing is a social science related to why humans behave the way they do, and
how 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 undertake
the above steps.
Ask a question
Do background
research
Construct a
hypothesis
Test your
hypothesis by
doing an
experiment
Analyse your
data and draw a
conclusion
Communicate
your results
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Customer satisfaction
This depends on a product’s perceived performance in delivering value relative to a
buyer’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 is
satisfied. If not, the customer is dissatisfied. The key is to match customer
expectations with product performance, because satisfied customers make repeat
purchases and tell others about their good experiences with the product and the
company 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 does
more. Because our expectations are higher we may not be satisfied.
Exchange is the act of obtaining a desired object or service from someone by
offering something of value in return. Exchange is not the only way we can get things
that 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 for
needed 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 trade
of units of value between two parties.
In a transaction, we must be able to say that one party gives X to another party and
gets Y in return. Not all transactions involve money. Sometimes we exchange goods
or services (barter).
Beyond just transactions, marketers today need to build and maintain relationships
between themselves and other important parties. This is what is known as
relationship 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 opportunities
A marketing opportunity is considered to be an identified need, want or demand a
business can work with because the need, want or demand is not being addressed by
competitors.
Needs that are unmet are marketing opportunities.
Needs - can be those need that are unmet or which are the result of change. Change
in consumption, use of technology, attitudes and behaviours of consumers, or many
other factors which cause a need to exist.
Before business can begin to determine marketing opportunities it is important to
understand 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 so
that 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 that
market?
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 behaviour
o Your USP (unique selling proposition) unless you can do this you
cannot target your marketing properly and effectively - understand
what makes your business or product different or unique
o The business purpose
o 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 the
organisation want to
achieve?
How will we do
that?
Understand the
situation, our
customers and
environment we
operate in
How will we know
that?
Research and
gathering of
information
Information comes
from customers and
from industry.
Examin behaviour
from many sources
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1.1 Analyse information on market and business
needs to identify marketing opportunities
What are markets?
A market is the set of all the actual and potential buyers of a product. Members of a
market share common needs or wants. It is up to the marketers to identify the need
and meet it for their customers (or other stakeholders).
The size of a market will depend on the number of people who have a particular need
or want and have the resources and willingness to exchange for them.
Company looks at all of these people to determine their market:
Business needs to ask itself?
 Who are your customers, what do they need?
 Where are they and how do you reach them?
 How do they make their decisions to buy and where do they buy?
How do you find out the answers to this information? You ask, research and read.
There is a great deal of information available online and from your own business.
Gather as much information as possible to do with your customers, the potential
market and your business.
Customers Suppliers Distributors Partners
Stake
holders
Share
holders
Dealers
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Marketing is a decision making process where business and marketers decide on
strategies to make sure the long terms objectives of the organisation are met. There
are many different strategies that may or may not work for your business, there is a
comprehensive list of possible strategies in the appendix of this eBook.
Planning for the marketing of your business is an important step in understanding
your customers and what you are able to do to meet their needs. It is important to
assess the marketing environment. Consider undertaking an analysis of strengths,
weaknesses, opportunities and threats (SWOT).
1.1.1 SWOT Analysis
SWOT is a method for considering the pros and cons of a situation:
 Internally we look at strengths and weaknesses (factors that belong to the
organisation)
 Externally examine opportunities and threats (factors that belong to the
situation and environment)
SWOT analysis is used as a first step to developing a strategy for achieving specific
objectives and is useful for generating new ideas and opportunities.
In marketing we need to consider the impact of current strengths and weaknesses of
our 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 the
people who could buy
your product
Available market - all
the people who can
afford your product
Qualified available market
- those who can legally
buy your product
Target market- people
your business wants to
service with your
product
Penetrated market
current customers
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Current opportunities and threats help us to understand the external influences that
can 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 generic
SWOT examples that can be applied to a wide range of business applications:
SWOT analysis
Strengths 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 networking
strategies
New product research and development
Improved sustainability and environmental
impact
Global market reach
Changes to demographics and target market
needs
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, competitor
or 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 the
direction 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 relation
to 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 range
of customers.
Strategy in marketing refers to the long term direction the organisation chooses to take
so they can meet their objectives and plans. The plan to ensure the success of the
business. Forming a strategy that works for your organisation will take into account:
 How people in the organisation think, are they willing to think creatively to
make 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, direct
mail and in house promotions)
 Are your plans inclusive of social media? This is an important area to market
how will you address your strategy to capture this opportunity?
 Promotional strategies allow for sampling of products, if this works for your
product how will this roll out across the organisation? Who needs to be
involved?
 How are you going to manage Loyalty of your customers? Is there a loyalty
program? Does it work well? How do you know?
 Alliance marketing is a strategy where more than one entity joins together to
promote and sell products, services, ideas. All parties in the alliance stand to
gain as much as the other
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Whether your business decides to pursue heavy web based marketing or print media
or social media, it is important to decide on a strategy or strategies which meets the
objectives and goals already determined by the organisation. Your marketing needs to
drive business to your organisation. How will your customer reach you? Consider all
the elements of the marketing mix in your strategy.
1.1.2 The marketing mix
The marketing mix is the set of controllable marketing variables that the company
blends 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 are
selling? What are the perceived benefits of your product? Product is a
good service, idea, place or person - whatever is for sale whatever we
are selling. Considered to include core - benefits the product offers
the customer, actual which is the physical product and augmented
the whole package including warranty, delivery and after sales
options for example.
Price List price, discounts, allowances etc. what will make them part with
their money? What the customer is willing to exchange for the
product 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 fulfil
their needs? How available is the product to your customers? This
relates to channels of distribution as well as actual places the product
is available from.
Promotion Advertising, personal selling, sales promotions. All activities, actions
taken to let customers know about the product benefits and how this
product 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 and
physical 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 the
process is not providing customer value.
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Physical evidence Examining every aspect that customers use in their
perceptual field to assess such a service.
There is a significant amount of information relating to the marketing mix. There is
additional content in the appendix of this eBook.
When you are considering the information available to you regarding the market and
your 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 the
market to sell?
The simple answer is of course not. You need to understand why your customers
would want to buy your product. What motivates and interests them, who are they?
What alternatives are available in the market place already?
Case study
Let’s assume you are intending to open a café in a suburban area to cater for stay at
home mums and their children. There will be a crèche in the café to give the mothers
a 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 what
other cafes are in the area? Why would someone choose to come to your café over
the 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 you
choose to market via social media exclusively
 Is the location you have chosen convenient? Since customers will be coming
with prams is there space for them in the café or is there a pram parking lot?
Target
market
intended
position
Price
People
Product
Process
Place
Physical
evidence
Promotion
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 Is your business able to support this idea, is the market
Doing this initial planning and research is critical to the success and identification of
marketing opportunities. Remember a marketing opportunity is considered to be an
identified need, want or demand a business can work with because the need, want or
demand 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 marketing
Marketing imposes a great deal of influence on the social landscape. The onus is on
you to behave in a responsible way to use your power wisely. Your decision as a
business 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 different
matter. 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 pricing
Consumers 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 marketing
channel, mark up their prices beyond what is fair so as to make excessively high
profit margins. As a result, the distribution costs too much and consumers are forced
to pay the price.
Marketers are also accused of pushing up prices to cover the costs of inflated or
ineffective advertising media.
Example A heavily promoted brand of aspirin is 10 times more expensive than a
less 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 the
consumer. Additional charge occur when margins are inflated to extreme
levels. E.g. it is common in the pharmaceutical industry to sell a pill that
costs 5 cents to produce at between 40 and 90 cents. Some of this is
invested in research and development of new drugs, however, the
arguments continue.
Financial responsibility and accountability
Making sure marketing expenses relate to the appropriate activities means we are
able to measure the impact on the profit margin. Is the percentage of expense spent
on marketing the product reasonable and able to be justified?
Planned obsolescence
Another criticism often levelled at businesses is that they develop products with built
in obsolescence. That is, that products are designed to break down so that consumers
need to buy a new product earlier than is reasonable, or that products are released
without certain features so new models can be released that are more desirable than
the previous model. This concept is most often applied to electronic and computer
goods manufacturers.
Deceptive practices
Refer to any practice that leads consumers to believe that they will get more value
than they actually do. They usually fall into one of three categories:
Consumerism
The increased involvement of government agencies and consumer interest groups
pushing and monitoring regulations designed to protect consumer rights.
Environmentalism
We must become increasingly aware of the impact on the environment of marketing
decisions ranging from product design and development through to promotional
strategies. As more and more people are demanding sustainable options we need to
be ahead in all aspects of business, not just marketing.
Globalisation
The increase of globalisation explains why competition is stronger, communication is
better, we have an increased access to cheaper labour and materials, and transport is
Deceptive pricing
•May relate to falsely over or
under stating factory or
wholesale prices, or a large
reduction in a fake
Recommended Retail Price
(RRP)
Deceptive promotion
•Relates to the overstatement
of a products features or
performance, attracting
customers to the store for a
‘bargain’ that is out of stock,
or even running rigged
competitions
Deceptive packaging
•Can include exaggerating the
contents of the product using
unrelated or unrealistic
images or design, not filling
the package to the required
level, misleading terms or
language
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more efficient. In short the world is becoming smaller and we need to consider this
with 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 and
emerging economies to benefit the wealthiest 10% of the world’s population in first
world economies. These third world countries provide lower costs in terms of
resources and labour but also open up broader markets of people with disposable
income 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 their
operations. Customers, employees, shareholders, communities and the environment
can all be impacted positively and or negatively. This obligation is seen to extend
beyond the statutory obligation to comply with legislation and sees organisations
voluntarily taking further steps to improve the quality of life for employees and their
families 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 impact
on our community and planet from a social and environmental perspective and our
financial responsibility of course needs to be observed in balance with the other
issues. Experts now refer to the quadruple bottom line and includes governance and
how we behave as an organisation. It does seem to be difficult to describe the actual
four, with words like cultural, social, sustainable, economic, spirituality and purpose.
Whichever ‘headings’ you subscribe to this refers to an expanded spectrum of values
and criteria for measuring organisational (and societal) success: economic, ecological
social and responsible wellbeing for all.
1.1.4 Law and regulation
Marketing is covered by many pieces of legislation and peak body regulations. These
include, 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 support
consumer rights for example, Choice, is a publication by the Australian Consumers
Association and Consumer Action is a consumer based website that takes action against
unfair practices on behalf of consumers who can’t take the fight themselves.
Go to the Advertising Standards Bureau website for the Codes administered by ABS
www.advertisingstandardsbureau.com.au.
Regulation of advertising
Advertising media are regulated by a number of internal and external bodies.
Internal regulators
Australian Publishers
Bureau APB
An advisory opinion body to its publisher members and their
constituent publications, on legal and other issues affecting
advertising.
Aust. Assoc. of National
Advertisers - AANA
The AANA is the peak advertising industry body
representing the rights and responsibilities of Australia’s
major advertisers and their industry partners.
Advertising Federation of
Aust. - AFA
The AFA is the peak body representing companies in
advertising and marketing communications to industry,
government, media and the public.
Federation of Aust. Radio
Broadcasters - FARB
FARB is the national industry body representing the
interests of Australian commercial radio broadcasters. FARB
provides a forum for discussion of industry matters and acts
as a political advocate on behalf of the industry
Commercial Television
Industry Code of Practice
Regulates the content of free-to-air commercial television.
Codes of practice are important guidelines which dictate how industry should behave
towards its customers.
Example ‘The objectives of the code of practice of the Australian Direct
Marketing Association (ADMA) are to:
• Ensure business and consumers have access to the product and service
information they need to make informed choices
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• Minimise the risk of members breaching the Trade Practices Act 1974, Privacy
Act 1988 including the National Privacy Principles (NPPs), Spam Act 2003 or
State fair trading legislation
• Promote a culture among members of conducting their businesses fairly,
honestly, ethically and in accordance with best practices; and increase business
and consumer confidence in doing business with ADMA members' (ADMA 2012)’
The Free TV Australia Commercial Television Industry has a code of practice which
regulates marketing on commercial television. It ‘... covers matters prescribed in
Section 123 of the Broadcasting Services Act and other matters relating to program
content that are of concern to the community ...’ (Free TV Australia 2010).
The Australian Guidelines for Electronic Commerce (Attorney General's Department
2012), which replaced the Australian E-commerce Best Practice Model, offer guidelines
for fair trading and protection of both consumers and traders who are engaged in e-
commerce or online trading.
External regulators
Aust. Competition and
Consumer Commission -
ACCC
The ACCC promotes competition and fair trade in the
market place to benefit consumers, business and the
community. Its primary responsibility is to ensure that
individuals and businesses comply with the Commonwealth
competition, fair trading and consumer protection laws.
Competition and Consumer
Act 2010 - replaces Trade
Practices Act 1974
Promotes competition and fair trading to protect
consumers. The Act deals with almost all aspects of the
marketplace: relationships between suppliers, wholesalers,
retailers, competitors and customers. It covers unfair
market practices, industry codes, mergers and acquisitions
of companies, product safety, product labeling, price
monitoring, and the regulation of industries such as
telecommunications, gas, electricity and airports.
Privacy legislation
Australia’s privacy regimes involve a range of
Commonwealth and state/territory enactments, judicial
decisions, industry codes of practice and action by
individual players (consumers, businesses, other entities).
Aust. Communication and
Media Authority ACMA
ACMA is responsible for regulating online content, including
internet and mobile phone content, and enforcing
Australia'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 future
marketing 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 various
selling 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 then
tries 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 and
product/service mix. Most of us, though, are limited by our experience and
interests, 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 the
requirements of their markets and find products which match them. They must also
constantly 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 new
activities.
1.2 Research potential new markets and assess
opportunities to enter, shape or influence each
market, and the likely contribution to the
business
Finding new markets can provide opportunities to improve sales volume, growth,
market share and profitability. Before entering a new market, thorough research
must be done to balance potential advantages against risks in entering the new
market. New markets can be similar to, or radically different from the existing market
the organisation currently operates in.
What is a new market? It is a market your business has not previously trade into. Or
it is a brand new opportunity. The internet and online sales was a new market for
many businesses at the beginning of the technology boom. Now if your business
doesn’t have an online presence there is a problem!
The internet provides opportunities for organisations to enter the e-commerce
market. 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 their
target markets, even though they could have large numbers of common
customers are very different. An individual consumer might buy books
one day and a car another day, but for marketing purposes they are part
of two separate markets.
E-commerce should not be viewed as a market, but as a tool which opens up
previously unreachable markets. Small retailers have traditionally had their markets
limited by geography and storage space. E-commerce removes restrictions by giving
them access to any market connected to the internet and allowing them to ship
goods 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 markets
can be a source of new markets. Exporting is another tool rather than a
homogeneous market. Japan and the United Kingdom could both be export markets
for Australian canned tuna, but they are clearly not one market because of their
geographic separation and cultural differences. Exporting can be a rewarding tool for
opening up new markets.
Regardless of which tools they use, organisations can develop new markets by
targeting market segments they have not yet penetrated. Marketers subdivide the
whole market into groups or segments, whose members have something in common
that marketers can use.
‘The members of a group or segment will be similar to each other, with respect to
what 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 division
between business markets, which buy goods and services to use in a business or to
re-sell, and consumers, who buy goods and services for their own personal use.
When organisations target demographically based segments they must ensure that
they do not breach anti-discrimination legislation.
Example A halal restaurant is likely to target Muslim people, while a female friendly
mechanic would target women. Both can say positive things about their
target markets and indicate that the target groups can trust them to
provide 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 and
research its characteristics. They must then find new or existing products which
match the requirements of this market.
Example A hardware store currently supplies mainly to the local consumer market
and decides to market to tradespeople. Tradespeople is too broad a
segment (it can include all building trades as well as trades like
hairdressers, mechanics and bakers etc.). The target needs to be limited
to building trades. Even building trades is very broad. Carpenters,
plumbers and electricians all have some common requirements, but each
trade also has unique requirements.
After defining the market it is time to research requirements:
 Acquire a database of potential customers from your target market. Business
can do this in a number of ways, including finding details from the Yellow Pages,
using competitions and questionnaires in the store, sending a representative to
visit specific areas or employing a market research organisation
 Promote suitable products from its current range to the market and also obtain
new products if research shows that lines which are not currently stocked were
important 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 to
enter 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 a
questionnaire or contract someone to survey your customers for you. This kind
of research may be as a result of information you found out at the stage of
conducting secondary research. This level of research allows us to focus on a
specific issue. It can be somewhat expensive and time consuming
 Secondary research focuses on the analysis of the results of primary research. As a
marketer we need to ask if the information we need has already been gathered by
others. If it has we can gather that information from a range of sources to draw a
picture of our audience, their needs and of our market or industry. Secondary
research refers to the analysis of the information already available
Sources of information can come from:
 Tailor made surveys and questionnaires and market research specifically
targeting your issue (primary)
 Records of company performance – historical and financial records, academic
research, specialist information (secondary). Analysis of the figures will provide
you 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 information
every 5 years and aims to measure each household and their occupants, this
provides information for marketers regarding the population, where they live,
how much money they earn, family size and structure, the level of information
is comprehensive and valuable (secondary)
 Creative workshops using focus groups and brainstorming sessions with a
diverse group to come up with potential opportunities to evaluate and consider
as options for your business (primary)
What does the
organisation want to
achieve?
How will we do that?
We need to understand
the situation, our
customers and
environment we operate
in
How will we know that?
Research and gathering
of information
Information comes from
customers and from
industry. Examination of
behaviour from a
number of sources
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Example In 2011 (the last census) Brisbane had grown by 11.5% since the 2006
census 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 the
area. It may have been established that no competitors are offering the same service and
that 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 location
and area, focus groups and brainstorming) you may discover that the target market cares
about 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 that
are at odds with their values. Plastic disposable cups may aggravate your target market
instead of providing a choice to reuse all cups for coffee which may be a basic expectation
for them.
Be prepared and understand what is happening for the community, your competitors and
your target audience.
Your primary research may lead to an opportunity to work with an organic fruit and
vegetable supplier to hold a market onsite each Saturday, a chance to develop a new
business 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 operated
power saws. The combination of portability, power and battery life make it ideal for
use on building sites.
Analysis of the market might show that carpenters use portable power saws more
than all the other trades combined on a building site, and therefore have most to gain
from a safer, more efficient product. The store could embark on a marketing
campaign promoting the benefits of no power leads or air lines, time saving,
increasing safety and improving profitability. Research has already identified
carpenters have the most to gain from these benefits so the initial campaign could be
directed at them. Expansion to other trades may be an offshoot from this.
A large retail business could consider advances in technology to improve their
outcomes. They would need to take into account weaker consumer demand (by
analysis of financial results). Understand the actions of the competition and why they
are doing what they are, is it working, can you incorporate changes to your
opportunities? If you have a large checkout element to your organisation consider
how improvements to access, technology and process can improve the outputs. For
example do self-service checkouts help your business? Using the marketing mix in
the 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 market
with deliberate intentions of changing it.
Example Apple's introduction of the iPad. Apple introduced the iPad into the
personal computer market with the intention of changing the market.
Another example, on a much smaller scale, is a cooperative called The People's
Supermarket, which was established in London in May 2010. It entered the local food
market with the clearly stated intention of winning customers from the major
supermarket chains and changing their shopping habits and expectations. Its mission
statement says:
‘We seek ... to create a community supermarket that highlights the possibilities of
consumer 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 new
markets. It would be appropriate to use social media to target products developed for
single people in their twenties. Facebook advertisements can be specifically targeted
to be seen specifically by the target market.
There are entire libraries dedicated to the statistical analysis of data. You must do
work on making sure your research is reliable and valid, these are statistical terms
referring to how likely it is that the data can produce reliable and useful results. Did
the research measure what it was supposed to? This is a measure of its validity. You
also 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, innovative
approaches and creative ideas for their
potential business application, and develop
into potential marketing opportunities
Thinking differently and innovatively is an essential driver for creating solutions that
maximise potential for new and improved marketing opportunities. The following
diagram has been adapted from the website
http://www.dukeven.com/Home/Evaluation/Market-Opportunity
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Consideration of these factors will assist your business in making the right decisions
for their innovative thinking and approaches. Can any of these areas be useful to work
on 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 market
is and what they want. Now it is time to challenge the ideas they already have.
Their current thoughts to date are to:
Environment
What is the potential customer’s
current environment?
What behaviour or processes
exist?
What is the need or problem to be
filled or solved?
Potential customers
What characteristics create this
need/problem?
How many customers are there?
How does this equate to
consumption? Are there issues
affecting use and frequency of
use?
Segments
Are there important differences
among potential customers
(relative to the need/problem you
have identified)?
Value
How severe is the need or problem
identified? Do your customers
recognize that they have this
need? How can you measure the
value of a solution?
Buying process
How does your customer buy
from you? Is there only one way?
What are major barriers or
obstacles to purchase/use of a
solution to the identified need or
problem?
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?
Is any part of the process affected
by monopoly or concentrated
power?
If so, how does your proposed
solution align with the powerful
firms?
Are any people or groups
threatened by your product or
service? Are any relationships
threatened? Are you relying on
other industries and/or products
or technologies to be adopted?
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Case study
 Employ a child care expert to manage the crèche 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 after
school sport and other children to look after
 The café will close at 3.30 pm. The menu will be quite complex to cater for breakfast
and lunch as well as snacks
At the moment the café has to decide if they have a solution to a problem for their customer
or a change in need and use of a product. Does the potential customer for the café
understand that they have this need for an uninterrupted conversation and cup of coffee
with 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 select
people from the community they ask the following questions (italics) and receive the
following information:
 How do your customers buy from you? Is there only one way? Parents need a place to
get 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 eat
breakfast 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 more
business with after school care assuming they are licensed to do this, closing early
however 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, it
may require another provider but this is an additional service which could be very
lucrative, especially in the holidays
 What does our customer want but cannot buy? Customers indicated that they wanted
to be able to take home roast dinners especially after late school based sporting
events
As you can see there are many other options than the traditional café approach. Think
innovatively to solve the new marketing opportunities creatively.
Ask and watch. Observe research and brainstorm alternative approaches to solutions
to best suit your target audience and what is important to them. The stage of market
research are predominately these. Understand your customer by watching and
listening. Talk to them and others to determine what is important to them. Pay
attention to the overall environment, the closeness of another business may prompt
an opportunity to work with them to build both businesses. Only an aware business
person is willing to think creatively to provide solutions to the needs of their
customers.
Consider how many people are available to take up your idea? Are their enough
customers 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? Are
their 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 available
for your options to be attractive.
The first step is to develop a conscious mind set of looking for ideas and
opportunities 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 focussing
their awareness. They are observant and prepared to take calculated risks, knowing
that some of their ideas could fail. Entrepreneurs have ideas and see new options and
opportunities to be developed into businesses. Anyone can adopt an entrepreneurial
approach to their marketing by developing their ideas and being prepared to take on
new 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 marketing
Smirnoff as ‘white whiskey, no taste, no smell’ (Wikipedia 2012).
1.3.1 Tools and techniques for generating ideas
Entrepreneurial ideas come from creative thinking.
Professional marketing organisations have creative teams, whose function is to
generate new, creative ideas. It is possible to use idea generation techniques in
smaller teams to learn creative thinking and use your team to come up with
innovative solutions.
In order to manage marketing for your business or organisation you sometimes need
to think ‘outside the box’. This is not always easy to do. Being proficient in using some
well-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 or
solutions to an issue at hand. Whether done alone or in groups, idea generation is
more productive when you follow a few guidelines and use various techniques that
encourage divergent thinking (suggesting many different options) and deliberate
mental processes of attention, escape (challenging an existing concept), and
movement (generating ideas freely).
Brainstorming
Alex Osborn, the developer of the brainstorming technique, suggests basic guidelines
for 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 contains
only 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 a
problem by gathering a list of ideas spontaneously contributed by a group or an
individual.
It is particularly useful when you want to break out of stale, established patterns of
thinking, to develop new ways of looking at things. This also helps overcome many of
the 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 bit
crazy. Some of the ideas can be crafted into original, creative solutions to a problem
you'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 normal
group problem-solving, there have been many studies showing that when individuals
brainstorm on their own, they come up with more ideas (and often better quality
ideas) than groups of people who brainstorm together.
Partly this occurs because, in groups, people aren’t always strict in following the rules
of brainstorming, and bad group behaviours creep in. Mostly, though, this occurs
because people are paying so much attention to other people’s ideas that they're not
generating ideas of their own – or they're forgetting these ideas while they wait for
their turn to speak. This is called ‘blocking’.
Brainstorming does have limitations however. A number of studies have found that a
large quantity of ideas/solutions does not necessarily lead to quality ideas or
solutions. Groups have been found to perform better than individuals when the
emphasis 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 idea
generation compared with other techniques or variations due to:
 People interrupting each other
 The effect of the group on the individual (like attention seeking behaviour and
shyness)
 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 dealing
with 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 make
associations easily, and generate new ideas. If you find out more information after
drawing a mind mapyou can easily integrate it with little disruption.
More than this, mind mapping helps you break large projects or topics down into
manageable chunks, so you can plan effectively without becoming overwhelmed or
forgetting 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 that
they're very quick to review, as you can often refresh information in your mind just by
glancing at one. In this way, they can be effective mnemonics - remembering the
shape and structure of a mind map can give you the cues you need to remember the
information within it.
Scenario analysis
Scenarios are stories about the way the world might turn out if certain trends continue
and 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 to
make 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 entrepreneurial
approach is not to just copy them, but to ask and answer the question, 'What are
they trying to achieve, and how can we do it better?' It is often easier to look
objectively at another organisation than at one's own, especially in very small
organisations with only a few people.
Customers, sales representatives, other personnel and suppliers can also be sources
of entrepreneurial ideas which have potential to turn into marketing opportunities.
Adopting an entrepreneurial approach to marketing is a very creative activity and it is
impossible to give a set of step-by-step instructions for creativity. Organisations and
their personnel who wish to adopt an entrepreneurial approach must first analyse
current circumstances to use as the starting point for future plans.
•Scenarios should look at the future by focussing on a specific issue. E.g.How
could a change in government policy affect our business operations? What
happens if the Australian dollar devalued / increased in value?
Define a focal issue or decision:
•Social, economic, environmental, political, and technological factors most
relevant to the issue being reviewed. They should be prioritised according to
their level of predictability and importance in affecting the desired outcome.
Identify driving forces
•Stories that explain what effects there is on business operations or strategic
direction. Good scenarios combine a solid understanding of present trends
with a focus on outcomes sought by decision makers. To make the scenario
realistic conduct research to obtain relevant data. Data may come from
internal and external sources.
Write scenario plots
•Once scenarios are developed, decision makers within the organisation should
review implications that outcomes uncovered by the scenario would have on
the 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 be
integrated into organisational procedures. Use or modify existing systems to
monitor progress toward operational goals as well as changes in the external
environment.
Disseminate scenarios
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Once an organisation has explored entrepreneurial, innovative ideas it must develop
them 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 marketing
activities of the organisation. It is a road map that helps business decide where they
are, where they want to go and how they will get there. It helps clarify how to appeal
to your audience and what they need. It can include strategies, budgets and goals.
This is similar to any other marketing campaign. An entrepreneurial approach to
marketing is really only different from other approaches because it uses a more
creative method of generating ideas and has the potential to develop ideas which are
radically different from previous marketing campaigns.
We have moved through the first two steps of this process, in the next section we will
look at the evaluation of the ideas to see how they fit within the overall organisations
direction.
Gather all the
ideas together
Sort through
ideas. Screen the
ideas for suitability
Concept and test
your ideas
Analyse the
business and
strategy for
marketing
Fine tune your
prototype, develop
a firm idea of your
business
Test again
Proceed after final
changes
Review again in a
specific time frame
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2 Investigating marketing opportunities
2.1 Identify and analyse opportunities in terms of
their likely fit with organisational goals and
capabilities
We need to understand clearly what the organisations looking to achieve. What are
the financial goals, the social aims, the environmental priorities and the brand
considerations?
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 drawing
board. If they do then move onto the next stage of realising the value of the
marketing opportunities.
Consider the strategic and operating plans for the business. What are the objectives
for the short term and the long term? How will you be able to plan for long term
objectives with your marketing opportunity?
Is your business capable of working with the increased demand? It is
counterproductive to sell more products if the manufacturing capacity is limited to the
current levels. This will not fit with the organisational goals and capabilities, the
organisation would be better to work with increasing capacity first.
Identifying the opportunities for marketing for the business is part one, can the
business achieve the objectives within the new direction, what trends will impact on
the new plans or opportunities? What impact will your competition have on your
plans?
Case study
The 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 and
more 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 the
sport 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 study
especially after late school based sporting events
Solution: Consider this option in the second part of the first year of trading work on the
other 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 could
develop new products in response to consumer demand or changes in trends.
Example Grocery stores could consider the changes in working hours and the
fact that many families have both parents working. Healthy, pre-
prepared meals could be an important area of growth – a new
opportunity. Also home delivery could be another area of growth. If
the grocery chains weren’t paying attention to trends and
developments they may miss the potential of this opportunity. Many of
the larger grocery chains have expanded into alcohol sales and
discount stores to broaden their exposure and to provide more
products for their customers, more opportunities!
Do your markets value ethics and environmental values in their products? Are organic
products important to your markets? How do you know if they do or don’t? Pay
attention once again, ask them and listen to them when they talk. We have already
discussed the importance of ethical and fair behaviour in marketing it is just as
important to appeal to your customers and help them make fair purchasing decisions.
2.2 Evaluate each opportunity to determine its
impact on current business and customer base
Each marketing opportunity will impact on your business in some way. The key here is
to understand the impact on your business as it operates currently and your existing
customers.
Armed with all the research you conducted in the first phase to identify the needs and
wants of your target audience we can now evaluate the benefit or limitation of each
idea. How do we do this?
This is part of the process of screening ideas for suitability. Will they help or hinder
your 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 the
organisational capabilities and goals. Rank them in order of likely success, most
potential 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 the
current 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 level
executives who come in for lunch meetings, after work drinks and use the
bar as a place to network. You have noticed an increase of younger
executives out and about at lunch who are becoming active in the
networking scene. They are much more inclined to drink and become loud
and insist on other kinds of food on the menu. Is it cost effective to attract
the younger market at the expense your usual clientele? You will need to
evaluate this decision and opportunity for your business carefully to avoid
changing the nature of the business completely.
Remember there is more to the value of the opportunity than purely financial. Maybe
a different (new) group are more fickle and will move on to the next big thing in a
short time. What if you have alienated existing customers in pursuit of a new market
opportunity?
2.2.1 Knock out factors
New market opportunities must be evaluated to determine their impact.
It is critical all potential impacts are evaluated, unforeseen consequences of taking
the 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 knock
out effect. Entering a new market could knock out an existing one.
Opportunity What could happen Outcome
A supermarket
examines entering
the home delivery
market.
Increase in overheads
required to purchase and
maintain suitable vehicles,
plus extra staff required.
Reduction in cash flow to an
unsustainable level
A greengrocer can
buy all of their eggs
from a battery farm
at a fraction of their
current cost.
The supermarket has to
agree to stock that supplier's
eggs exclusively.
This knocks out the market for
free range eggs and those who
oppose battery farming. Super
market needs to determine
significance of this knock out.
A music store could
have the opportunity
to enter the teenage
market as a new
market.
Teenagers would be
attracted to the store in
large groups to listen to
music, dance and generally
make a lot of noise, as large
groups of teenagers do.
This might knock out the over
60's market, because many of
these people are annoyed by the
normal behaviour of groups of
teenagers, so would go and buy
their music elsewhere.
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2.2.2 Present value analysis
Before considering new opportunities, organisations often conduct a present value
analysis in which they evaluate their current business in terms of the criteria which
will 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
Comparative
market
information
Compare performances in
different market segments,
e.g. a fashion retailer could
compare performances in the
teenage market and the 30–
40 year old market.
Can compare performance and
profitability in different market
segments and plan accordingly.
Competitor
performance
An organisation analyses what
its competitors are doing.
The organisation can compare with its
competitors and plan ways to compete
against them.
This can also be a source of ideas for
future marketing.
Customer
requirements
Collecting and analysing
feedback from customers.
Knowing what customers want is
crucial to planning new marketing.
Customer feedback can also be a
source of ideas for new products.
Legal
requirements
Analysing legislative changes
to determine their effects on
the organisation’s marketing
strategies.
Reveals threats and opportunities
enabling plans to be made for both.
Ethical
requirements
Analysing marketing activity
in terms of the organisation’s
ethics.
Provides opportunities to promote
ethics and integrity of the organisation
into markets with similar values and
ethics.
Market trends
and
developments
Making sure that the
organisation understands
positive and negative trends in
its markets.
Example: weaker consumer
demand, increased
competition, rising costs.
Enables the organisation to take
advantage of positive trends and
minimise impact of negative trends.
New and
emerging
markets
Identifying new and emerging
markets. Consider
technological improvements.
Allows the organisation to position
itself, ready to serve these markets.
Profitability Analysing the profitability of
each market segment.
Reveals opportunities to expand
profitable markets and withdraw from
unprofitable ones.
Sales figures Analysing sales figures from
each market segment.
Used in conjunction with profitability,
sales figures aid planning for future
marketing.
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Marketing activities are monitored in terms of their return on investment (ROI) see
the next section. Assessing new market opportunities and planning campaigns in
current markets should be evaluated in terms of their expected costs and expected
revenue. The ROI is the difference between these and can be expressed in dollar
terms or as a percentage.
New opportunities must be evaluated against the same criteria as were used for the
present value analysis. The exact criteria used will depend on the organisation, its
markets and its products. They can be evaluated according to their impact and their
importance. Impact could be measured by a score where -10 is an extremely
negative 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 teenage
market could include the following information.
Criteria Score Weight Comments
Sales revenue +8 Important Bigger market.
Profit +9 Critical
Margins are similar across the board but
teenagers on average buy more per sale,
which reduces the average overheads per sale.
Impact on
current markets
–10 Neutral
Will knock out over 60’s but this will be
compensated for by the large increase in
overall market.
Customer
service
standards
–2 Important
More customers, buying more items will
stretch current staff. Can be overcome by
employing casual juniors at peak times. Impact
is acceptable.
Overheads –1 Critical
Increased customers who will be careless with
equipment will incur extra repair costs, but
this can be absorbed by the expected increase
in profit.
2.2.3 Forecasting
The process of looking to the future and determining what your business will need to
support 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 to
changes quickly to remain ahead of your plans. There are two main kinds of
forecasting:
• Macro – Forecasts markets in total, in particular total market demand
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• Micro – detailed sales forecasts, considers market share and what will happen
to their share of the market in the future
Business needs to consider what will happen in their markets in the short term and in
the 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 case
study? Then we need to forecast how many of those people will go to our café. How is
our café, service and product positioned in relation to the other cafés our customers
could go to?
Next we predict the forecast sales based on the information we have and the strategy
we 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 you
use the research and information carefully to shape a view of the world you believe
exists in relation to your product.
Quantitative or qualitative
Interpreting data requires one of two approaches. Quantitative or qualitative:
Quantitative Qualitative
Quantitative research is conclusive,
and takes a more logical, data-led
approach.
Due to the specific nature of
quantitative data it is particularly
useful for assessing performance of
the individual, the team and the
organisation.
Generates numerical data or
information which can be converted
into numbers.
Rates the likelihood as a probability
or frequency of the risk using
numerical weighting e.g. 1 in 200
cases will exhibit this behaviour.
Quantitative data can be verified and
manipulated statistically.
Qualitative research is exploratory. It
is used when we do not know what
expect, and need to define or develop
an approach to the problem.
It focuses primarily on the issues of
interest, looking at how people feel,
what they think and why they make
certain choices.
Generates non numerical data.
Rates the likelihood using words and
alphabetical ratings e.g. Extremely
Likely = A.
Examination of non-measurable data
such as reputation, brand image, or
feelings people may have. E.g. Rate
risk in terms of low, medium or high,
or not important, important or very
important.
Goals Counting and classifying.
Constructing statistical models and
figures to explain outcomes.
Narrow hypothesis and conclusive
research.
Describing and explaining.
Complete and detailed descriptions
Whole picture with exploratory
research.
Instruments
for data
gathering
Questionnaires, surveys,
measurements, Audits, Points of
purchase, Click-streams
Trend 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 that
provides you with information based
on multiple choice, rank in order or
measurements such as frequency.
maps, brainstorming.
Information derived from qualitative
data (text) on its own may not be all
that useful for trend analysis.
Types of
data
Numbers, tables. Words, images objects, graphs.
Objective. Seeking precise
measurements and analysis of
concepts.
Subjective. Researchers seeks to
understand human behaviour and why
we make the choices we do.
The decision which type of research to use is, of course, dependant on what you are
aiming to achieve with your research. If you want to use numerical information to
support your theory then use quantitative, if you need to explain why something is
the case then use qualitative. In order to analyse market trends, you need to ensure
the correct research is used.
Another consideration with gathering information especially qualitative which of
course is based on feelings and impressions rather than numbers and facts, is how
you ask questions to gain appropriate responses that are useful not just answers that
make you ‘feel’ better about your business.
Open and closed are two types of questions you can use that are very different in
character and usage.
Open questions
Definition Is likely to receive an answer that is long and detailed
Examples Although any question can receive a long answer, open questions
deliberately seek longer answers, and are the opposite of closed
questions.
 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 and
why to use
them
To develop a conversation and open people up
To 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 or
otherwise 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 to
the other person.
Well-placed questions do leave you in control as you steer their interest
and engage them where you want them.
Words Open questions begin with such as: what, why, how, describe.
When opening conversations, a good balance is around three closed
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Open questions
questions to one open question. The closed questions start the
conversation and summarize progress, whilst the open question gets the
other person thinking and continuing to give you useful information
about them.
A neat trick is to get them to ask you open questions. This then gives
you the floor to talk about what you want. The way to achieve this is to
intrigue them with an incomplete story or benefit.
Closed questions
Definition …can be answered with either a single word or a short phrase.
Also referred to as yes /no questions.
Examples  How old are you?
 Where do you live?
 Are you happy?
Characteristics They give you facts
They are easy to answer
They are quick to answer
They keep control of the conversation with the questioner
For setting up a desired positive or negative frame of mind in them -ask
questions with obvious answers yes / no
For achieving closure
Pointers and
why to use
them
As opening questions in a conversation, it makes it easy for the other
person to answer, and doesn't force them to reveal too much about
themselves.
 Its great weather, isn't it?
 Where do you live?
For testing their understanding
 So, you are looking to buy a blue suit?
For setting up a positive or negative frame of mind
 Are you happy with your current supplier?
 Do they give you all that you need?
 Would you like to find a better supplier?
Seeking yes answers to important questions
 If I can deliver this tomorrow, will you sign for it now?
Words Turn any opinion in to a closed question which forces a yes/no answer.
Add ‘isn't it?’, ‘don't you?’ or ‘can't they?’ to any statement.
The first word of a question sets up the closed question and signals the
easy answer ahead. Note how these are words like: do, would, are, will, if.
Do you like this suit?
Gaining information and making a reliable statistical analysis of this information is
critical. Among the other sources of information marketers look at the following:
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Remember to start at the beginning. What were your original goals when you began
to gather information to evaluate each of your opportunities for marketing your
business? Once you have gathered it all you need to put all the information into
perspective. Ask yourself?
 What did I expect? What can I use from the information to support the new
opportunity?
 Does any information exist to help with forecasting?
 What are the strengths in terms of what exists, weaknesses?
 How will all of this impact on existing customers and levels of service we are
able to provide?
Understanding the financial results will help you to evaluate the results. We will
discuss costs and benefits in the next section. Some of the indicators of success are
earnings per share, income growth as well as profit levels. Comparing from one
quarter to the one in the previous year provides the change which will allow you to
understand what has happened to effect the changes.
2.3 Use an assessment of external factors, costs,
benefits, risks and opportunities to determine
the financial viability of each marketing
opportunity
When assessing the financial viability business needs to consider the following
external factors:
 Policies and procedures that impact on the business from other stakeholders
 Codes of practice imposed on them by industry
 Regulations and legal aspects of their business
Trends or seasonal factors
•Where is your product in the
cycle of popularity?
•Is it waning or growing?
•It your market dependant on
the seasonas?
•Is the market optimistic?
Sales levels
•Current sales -what are your
customers buying?
•Past sales behaviour may
provide information to help
you
Random events
•There will always be some
unexpected event that
impacts on your business
•How prepared are you to
take advantage of an
opportunity or able to
respond to a problem?
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An organisation will only enter new markets, if benefits outweigh risks.
Determining this is an important part of research into the new market and considers
four main areas:
ONE: Sales volume
Generally entry into a new market should increase sales volume (usually beneficial).
The organisation needs to ensure it has the ability to manage the increased sales. An
increase in sales at the cost of reduced customer service would be counterproductive.
It could also cause cash flow problems if the financial consequences were not
managed properly.
If entry into a new market is accompanied by abandoning an old one, sales volume
could decrease. This could be beneficial if the abandoned market had high volumes
with little profit, while the new one had lower volumes but high profit.
Example A greengrocer could decide to switch from selling low cost fruit and
vegetables at discount prices to selling organic produce. He would lose the
market which buys on price, but would attract new consumers prepared
to pay a premium for organic food. The margins on the organic produce
may be higher than on the discount lines so the decrease in sales volume
could be beneficial in terms of gross profit, reduced overheads (such as
wages) and reduced waste.
Policies and guidelines
•From a marketing
perspective, internal
organisational policies and
guidelines influence
marketing behaviour
•If a restaurant had a policy
of using only locally
produced, seasonally
available ingredients, it
would not offer meals
requiring ingredients out of
season locally and/ or
imported from overseas
•External policies and
procedures that can impact
on the business could be
those of your reseller,
supplier, freight handler or
importer. These companies
that impact on your
business may create a
situation which is no longer
viable for that particular
opportunity
Codes of practice
•Set out specific standards
of conduct for an industry
to deliver to its customers
•How an industry should
behave to its customers
•Mandatory codes of
practice enforced by law
•Voluntary codes of practice
are enforced by industry
usually enforced by the
peak industry body, which
has the power to expel
non-compliant members
•In Australia, most codes of
practice are developed in
consultation with the
industry and drafted into
legislation so that they are
enforced by bodies such as
the ACCC or consumer
protection agencies of
state governments
Legislation and regulations
•All commercial activity in
Australia is governed by
legislation
•Regulations can be made
by local, state or federal
government, and affect
marketing activity
•E.g. many local
governments regulate
against sticking posters
onto light poles or
buildings. Health
regulations control how
restaurants, cafes and
other food sellers can
present their products to
their markets
•Business needs to be fully
conversant with their legal
compliance requirements
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TWO: Growth
Organisations often reach a limit in their growth within one market and so enter new
markets to allow continued growth of the business. A real estate organisation might
reach a level in the domestic housing market and believe that it would be
uneconomical to try to expand their market share any more, they could continue
overall business growth by entering the commercial property market. The risk of
rapid growth might be a lack in infrastructure and expertise to properly manage the
listings in the new market. Growth of an organisation needs to be carefully planned
and monitored.
THREE: Market share
Increasing market share is not technically entering a new market, but the benefits
and risks are similar. An increased market share:
 Can result in increased sales and growth
 In one market could require a decrease in another market. If the expanding
market is profitable and the diminishing market less profitable, the change
would be beneficial to the organisation
Example A business could find it beneficial to reduce their share of the consumer
market to concentrate on increasing their share of the business market.
This may allow them to cater to a segment of the market with more
specific needs than the broad ranging consumer market. The business
may be able to:
 Limit stock to lines which are required by their businesses customers
 This could reduce capital tied up in inventory and increase operational
efficiency because most businesses have a standard stationery requirement
purchased regularly
 It could also increase turnover - businesses tend to make larger one off
purchases than consumers
FOUR: Profitability
The ultimate purpose of all marketing activity is to improve profitability of an
organisation. The financial impact of any marketing proposal must be analysed in
detail and an assessment made of how long it would take for the activity to return a
profit. This and the level of profit expected must be considered against start-up costs
and the risk of the activity failing. The organisation has to make a decision that the
cost of start-up and risk of failure are outweighed by potential profits and the
likelihood that they will be achieved within an acceptable time.
2.4 Determine probable return on investment and
potential competitors
Entry into new markets has initial (start-up) costs as well as ongoing costs. Start-up
costs could include new equipment, increases in inventory and staff training. All of
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these could be required to enter the new market. In addition, all marketing
campaigns have ongoing costs such as advertising and campaign design.
Organisations must analyse costs of marketing and balance these costs against the
revenues which it expects to generate. This analysis should be repeated at set
intervals throughout the campaign. At the end of the campaign there should be a
final analysis based on actual costs and revenues. If an organisation monitors its
marketing costs it can tell which opportunities were successful and which should be
abandoned.
Return on investment (ROI) is a profitability ratio. It is used to evaluate the efficiency
of an investment. In business it usually refers to the ratio of net profit by the amount
invested in assets. In marketing (or any other aspect of the business) we use it to
demonstrate the value of the investment to the business. How much profit has been
generated by the investment?
When calculating the ROI for a marketing campaign for example consider the amount
of income generated from that campaign. Calculate the costs associated with the
process and the profit that results. Take care to include the appropriate costs into
your calculations marketing can include a range of costs:
 Creative, including printing
 Technology – websites etc.
 Wages and salaries of staff and managers
 The actual cost of sales (costs to actually produce the product or service)
The formula for ROI equals the return minus the investment. Then divide this figure
by the investment. The ROI is usually expressed as a percentage so multiple the
result by 100.
Marketers need to know the ROI from all of their campaigns. It is the best measure of
the success or failure available.
Example If a hardware store was considering marketing a heavy duty circular saw,
as a new product to carpenters in the local area, it could use a
spreadsheet to calculate the predicted ROI.
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This is a simplified version. If this organisation decided they needed to run a more
extended campaign at an increased cost the ROI would be different.
Different organisations need to consider other factors. Consideration must be given to
the minimum purchase numbers in order to achieve the ideal buying price. There
may also only be a fraction of units sold at full retail price before being discounted to
clear stock. Spreadsheets will need to show sales at a range of prices.
Other factors which might need to be shown by some organisations include:
 Increased staff
 Staff training
 Overheads associated directly with the marketing campaign
 Capital equipment
 Regulatory and legal costs
 Environmental levies
Organisations also need to analyse the effects of direct competition. If another
hardware store sold the same heavy duty circular saw at increasingly discounted
prices, assessment would be required to analyse the reduction in sales that could be
expected.
An accurately calculated ROI is one of the most important indicators of the potential
viability of a marketing campaign. If the ROI is not acceptable the campaign should
either be revised or abandoned, because it will adversely affect the profitability of the
organisation.
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309545760 bsbmkg501-e book-v1-1

  • 1. eBook BSBMKG501B Identify and evaluate marketing opportunities 1 | P a g e M a y 2 0 1 5 BSBMKG501 IDENTIFY AND EVALUATE MARKETING OPPORTUNITIES
  • 2. eBook BSBMKG501 Identify and evaluate marketing opportunities 2 | P a g e M a y 2 0 1 5 v 1 . 1 Contents Introduction ......................................................................................................4 1 Identify marketing opportunities...............................................................6 1.1 Analyse information on market and business needs to identify marketing opportunities ..................................................................................................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 or influence each market, and the likely contribution to the business.......................18 1.3 Explore entrepreneurial, innovative approaches and creative ideas for their potential 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 with organisational goals and capabilities ................................................................30 2.2 Evaluate each opportunity to determine its impact on current business and customer 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 opportunities to 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 likely contribution to the business ...........................................................................47 3 Evaluate required changes to current operations.......................................49 3.1 Identify and document changes needed to current operations to take advantage of viable marketing opportunities ....................................................49
  • 3. eBook BSBMKG501 Identify and evaluate marketing opportunities 3 | P a g e M a y 2 0 1 5 v 1 . 1 3.2 Ensure organisational changes to service an increased or different customer base 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 operations to 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
  • 4. eBook BSBMKG501 Identify and evaluate marketing opportunities 4 | P a g e M a y 2 0 1 5 v 1 . 1 Introduction This unit describes the performance outcomes, skills and knowledge required to identify, evaluate and take advantage of marketing opportunities by analysing market data, distinguishing the characteristics of possible markets and assessing the viability of changes to operations. It applies to individuals working in senior marketing management roles that, together with a marketing team, identify, investigate and evaluate marketing opportunities to determine whether they meet organisational and marketing objectives. Based on this evaluation, changes to current business operations can be determined to take advantage 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 customer relationships 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 and individual 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. Marketing has historically been considered a creative discipline. In reality, marketing is scientific and follows a common scientific method: Marketing is a social science related to why humans behave the way they do, and how 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 undertake the above steps. Ask a question Do background research Construct a hypothesis Test your hypothesis by doing an experiment Analyse your data and draw a conclusion Communicate your results
  • 5. eBook BSBMKG501 Identify and evaluate marketing opportunities 5 | P a g e M a y 2 0 1 5 v 1 . 1 Customer satisfaction This depends on a product’s perceived performance in delivering value relative to a buyer’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 is satisfied. If not, the customer is dissatisfied. The key is to match customer expectations with product performance, because satisfied customers make repeat purchases and tell others about their good experiences with the product and the company 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 does more. Because our expectations are higher we may not be satisfied. Exchange is the act of obtaining a desired object or service from someone by offering something of value in return. Exchange is not the only way we can get things that 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 for needed 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 trade of units of value between two parties. In a transaction, we must be able to say that one party gives X to another party and gets Y in return. Not all transactions involve money. Sometimes we exchange goods or services (barter). Beyond just transactions, marketers today need to build and maintain relationships between themselves and other important parties. This is what is known as relationship marketing. Relationship marketing is the process of creating, maintaining and enhancing strong, value-laden relationships with customers and other stakeholders.
  • 6. eBook BSBMKG501 Identify and evaluate marketing opportunities 6 | P a g e M a y 2 0 1 5 v 1 . 1 1 Identify marketing opportunities A marketing opportunity is considered to be an identified need, want or demand a business can work with because the need, want or demand is not being addressed by competitors. Needs that are unmet are marketing opportunities. Needs - can be those need that are unmet or which are the result of change. Change in consumption, use of technology, attitudes and behaviours of consumers, or many other factors which cause a need to exist. Before business can begin to determine marketing opportunities it is important to understand 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 so that 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 that market? 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 behaviour o Your USP (unique selling proposition) unless you can do this you cannot target your marketing properly and effectively - understand what makes your business or product different or unique o The business purpose o 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 the organisation want to achieve? How will we do that? Understand the situation, our customers and environment we operate in How will we know that? Research and gathering of information Information comes from customers and from industry. Examin behaviour from many sources
  • 7. eBook BSBMKG501 Identify and evaluate marketing opportunities 7 | P a g e M a y 2 0 1 5 v 1 . 1 1.1 Analyse information on market and business needs to identify marketing opportunities What are markets? A market is the set of all the actual and potential buyers of a product. Members of a market share common needs or wants. It is up to the marketers to identify the need and meet it for their customers (or other stakeholders). The size of a market will depend on the number of people who have a particular need or want and have the resources and willingness to exchange for them. Company looks at all of these people to determine their market: Business needs to ask itself?  Who are your customers, what do they need?  Where are they and how do you reach them?  How do they make their decisions to buy and where do they buy? How do you find out the answers to this information? You ask, research and read. There is a great deal of information available online and from your own business. Gather as much information as possible to do with your customers, the potential market and your business. Customers Suppliers Distributors Partners Stake holders Share holders Dealers
  • 8. eBook BSBMKG501 Identify and evaluate marketing opportunities 8 | P a g e M a y 2 0 1 5 v 1 . 1 Marketing is a decision making process where business and marketers decide on strategies to make sure the long terms objectives of the organisation are met. There are many different strategies that may or may not work for your business, there is a comprehensive list of possible strategies in the appendix of this eBook. Planning for the marketing of your business is an important step in understanding your customers and what you are able to do to meet their needs. It is important to assess the marketing environment. Consider undertaking an analysis of strengths, weaknesses, opportunities and threats (SWOT). 1.1.1 SWOT Analysis SWOT is a method for considering the pros and cons of a situation:  Internally we look at strengths and weaknesses (factors that belong to the organisation)  Externally examine opportunities and threats (factors that belong to the situation and environment) SWOT analysis is used as a first step to developing a strategy for achieving specific objectives and is useful for generating new ideas and opportunities. In marketing we need to consider the impact of current strengths and weaknesses of our 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 the people who could buy your product Available market - all the people who can afford your product Qualified available market - those who can legally buy your product Target market- people your business wants to service with your product Penetrated market current customers
  • 9. eBook BSBMKG501 Identify and evaluate marketing opportunities 9 | P a g e M a y 2 0 1 5 v 1 . 1 Current opportunities and threats help us to understand the external influences that can 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 generic SWOT examples that can be applied to a wide range of business applications: SWOT analysis Strengths 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 networking strategies New product research and development Improved sustainability and environmental impact Global market reach Changes to demographics and target market needs 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, competitor or 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
  • 10. eBook BSBMKG501 Identify and evaluate marketing opportunities 10 | P a g e M a y 2 0 1 5 v 1 . 1 Marketing planning requires us to know the answers to many questions regarding the direction 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 relation to 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 range of customers. Strategy in marketing refers to the long term direction the organisation chooses to take so they can meet their objectives and plans. The plan to ensure the success of the business. Forming a strategy that works for your organisation will take into account:  How people in the organisation think, are they willing to think creatively to make 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, direct mail and in house promotions)  Are your plans inclusive of social media? This is an important area to market how will you address your strategy to capture this opportunity?  Promotional strategies allow for sampling of products, if this works for your product how will this roll out across the organisation? Who needs to be involved?  How are you going to manage Loyalty of your customers? Is there a loyalty program? Does it work well? How do you know?  Alliance marketing is a strategy where more than one entity joins together to promote and sell products, services, ideas. All parties in the alliance stand to gain as much as the other
  • 11. eBook BSBMKG501 Identify and evaluate marketing opportunities 11 | P a g e M a y 2 0 1 5 v 1 . 1 Whether your business decides to pursue heavy web based marketing or print media or social media, it is important to decide on a strategy or strategies which meets the objectives and goals already determined by the organisation. Your marketing needs to drive business to your organisation. How will your customer reach you? Consider all the elements of the marketing mix in your strategy. 1.1.2 The marketing mix The marketing mix is the set of controllable marketing variables that the company blends 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 are selling? What are the perceived benefits of your product? Product is a good service, idea, place or person - whatever is for sale whatever we are selling. Considered to include core - benefits the product offers the customer, actual which is the physical product and augmented the whole package including warranty, delivery and after sales options for example. Price List price, discounts, allowances etc. what will make them part with their money? What the customer is willing to exchange for the product 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 fulfil their needs? How available is the product to your customers? This relates to channels of distribution as well as actual places the product is available from. Promotion Advertising, personal selling, sales promotions. All activities, actions taken to let customers know about the product benefits and how this product 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 and physical 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 the process is not providing customer value.
  • 12. eBook BSBMKG501 Identify and evaluate marketing opportunities 12 | P a g e M a y 2 0 1 5 v 1 . 1 Physical evidence Examining every aspect that customers use in their perceptual field to assess such a service. There is a significant amount of information relating to the marketing mix. There is additional content in the appendix of this eBook. When you are considering the information available to you regarding the market and your 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 the market to sell? The simple answer is of course not. You need to understand why your customers would want to buy your product. What motivates and interests them, who are they? What alternatives are available in the market place already? Case study Let’s assume you are intending to open a café in a suburban area to cater for stay at home mums and their children. There will be a crèche in the café to give the mothers a 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 what other cafes are in the area? Why would someone choose to come to your café over the 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 you choose to market via social media exclusively  Is the location you have chosen convenient? Since customers will be coming with prams is there space for them in the café or is there a pram parking lot? Target market intended position Price People Product Process Place Physical evidence Promotion
  • 13. eBook BSBMKG501 Identify and evaluate marketing opportunities 13 | P a g e M a y 2 0 1 5 v 1 . 1  Is your business able to support this idea, is the market Doing this initial planning and research is critical to the success and identification of marketing opportunities. Remember a marketing opportunity is considered to be an identified need, want or demand a business can work with because the need, want or demand 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 marketing Marketing imposes a great deal of influence on the social landscape. The onus is on you to behave in a responsible way to use your power wisely. Your decision as a business 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 different matter. 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 pricing Consumers 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 marketing channel, mark up their prices beyond what is fair so as to make excessively high profit margins. As a result, the distribution costs too much and consumers are forced to pay the price. Marketers are also accused of pushing up prices to cover the costs of inflated or ineffective advertising media. Example A heavily promoted brand of aspirin is 10 times more expensive than a less promoted brand. Differentiated products e.g. cosmetics, detergents
  • 14. eBook BSBMKG501 Identify and evaluate marketing opportunities 14 | P a g e M a y 2 0 1 5 v 1 . 1 or toiletries include promotion and packaging costs, sometimes up to 40% of the manufacturer’s price to the retailer. These are passed on to the consumer. Additional charge occur when margins are inflated to extreme levels. E.g. it is common in the pharmaceutical industry to sell a pill that costs 5 cents to produce at between 40 and 90 cents. Some of this is invested in research and development of new drugs, however, the arguments continue. Financial responsibility and accountability Making sure marketing expenses relate to the appropriate activities means we are able to measure the impact on the profit margin. Is the percentage of expense spent on marketing the product reasonable and able to be justified? Planned obsolescence Another criticism often levelled at businesses is that they develop products with built in obsolescence. That is, that products are designed to break down so that consumers need to buy a new product earlier than is reasonable, or that products are released without certain features so new models can be released that are more desirable than the previous model. This concept is most often applied to electronic and computer goods manufacturers. Deceptive practices Refer to any practice that leads consumers to believe that they will get more value than they actually do. They usually fall into one of three categories: Consumerism The increased involvement of government agencies and consumer interest groups pushing and monitoring regulations designed to protect consumer rights. Environmentalism We must become increasingly aware of the impact on the environment of marketing decisions ranging from product design and development through to promotional strategies. As more and more people are demanding sustainable options we need to be ahead in all aspects of business, not just marketing. Globalisation The increase of globalisation explains why competition is stronger, communication is better, we have an increased access to cheaper labour and materials, and transport is Deceptive pricing •May relate to falsely over or under stating factory or wholesale prices, or a large reduction in a fake Recommended Retail Price (RRP) Deceptive promotion •Relates to the overstatement of a products features or performance, attracting customers to the store for a ‘bargain’ that is out of stock, or even running rigged competitions Deceptive packaging •Can include exaggerating the contents of the product using unrelated or unrealistic images or design, not filling the package to the required level, misleading terms or language
  • 15. eBook BSBMKG501 Identify and evaluate marketing opportunities 15 | P a g e M a y 2 0 1 5 v 1 . 1 more efficient. In short the world is becoming smaller and we need to consider this with 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 and emerging economies to benefit the wealthiest 10% of the world’s population in first world economies. These third world countries provide lower costs in terms of resources and labour but also open up broader markets of people with disposable income 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 their operations. Customers, employees, shareholders, communities and the environment can all be impacted positively and or negatively. This obligation is seen to extend beyond the statutory obligation to comply with legislation and sees organisations voluntarily taking further steps to improve the quality of life for employees and their families 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 impact on our community and planet from a social and environmental perspective and our financial responsibility of course needs to be observed in balance with the other issues. Experts now refer to the quadruple bottom line and includes governance and how we behave as an organisation. It does seem to be difficult to describe the actual four, with words like cultural, social, sustainable, economic, spirituality and purpose. Whichever ‘headings’ you subscribe to this refers to an expanded spectrum of values and criteria for measuring organisational (and societal) success: economic, ecological social and responsible wellbeing for all. 1.1.4 Law and regulation Marketing is covered by many pieces of legislation and peak body regulations. These include, 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)
  • 16. eBook BSBMKG501 Identify and evaluate marketing opportunities 16 | P a g e M a y 2 0 1 5 v 1 . 1  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 support consumer rights for example, Choice, is a publication by the Australian Consumers Association and Consumer Action is a consumer based website that takes action against unfair practices on behalf of consumers who can’t take the fight themselves. Go to the Advertising Standards Bureau website for the Codes administered by ABS www.advertisingstandardsbureau.com.au. Regulation of advertising Advertising media are regulated by a number of internal and external bodies. Internal regulators Australian Publishers Bureau APB An advisory opinion body to its publisher members and their constituent publications, on legal and other issues affecting advertising. Aust. Assoc. of National Advertisers - AANA The AANA is the peak advertising industry body representing the rights and responsibilities of Australia’s major advertisers and their industry partners. Advertising Federation of Aust. - AFA The AFA is the peak body representing companies in advertising and marketing communications to industry, government, media and the public. Federation of Aust. Radio Broadcasters - FARB FARB is the national industry body representing the interests of Australian commercial radio broadcasters. FARB provides a forum for discussion of industry matters and acts as a political advocate on behalf of the industry Commercial Television Industry Code of Practice Regulates the content of free-to-air commercial television. Codes of practice are important guidelines which dictate how industry should behave towards its customers. Example ‘The objectives of the code of practice of the Australian Direct Marketing Association (ADMA) are to: • Ensure business and consumers have access to the product and service information they need to make informed choices
  • 17. eBook BSBMKG501 Identify and evaluate marketing opportunities 17 | P a g e M a y 2 0 1 5 v 1 . 1 • Minimise the risk of members breaching the Trade Practices Act 1974, Privacy Act 1988 including the National Privacy Principles (NPPs), Spam Act 2003 or State fair trading legislation • Promote a culture among members of conducting their businesses fairly, honestly, ethically and in accordance with best practices; and increase business and consumer confidence in doing business with ADMA members' (ADMA 2012)’ The Free TV Australia Commercial Television Industry has a code of practice which regulates marketing on commercial television. It ‘... covers matters prescribed in Section 123 of the Broadcasting Services Act and other matters relating to program content that are of concern to the community ...’ (Free TV Australia 2010). The Australian Guidelines for Electronic Commerce (Attorney General's Department 2012), which replaced the Australian E-commerce Best Practice Model, offer guidelines for fair trading and protection of both consumers and traders who are engaged in e- commerce or online trading. External regulators Aust. Competition and Consumer Commission - ACCC The ACCC promotes competition and fair trade in the market place to benefit consumers, business and the community. Its primary responsibility is to ensure that individuals and businesses comply with the Commonwealth competition, fair trading and consumer protection laws. Competition and Consumer Act 2010 - replaces Trade Practices Act 1974 Promotes competition and fair trading to protect consumers. The Act deals with almost all aspects of the marketplace: relationships between suppliers, wholesalers, retailers, competitors and customers. It covers unfair market practices, industry codes, mergers and acquisitions of companies, product safety, product labeling, price monitoring, and the regulation of industries such as telecommunications, gas, electricity and airports. Privacy legislation Australia’s privacy regimes involve a range of Commonwealth and state/territory enactments, judicial decisions, industry codes of practice and action by individual players (consumers, businesses, other entities). Aust. Communication and Media Authority ACMA ACMA is responsible for regulating online content, including internet and mobile phone content, and enforcing Australia'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 future marketing 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 various selling 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 then tries to develop a product that will satisfy that want and still yield a profit.’
  • 18. eBook BSBMKG501 Identify and evaluate marketing opportunities 18 | P a g e M a y 2 0 1 5 v 1 . 1 Bangs (1989, p. 27) modifies this by saying, ‘That's fine if you have the luxury of choosing your target market and product/service mix. Most of us, though, are limited by our experience and interests, 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 the requirements of their markets and find products which match them. They must also constantly 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 new activities. 1.2 Research potential new markets and assess opportunities to enter, shape or influence each market, and the likely contribution to the business Finding new markets can provide opportunities to improve sales volume, growth, market share and profitability. Before entering a new market, thorough research must be done to balance potential advantages against risks in entering the new market. New markets can be similar to, or radically different from the existing market the organisation currently operates in. What is a new market? It is a market your business has not previously trade into. Or it is a brand new opportunity. The internet and online sales was a new market for many businesses at the beginning of the technology boom. Now if your business doesn’t have an online presence there is a problem! The internet provides opportunities for organisations to enter the e-commerce market. 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 their target markets, even though they could have large numbers of common customers are very different. An individual consumer might buy books one day and a car another day, but for marketing purposes they are part of two separate markets. E-commerce should not be viewed as a market, but as a tool which opens up previously unreachable markets. Small retailers have traditionally had their markets limited by geography and storage space. E-commerce removes restrictions by giving them access to any market connected to the internet and allowing them to ship goods directly from the wholesaler without the need to first stock it in their store.
  • 19. eBook BSBMKG501 Identify and evaluate marketing opportunities 19 | P a g e M a y 2 0 1 5 v 1 . 1 If an organisation traditionally markets only within its own country, export markets can be a source of new markets. Exporting is another tool rather than a homogeneous market. Japan and the United Kingdom could both be export markets for Australian canned tuna, but they are clearly not one market because of their geographic separation and cultural differences. Exporting can be a rewarding tool for opening up new markets. Regardless of which tools they use, organisations can develop new markets by targeting market segments they have not yet penetrated. Marketers subdivide the whole market into groups or segments, whose members have something in common that marketers can use. ‘The members of a group or segment will be similar to each other, with respect to what 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 division between business markets, which buy goods and services to use in a business or to re-sell, and consumers, who buy goods and services for their own personal use. When organisations target demographically based segments they must ensure that they do not breach anti-discrimination legislation. Example A halal restaurant is likely to target Muslim people, while a female friendly mechanic would target women. Both can say positive things about their target markets and indicate that the target groups can trust them to provide 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 and research its characteristics. They must then find new or existing products which match the requirements of this market. Example A hardware store currently supplies mainly to the local consumer market and decides to market to tradespeople. Tradespeople is too broad a segment (it can include all building trades as well as trades like hairdressers, mechanics and bakers etc.). The target needs to be limited to building trades. Even building trades is very broad. Carpenters, plumbers and electricians all have some common requirements, but each trade also has unique requirements. After defining the market it is time to research requirements:  Acquire a database of potential customers from your target market. Business can do this in a number of ways, including finding details from the Yellow Pages, using competitions and questionnaires in the store, sending a representative to visit specific areas or employing a market research organisation  Promote suitable products from its current range to the market and also obtain new products if research shows that lines which are not currently stocked were important to the market
  • 20. eBook BSBMKG501 Identify and evaluate marketing opportunities 20 | P a g e M a y 2 0 1 5 v 1 . 1  Conduct your SWOT analysis, consider a PEST analysis – Political, Economic, Socio-cultural and Technological factors that can affect your opportunities to enter 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 a questionnaire or contract someone to survey your customers for you. This kind of research may be as a result of information you found out at the stage of conducting secondary research. This level of research allows us to focus on a specific issue. It can be somewhat expensive and time consuming  Secondary research focuses on the analysis of the results of primary research. As a marketer we need to ask if the information we need has already been gathered by others. If it has we can gather that information from a range of sources to draw a picture of our audience, their needs and of our market or industry. Secondary research refers to the analysis of the information already available Sources of information can come from:  Tailor made surveys and questionnaires and market research specifically targeting your issue (primary)  Records of company performance – historical and financial records, academic research, specialist information (secondary). Analysis of the figures will provide you 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 information every 5 years and aims to measure each household and their occupants, this provides information for marketers regarding the population, where they live, how much money they earn, family size and structure, the level of information is comprehensive and valuable (secondary)  Creative workshops using focus groups and brainstorming sessions with a diverse group to come up with potential opportunities to evaluate and consider as options for your business (primary) What does the organisation want to achieve? How will we do that? We need to understand the situation, our customers and environment we operate in How will we know that? Research and gathering of information Information comes from customers and from industry. Examination of behaviour from a number of sources
  • 21. eBook BSBMKG501 Identify and evaluate marketing opportunities 21 | P a g e M a y 2 0 1 5 v 1 . 1 Example In 2011 (the last census) Brisbane had grown by 11.5% since the 2006 census 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 the area. It may have been established that no competitors are offering the same service and that 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 location and area, focus groups and brainstorming) you may discover that the target market cares about 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 that are at odds with their values. Plastic disposable cups may aggravate your target market instead of providing a choice to reuse all cups for coffee which may be a basic expectation for them. Be prepared and understand what is happening for the community, your competitors and your target audience. Your primary research may lead to an opportunity to work with an organic fruit and vegetable supplier to hold a market onsite each Saturday, a chance to develop a new business 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 operated power saws. The combination of portability, power and battery life make it ideal for use on building sites. Analysis of the market might show that carpenters use portable power saws more than all the other trades combined on a building site, and therefore have most to gain from a safer, more efficient product. The store could embark on a marketing campaign promoting the benefits of no power leads or air lines, time saving, increasing safety and improving profitability. Research has already identified carpenters have the most to gain from these benefits so the initial campaign could be directed at them. Expansion to other trades may be an offshoot from this. A large retail business could consider advances in technology to improve their outcomes. They would need to take into account weaker consumer demand (by analysis of financial results). Understand the actions of the competition and why they are doing what they are, is it working, can you incorporate changes to your opportunities? If you have a large checkout element to your organisation consider how improvements to access, technology and process can improve the outputs. For example do self-service checkouts help your business? Using the marketing mix in the appendix how do these important marketing considerations help you with your planning and when identifying new opportunities?
  • 22. eBook BSBMKG501 Identify and evaluate marketing opportunities 22 | P a g e M a y 2 0 1 5 v 1 . 1 Organisations sometimes create new opportunities by entering a market with deliberate intentions of changing it. Example Apple's introduction of the iPad. Apple introduced the iPad into the personal computer market with the intention of changing the market. Another example, on a much smaller scale, is a cooperative called The People's Supermarket, which was established in London in May 2010. It entered the local food market with the clearly stated intention of winning customers from the major supermarket chains and changing their shopping habits and expectations. Its mission statement says: ‘We seek ... to create a community supermarket that highlights the possibilities of consumer 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 new markets. It would be appropriate to use social media to target products developed for single people in their twenties. Facebook advertisements can be specifically targeted to be seen specifically by the target market. There are entire libraries dedicated to the statistical analysis of data. You must do work on making sure your research is reliable and valid, these are statistical terms referring to how likely it is that the data can produce reliable and useful results. Did the research measure what it was supposed to? This is a measure of its validity. You also 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, innovative approaches and creative ideas for their potential business application, and develop into potential marketing opportunities Thinking differently and innovatively is an essential driver for creating solutions that maximise potential for new and improved marketing opportunities. The following diagram has been adapted from the website http://www.dukeven.com/Home/Evaluation/Market-Opportunity
  • 23. eBook BSBMKG501 Identify and evaluate marketing opportunities 23 | P a g e M a y 2 0 1 5 v 1 . 1 Consideration of these factors will assist your business in making the right decisions for their innovative thinking and approaches. Can any of these areas be useful to work on 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 market is and what they want. Now it is time to challenge the ideas they already have. Their current thoughts to date are to: Environment What is the potential customer’s current environment? What behaviour or processes exist? What is the need or problem to be filled or solved? Potential customers What characteristics create this need/problem? How many customers are there? How does this equate to consumption? Are there issues affecting use and frequency of use? Segments Are there important differences among potential customers (relative to the need/problem you have identified)? Value How severe is the need or problem identified? Do your customers recognize that they have this need? How can you measure the value of a solution? Buying process How does your customer buy from you? Is there only one way? What are major barriers or obstacles to purchase/use of a solution to the identified need or problem? 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? Is any part of the process affected by monopoly or concentrated power? If so, how does your proposed solution align with the powerful firms? Are any people or groups threatened by your product or service? Are any relationships threatened? Are you relying on other industries and/or products or technologies to be adopted?
  • 24. eBook BSBMKG501 Identify and evaluate marketing opportunities 24 | P a g e M a y 2 0 1 5 v 1 . 1 Case study  Employ a child care expert to manage the crèche 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 after school sport and other children to look after  The café will close at 3.30 pm. The menu will be quite complex to cater for breakfast and lunch as well as snacks At the moment the café has to decide if they have a solution to a problem for their customer or a change in need and use of a product. Does the potential customer for the café understand that they have this need for an uninterrupted conversation and cup of coffee with 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 select people from the community they ask the following questions (italics) and receive the following information:  How do your customers buy from you? Is there only one way? Parents need a place to get 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 eat breakfast 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 more business with after school care assuming they are licensed to do this, closing early however 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, it may require another provider but this is an additional service which could be very lucrative, especially in the holidays  What does our customer want but cannot buy? Customers indicated that they wanted to be able to take home roast dinners especially after late school based sporting events As you can see there are many other options than the traditional café approach. Think innovatively to solve the new marketing opportunities creatively. Ask and watch. Observe research and brainstorm alternative approaches to solutions to best suit your target audience and what is important to them. The stage of market research are predominately these. Understand your customer by watching and listening. Talk to them and others to determine what is important to them. Pay attention to the overall environment, the closeness of another business may prompt an opportunity to work with them to build both businesses. Only an aware business person is willing to think creatively to provide solutions to the needs of their customers. Consider how many people are available to take up your idea? Are their enough customers 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? Are their cultural issues to be overcome before this can be used fully by your audience?
  • 25. eBook BSBMKG501 Identify and evaluate marketing opportunities 25 | P a g e M a y 2 0 1 5 v 1 . 1 Are their barriers to the technology? Perhaps there are too many alternatives available for your options to be attractive. The first step is to develop a conscious mind set of looking for ideas and opportunities 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 focussing their awareness. They are observant and prepared to take calculated risks, knowing that some of their ideas could fail. Entrepreneurs have ideas and see new options and opportunities to be developed into businesses. Anyone can adopt an entrepreneurial approach to their marketing by developing their ideas and being prepared to take on new 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 marketing Smirnoff as ‘white whiskey, no taste, no smell’ (Wikipedia 2012). 1.3.1 Tools and techniques for generating ideas Entrepreneurial ideas come from creative thinking. Professional marketing organisations have creative teams, whose function is to generate new, creative ideas. It is possible to use idea generation techniques in smaller teams to learn creative thinking and use your team to come up with innovative solutions. In order to manage marketing for your business or organisation you sometimes need to think ‘outside the box’. This is not always easy to do. Being proficient in using some well-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 or solutions to an issue at hand. Whether done alone or in groups, idea generation is more productive when you follow a few guidelines and use various techniques that encourage divergent thinking (suggesting many different options) and deliberate mental processes of attention, escape (challenging an existing concept), and movement (generating ideas freely). Brainstorming Alex Osborn, the developer of the brainstorming technique, suggests basic guidelines for 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
  • 26. eBook BSBMKG501 Identify and evaluate marketing opportunities 26 | P a g e M a y 2 0 1 5 v 1 . 1  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 contains only 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 a problem by gathering a list of ideas spontaneously contributed by a group or an individual. It is particularly useful when you want to break out of stale, established patterns of thinking, to develop new ways of looking at things. This also helps overcome many of the 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 bit crazy. Some of the ideas can be crafted into original, creative solutions to a problem you'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 normal group problem-solving, there have been many studies showing that when individuals brainstorm on their own, they come up with more ideas (and often better quality ideas) than groups of people who brainstorm together. Partly this occurs because, in groups, people aren’t always strict in following the rules of brainstorming, and bad group behaviours creep in. Mostly, though, this occurs because people are paying so much attention to other people’s ideas that they're not generating ideas of their own – or they're forgetting these ideas while they wait for their turn to speak. This is called ‘blocking’. Brainstorming does have limitations however. A number of studies have found that a large quantity of ideas/solutions does not necessarily lead to quality ideas or solutions. Groups have been found to perform better than individuals when the emphasis 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 idea generation compared with other techniques or variations due to:  People interrupting each other  The effect of the group on the individual (like attention seeking behaviour and shyness)  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
  • 27. eBook BSBMKG501 Identify and evaluate marketing opportunities 27 | P a g e M a y 2 0 1 5 v 1 . 1  If ideas are to be vocalised, group participants must be aware of rules dealing with 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 make associations easily, and generate new ideas. If you find out more information after drawing a mind mapyou can easily integrate it with little disruption. More than this, mind mapping helps you break large projects or topics down into manageable chunks, so you can plan effectively without becoming overwhelmed or forgetting 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 that they're very quick to review, as you can often refresh information in your mind just by glancing at one. In this way, they can be effective mnemonics - remembering the shape and structure of a mind map can give you the cues you need to remember the information within it. Scenario analysis Scenarios are stories about the way the world might turn out if certain trends continue and if certain conditions are met. A simple five step method is:
  • 28. eBook BSBMKG501 Identify and evaluate marketing opportunities 28 | P a g e M a y 2 0 1 5 v 1 . 1 Scenario planning is a useful way of challenging the assumptions you naturally tend to make 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 entrepreneurial approach is not to just copy them, but to ask and answer the question, 'What are they trying to achieve, and how can we do it better?' It is often easier to look objectively at another organisation than at one's own, especially in very small organisations with only a few people. Customers, sales representatives, other personnel and suppliers can also be sources of entrepreneurial ideas which have potential to turn into marketing opportunities. Adopting an entrepreneurial approach to marketing is a very creative activity and it is impossible to give a set of step-by-step instructions for creativity. Organisations and their personnel who wish to adopt an entrepreneurial approach must first analyse current circumstances to use as the starting point for future plans. •Scenarios should look at the future by focussing on a specific issue. E.g.How could a change in government policy affect our business operations? What happens if the Australian dollar devalued / increased in value? Define a focal issue or decision: •Social, economic, environmental, political, and technological factors most relevant to the issue being reviewed. They should be prioritised according to their level of predictability and importance in affecting the desired outcome. Identify driving forces •Stories that explain what effects there is on business operations or strategic direction. Good scenarios combine a solid understanding of present trends with a focus on outcomes sought by decision makers. To make the scenario realistic conduct research to obtain relevant data. Data may come from internal and external sources. Write scenario plots •Once scenarios are developed, decision makers within the organisation should review implications that outcomes uncovered by the scenario would have on the 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 be integrated into organisational procedures. Use or modify existing systems to monitor progress toward operational goals as well as changes in the external environment. Disseminate scenarios
  • 29. eBook BSBMKG501 Identify and evaluate marketing opportunities 29 | P a g e M a y 2 0 1 5 v 1 . 1 Once an organisation has explored entrepreneurial, innovative ideas it must develop them 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 marketing activities of the organisation. It is a road map that helps business decide where they are, where they want to go and how they will get there. It helps clarify how to appeal to your audience and what they need. It can include strategies, budgets and goals. This is similar to any other marketing campaign. An entrepreneurial approach to marketing is really only different from other approaches because it uses a more creative method of generating ideas and has the potential to develop ideas which are radically different from previous marketing campaigns. We have moved through the first two steps of this process, in the next section we will look at the evaluation of the ideas to see how they fit within the overall organisations direction. Gather all the ideas together Sort through ideas. Screen the ideas for suitability Concept and test your ideas Analyse the business and strategy for marketing Fine tune your prototype, develop a firm idea of your business Test again Proceed after final changes Review again in a specific time frame
  • 30. eBook BSBMKG501 Identify and evaluate marketing opportunities 30 | P a g e M a y 2 0 1 5 v 1 . 1 2 Investigating marketing opportunities 2.1 Identify and analyse opportunities in terms of their likely fit with organisational goals and capabilities We need to understand clearly what the organisations looking to achieve. What are the financial goals, the social aims, the environmental priorities and the brand considerations? 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 drawing board. If they do then move onto the next stage of realising the value of the marketing opportunities. Consider the strategic and operating plans for the business. What are the objectives for the short term and the long term? How will you be able to plan for long term objectives with your marketing opportunity? Is your business capable of working with the increased demand? It is counterproductive to sell more products if the manufacturing capacity is limited to the current levels. This will not fit with the organisational goals and capabilities, the organisation would be better to work with increasing capacity first. Identifying the opportunities for marketing for the business is part one, can the business achieve the objectives within the new direction, what trends will impact on the new plans or opportunities? What impact will your competition have on your plans? Case study The 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 and more 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 the sport only activity only being offered in the community. Idea: Customers indicated that they wanted to be able to take home roast dinners
  • 31. eBook BSBMKG501 Identify and evaluate marketing opportunities 31 | P a g e M a y 2 0 1 5 v 1 . 1 Case study especially after late school based sporting events Solution: Consider this option in the second part of the first year of trading work on the other 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 could develop new products in response to consumer demand or changes in trends. Example Grocery stores could consider the changes in working hours and the fact that many families have both parents working. Healthy, pre- prepared meals could be an important area of growth – a new opportunity. Also home delivery could be another area of growth. If the grocery chains weren’t paying attention to trends and developments they may miss the potential of this opportunity. Many of the larger grocery chains have expanded into alcohol sales and discount stores to broaden their exposure and to provide more products for their customers, more opportunities! Do your markets value ethics and environmental values in their products? Are organic products important to your markets? How do you know if they do or don’t? Pay attention once again, ask them and listen to them when they talk. We have already discussed the importance of ethical and fair behaviour in marketing it is just as important to appeal to your customers and help them make fair purchasing decisions. 2.2 Evaluate each opportunity to determine its impact on current business and customer base Each marketing opportunity will impact on your business in some way. The key here is to understand the impact on your business as it operates currently and your existing customers. Armed with all the research you conducted in the first phase to identify the needs and wants of your target audience we can now evaluate the benefit or limitation of each idea. How do we do this? This is part of the process of screening ideas for suitability. Will they help or hinder your 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 the organisational capabilities and goals. Rank them in order of likely success, most potential 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?
  • 32. eBook BSBMKG501 Identify and evaluate marketing opportunities 32 | P a g e M a y 2 0 1 5 v 1 . 1  How much risk is associated with the opportunity? An important evaluation techniques is to consider how these ideas will affect the current 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 level executives who come in for lunch meetings, after work drinks and use the bar as a place to network. You have noticed an increase of younger executives out and about at lunch who are becoming active in the networking scene. They are much more inclined to drink and become loud and insist on other kinds of food on the menu. Is it cost effective to attract the younger market at the expense your usual clientele? You will need to evaluate this decision and opportunity for your business carefully to avoid changing the nature of the business completely. Remember there is more to the value of the opportunity than purely financial. Maybe a different (new) group are more fickle and will move on to the next big thing in a short time. What if you have alienated existing customers in pursuit of a new market opportunity? 2.2.1 Knock out factors New market opportunities must be evaluated to determine their impact. It is critical all potential impacts are evaluated, unforeseen consequences of taking the 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 knock out effect. Entering a new market could knock out an existing one. Opportunity What could happen Outcome A supermarket examines entering the home delivery market. Increase in overheads required to purchase and maintain suitable vehicles, plus extra staff required. Reduction in cash flow to an unsustainable level A greengrocer can buy all of their eggs from a battery farm at a fraction of their current cost. The supermarket has to agree to stock that supplier's eggs exclusively. This knocks out the market for free range eggs and those who oppose battery farming. Super market needs to determine significance of this knock out. A music store could have the opportunity to enter the teenage market as a new market. Teenagers would be attracted to the store in large groups to listen to music, dance and generally make a lot of noise, as large groups of teenagers do. This might knock out the over 60's market, because many of these people are annoyed by the normal behaviour of groups of teenagers, so would go and buy their music elsewhere.
  • 33. eBook BSBMKG501 Identify and evaluate marketing opportunities 33 | P a g e M a y 2 0 1 5 v 1 . 1 2.2.2 Present value analysis Before considering new opportunities, organisations often conduct a present value analysis in which they evaluate their current business in terms of the criteria which will 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 Comparative market information Compare performances in different market segments, e.g. a fashion retailer could compare performances in the teenage market and the 30– 40 year old market. Can compare performance and profitability in different market segments and plan accordingly. Competitor performance An organisation analyses what its competitors are doing. The organisation can compare with its competitors and plan ways to compete against them. This can also be a source of ideas for future marketing. Customer requirements Collecting and analysing feedback from customers. Knowing what customers want is crucial to planning new marketing. Customer feedback can also be a source of ideas for new products. Legal requirements Analysing legislative changes to determine their effects on the organisation’s marketing strategies. Reveals threats and opportunities enabling plans to be made for both. Ethical requirements Analysing marketing activity in terms of the organisation’s ethics. Provides opportunities to promote ethics and integrity of the organisation into markets with similar values and ethics. Market trends and developments Making sure that the organisation understands positive and negative trends in its markets. Example: weaker consumer demand, increased competition, rising costs. Enables the organisation to take advantage of positive trends and minimise impact of negative trends. New and emerging markets Identifying new and emerging markets. Consider technological improvements. Allows the organisation to position itself, ready to serve these markets. Profitability Analysing the profitability of each market segment. Reveals opportunities to expand profitable markets and withdraw from unprofitable ones. Sales figures Analysing sales figures from each market segment. Used in conjunction with profitability, sales figures aid planning for future marketing.
  • 34. eBook BSBMKG501 Identify and evaluate marketing opportunities 34 | P a g e M a y 2 0 1 5 v 1 . 1 Marketing activities are monitored in terms of their return on investment (ROI) see the next section. Assessing new market opportunities and planning campaigns in current markets should be evaluated in terms of their expected costs and expected revenue. The ROI is the difference between these and can be expressed in dollar terms or as a percentage. New opportunities must be evaluated against the same criteria as were used for the present value analysis. The exact criteria used will depend on the organisation, its markets and its products. They can be evaluated according to their impact and their importance. Impact could be measured by a score where -10 is an extremely negative 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 teenage market could include the following information. Criteria Score Weight Comments Sales revenue +8 Important Bigger market. Profit +9 Critical Margins are similar across the board but teenagers on average buy more per sale, which reduces the average overheads per sale. Impact on current markets –10 Neutral Will knock out over 60’s but this will be compensated for by the large increase in overall market. Customer service standards –2 Important More customers, buying more items will stretch current staff. Can be overcome by employing casual juniors at peak times. Impact is acceptable. Overheads –1 Critical Increased customers who will be careless with equipment will incur extra repair costs, but this can be absorbed by the expected increase in profit. 2.2.3 Forecasting The process of looking to the future and determining what your business will need to support 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 to changes quickly to remain ahead of your plans. There are two main kinds of forecasting: • Macro – Forecasts markets in total, in particular total market demand
  • 35. eBook BSBMKG501 Identify and evaluate marketing opportunities 35 | P a g e M a y 2 0 1 5 v 1 . 1 • Micro – detailed sales forecasts, considers market share and what will happen to their share of the market in the future Business needs to consider what will happen in their markets in the short term and in the 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 case study? Then we need to forecast how many of those people will go to our café. How is our café, service and product positioned in relation to the other cafés our customers could go to? Next we predict the forecast sales based on the information we have and the strategy we 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 you use the research and information carefully to shape a view of the world you believe exists in relation to your product. Quantitative or qualitative Interpreting data requires one of two approaches. Quantitative or qualitative: Quantitative Qualitative Quantitative research is conclusive, and takes a more logical, data-led approach. Due to the specific nature of quantitative data it is particularly useful for assessing performance of the individual, the team and the organisation. Generates numerical data or information which can be converted into numbers. Rates the likelihood as a probability or frequency of the risk using numerical weighting e.g. 1 in 200 cases will exhibit this behaviour. Quantitative data can be verified and manipulated statistically. Qualitative research is exploratory. It is used when we do not know what expect, and need to define or develop an approach to the problem. It focuses primarily on the issues of interest, looking at how people feel, what they think and why they make certain choices. Generates non numerical data. Rates the likelihood using words and alphabetical ratings e.g. Extremely Likely = A. Examination of non-measurable data such as reputation, brand image, or feelings people may have. E.g. Rate risk in terms of low, medium or high, or not important, important or very important. Goals Counting and classifying. Constructing statistical models and figures to explain outcomes. Narrow hypothesis and conclusive research. Describing and explaining. Complete and detailed descriptions Whole picture with exploratory research. Instruments for data gathering Questionnaires, surveys, measurements, Audits, Points of purchase, Click-streams Trend analysis can only be Interviews, focus groups, observation, In-depth interviews, Participation/observation Tools that are useful include mind
  • 36. eBook BSBMKG501 Identify and evaluate marketing opportunities 36 | P a g e M a y 2 0 1 5 v 1 . 1 successfully interpreted using ‘Quantitative’ style questions that provides you with information based on multiple choice, rank in order or measurements such as frequency. maps, brainstorming. Information derived from qualitative data (text) on its own may not be all that useful for trend analysis. Types of data Numbers, tables. Words, images objects, graphs. Objective. Seeking precise measurements and analysis of concepts. Subjective. Researchers seeks to understand human behaviour and why we make the choices we do. The decision which type of research to use is, of course, dependant on what you are aiming to achieve with your research. If you want to use numerical information to support your theory then use quantitative, if you need to explain why something is the case then use qualitative. In order to analyse market trends, you need to ensure the correct research is used. Another consideration with gathering information especially qualitative which of course is based on feelings and impressions rather than numbers and facts, is how you ask questions to gain appropriate responses that are useful not just answers that make you ‘feel’ better about your business. Open and closed are two types of questions you can use that are very different in character and usage. Open questions Definition Is likely to receive an answer that is long and detailed Examples Although any question can receive a long answer, open questions deliberately seek longer answers, and are the opposite of closed questions.  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 and why to use them To develop a conversation and open people up To 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 or otherwise 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 to the other person. Well-placed questions do leave you in control as you steer their interest and engage them where you want them. Words Open questions begin with such as: what, why, how, describe. When opening conversations, a good balance is around three closed
  • 37. eBook BSBMKG501 Identify and evaluate marketing opportunities 37 | P a g e M a y 2 0 1 5 v 1 . 1 Open questions questions to one open question. The closed questions start the conversation and summarize progress, whilst the open question gets the other person thinking and continuing to give you useful information about them. A neat trick is to get them to ask you open questions. This then gives you the floor to talk about what you want. The way to achieve this is to intrigue them with an incomplete story or benefit. Closed questions Definition …can be answered with either a single word or a short phrase. Also referred to as yes /no questions. Examples  How old are you?  Where do you live?  Are you happy? Characteristics They give you facts They are easy to answer They are quick to answer They keep control of the conversation with the questioner For setting up a desired positive or negative frame of mind in them -ask questions with obvious answers yes / no For achieving closure Pointers and why to use them As opening questions in a conversation, it makes it easy for the other person to answer, and doesn't force them to reveal too much about themselves.  Its great weather, isn't it?  Where do you live? For testing their understanding  So, you are looking to buy a blue suit? For setting up a positive or negative frame of mind  Are you happy with your current supplier?  Do they give you all that you need?  Would you like to find a better supplier? Seeking yes answers to important questions  If I can deliver this tomorrow, will you sign for it now? Words Turn any opinion in to a closed question which forces a yes/no answer. Add ‘isn't it?’, ‘don't you?’ or ‘can't they?’ to any statement. The first word of a question sets up the closed question and signals the easy answer ahead. Note how these are words like: do, would, are, will, if. Do you like this suit? Gaining information and making a reliable statistical analysis of this information is critical. Among the other sources of information marketers look at the following:
  • 38. eBook BSBMKG501 Identify and evaluate marketing opportunities 38 | P a g e M a y 2 0 1 5 v 1 . 1 Remember to start at the beginning. What were your original goals when you began to gather information to evaluate each of your opportunities for marketing your business? Once you have gathered it all you need to put all the information into perspective. Ask yourself?  What did I expect? What can I use from the information to support the new opportunity?  Does any information exist to help with forecasting?  What are the strengths in terms of what exists, weaknesses?  How will all of this impact on existing customers and levels of service we are able to provide? Understanding the financial results will help you to evaluate the results. We will discuss costs and benefits in the next section. Some of the indicators of success are earnings per share, income growth as well as profit levels. Comparing from one quarter to the one in the previous year provides the change which will allow you to understand what has happened to effect the changes. 2.3 Use an assessment of external factors, costs, benefits, risks and opportunities to determine the financial viability of each marketing opportunity When assessing the financial viability business needs to consider the following external factors:  Policies and procedures that impact on the business from other stakeholders  Codes of practice imposed on them by industry  Regulations and legal aspects of their business Trends or seasonal factors •Where is your product in the cycle of popularity? •Is it waning or growing? •It your market dependant on the seasonas? •Is the market optimistic? Sales levels •Current sales -what are your customers buying? •Past sales behaviour may provide information to help you Random events •There will always be some unexpected event that impacts on your business •How prepared are you to take advantage of an opportunity or able to respond to a problem?
  • 39. eBook BSBMKG501 Identify and evaluate marketing opportunities 39 | P a g e M a y 2 0 1 5 v 1 . 1 An organisation will only enter new markets, if benefits outweigh risks. Determining this is an important part of research into the new market and considers four main areas: ONE: Sales volume Generally entry into a new market should increase sales volume (usually beneficial). The organisation needs to ensure it has the ability to manage the increased sales. An increase in sales at the cost of reduced customer service would be counterproductive. It could also cause cash flow problems if the financial consequences were not managed properly. If entry into a new market is accompanied by abandoning an old one, sales volume could decrease. This could be beneficial if the abandoned market had high volumes with little profit, while the new one had lower volumes but high profit. Example A greengrocer could decide to switch from selling low cost fruit and vegetables at discount prices to selling organic produce. He would lose the market which buys on price, but would attract new consumers prepared to pay a premium for organic food. The margins on the organic produce may be higher than on the discount lines so the decrease in sales volume could be beneficial in terms of gross profit, reduced overheads (such as wages) and reduced waste. Policies and guidelines •From a marketing perspective, internal organisational policies and guidelines influence marketing behaviour •If a restaurant had a policy of using only locally produced, seasonally available ingredients, it would not offer meals requiring ingredients out of season locally and/ or imported from overseas •External policies and procedures that can impact on the business could be those of your reseller, supplier, freight handler or importer. These companies that impact on your business may create a situation which is no longer viable for that particular opportunity Codes of practice •Set out specific standards of conduct for an industry to deliver to its customers •How an industry should behave to its customers •Mandatory codes of practice enforced by law •Voluntary codes of practice are enforced by industry usually enforced by the peak industry body, which has the power to expel non-compliant members •In Australia, most codes of practice are developed in consultation with the industry and drafted into legislation so that they are enforced by bodies such as the ACCC or consumer protection agencies of state governments Legislation and regulations •All commercial activity in Australia is governed by legislation •Regulations can be made by local, state or federal government, and affect marketing activity •E.g. many local governments regulate against sticking posters onto light poles or buildings. Health regulations control how restaurants, cafes and other food sellers can present their products to their markets •Business needs to be fully conversant with their legal compliance requirements
  • 40. eBook BSBMKG501 Identify and evaluate marketing opportunities 40 | P a g e M a y 2 0 1 5 v 1 . 1 TWO: Growth Organisations often reach a limit in their growth within one market and so enter new markets to allow continued growth of the business. A real estate organisation might reach a level in the domestic housing market and believe that it would be uneconomical to try to expand their market share any more, they could continue overall business growth by entering the commercial property market. The risk of rapid growth might be a lack in infrastructure and expertise to properly manage the listings in the new market. Growth of an organisation needs to be carefully planned and monitored. THREE: Market share Increasing market share is not technically entering a new market, but the benefits and risks are similar. An increased market share:  Can result in increased sales and growth  In one market could require a decrease in another market. If the expanding market is profitable and the diminishing market less profitable, the change would be beneficial to the organisation Example A business could find it beneficial to reduce their share of the consumer market to concentrate on increasing their share of the business market. This may allow them to cater to a segment of the market with more specific needs than the broad ranging consumer market. The business may be able to:  Limit stock to lines which are required by their businesses customers  This could reduce capital tied up in inventory and increase operational efficiency because most businesses have a standard stationery requirement purchased regularly  It could also increase turnover - businesses tend to make larger one off purchases than consumers FOUR: Profitability The ultimate purpose of all marketing activity is to improve profitability of an organisation. The financial impact of any marketing proposal must be analysed in detail and an assessment made of how long it would take for the activity to return a profit. This and the level of profit expected must be considered against start-up costs and the risk of the activity failing. The organisation has to make a decision that the cost of start-up and risk of failure are outweighed by potential profits and the likelihood that they will be achieved within an acceptable time. 2.4 Determine probable return on investment and potential competitors Entry into new markets has initial (start-up) costs as well as ongoing costs. Start-up costs could include new equipment, increases in inventory and staff training. All of
  • 41. eBook BSBMKG501 Identify and evaluate marketing opportunities 41 | P a g e M a y 2 0 1 5 v 1 . 1 these could be required to enter the new market. In addition, all marketing campaigns have ongoing costs such as advertising and campaign design. Organisations must analyse costs of marketing and balance these costs against the revenues which it expects to generate. This analysis should be repeated at set intervals throughout the campaign. At the end of the campaign there should be a final analysis based on actual costs and revenues. If an organisation monitors its marketing costs it can tell which opportunities were successful and which should be abandoned. Return on investment (ROI) is a profitability ratio. It is used to evaluate the efficiency of an investment. In business it usually refers to the ratio of net profit by the amount invested in assets. In marketing (or any other aspect of the business) we use it to demonstrate the value of the investment to the business. How much profit has been generated by the investment? When calculating the ROI for a marketing campaign for example consider the amount of income generated from that campaign. Calculate the costs associated with the process and the profit that results. Take care to include the appropriate costs into your calculations marketing can include a range of costs:  Creative, including printing  Technology – websites etc.  Wages and salaries of staff and managers  The actual cost of sales (costs to actually produce the product or service) The formula for ROI equals the return minus the investment. Then divide this figure by the investment. The ROI is usually expressed as a percentage so multiple the result by 100. Marketers need to know the ROI from all of their campaigns. It is the best measure of the success or failure available. Example If a hardware store was considering marketing a heavy duty circular saw, as a new product to carpenters in the local area, it could use a spreadsheet to calculate the predicted ROI.
  • 42. eBook BSBMKG501 Identify and evaluate marketing opportunities 42 | P a g e M a y 2 0 1 5 v 1 . 1 This is a simplified version. If this organisation decided they needed to run a more extended campaign at an increased cost the ROI would be different. Different organisations need to consider other factors. Consideration must be given to the minimum purchase numbers in order to achieve the ideal buying price. There may also only be a fraction of units sold at full retail price before being discounted to clear stock. Spreadsheets will need to show sales at a range of prices. Other factors which might need to be shown by some organisations include:  Increased staff  Staff training  Overheads associated directly with the marketing campaign  Capital equipment  Regulatory and legal costs  Environmental levies Organisations also need to analyse the effects of direct competition. If another hardware store sold the same heavy duty circular saw at increasingly discounted prices, assessment would be required to analyse the reduction in sales that could be expected. An accurately calculated ROI is one of the most important indicators of the potential viability of a marketing campaign. If the ROI is not acceptable the campaign should either be revised or abandoned, because it will adversely affect the profitability of the organisation.