Target Market, demographics and psychographics characteristics, B2B, B2C, Direct and Indirect Costs, Cash and Accrual Basis Accounting

1. Market and costs
IED
Lesson 4/2014
Frieda Brioschi / Emma Tracanella
frieda.brioschi@gmail.com / emma.tracanella@gmail.com

2. 4. Market and Costs
Course program
1. Italian Startups
2. Set up a startup in Italy
3. I've got an idea. And now?
4. Market and costs
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3. 4. Market and Costs
Today's table of content
1. Target Market
2. Direct and Indirect Costs
3. Cash and Accrual Basis Accounting
4. Perceived Value
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4. 4. Market and Costs
I've got an idea. And now?
Past slides available on Slideshare @ubifrieda:
https://www.slideshare.net/ubifrieda/
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5. 4. Market and Costs
I've got an idea. And now?:
quick recap
During last lesson we discussed:
• Intellectual property
• General design principles (no ToDo list available..)
• Definition of a project (clear goal that must be reached in a fixed time using
available resources)
• Product life cycle (planning, analysis, design, implementation,
maintenance... maturity and decline or evolutionary maintenance and a new
cycle)
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6. 4. Market and Costs
I've got an idea. And now?:
quick recap
We detailed:
• Some basics useful from concept to company
• How to formalize and write my project
• Who can help me (Kublai, business incubators, seed
accelerators)
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7. 4. Market and Costs
Target market
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8. 4. Market and Costs4. Market and Costs
http://sbinfocanada.about.com/cs/marketing/a/targetmarket.htm
Target market
• Who are your customers? Who will buy your product?
• People purchase products or services for three basic
reasons:
• To satisfy basic needs.
• To solve problems.
• To make themselves feel good.
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9. 4. Market and Costs4. Market and Costs
http://www.successdesigns.net/articles/entry/how-to-define-your-target-market/
Definition
1. Look at your current customer base
2. Check out your competition
3. Analyze your product/service
4. Choose specific demographics to target
5. Consider the psychographics of your target
6. Evaluate your decision
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10. 4. Market and Costs4. Market and Costs
http://sbinfocanada.about.com/cs/marketing/a/targetmarket_2.htm
Segmentation by
demographics
• Age: children, teens, young, middle, elderly
• Location
• Gender: male, female
• Education: high school, college, university
• Income: low, medium, high
• Marital status: single, married, divorced
• Ethnic and/or religious background
• Occupation
• Family life cycle: newly married, married for 10 – 20 years, with or without children.
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11. 4. Market and Costs4. Market and Costs
http://sbinfocanada.about.com/cs/marketing/a/targetmarket_2.htm
Segmentation by
psychographics
• Personality
• Values
• Lifestyle: conservative, exciting, trendy, economical
• Social class: lower, middle, upper
• Opinion: easily led or opinionated
• Activities and interests: sports, physical fitness, shopping, books
• Attitudes and beliefs: environmentalist, security conscious.
• Behaviour
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12. 4. Market and Costs4. Market and Costs
Challenges to exporting
• import barriers
• import quotas and currency restrictions
• taxation
• health regulations
• 'CE marking' for exports to most European nations
• safety regulations
• environmental standards
• accreditation issues
• how you will be paid for your exported products or services
• legal agreements.
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http://www.nzte.govt.nz/en/export/starting-to-export/identify-your-target-market/

13. 4. Market and Costs4. Market and Costs
Country specific constraints
• tariffs or duties
• industry regulations
• political instability
• business laws
• intellectual property protection
• product to market logistics
• quarantine and regulatory requirements.
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http://www.nzte.govt.nz/en/export/starting-to-export/identify-your-target-market/

14. 4. Market and Costs4. Market and Costs
Research and analysis
• target audience
• SWOT
• marketing goals
• positioning
• pricing
• distribution
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• marketing strategies
• communication strategy
• media plan
• schedule
• budget
• tracking and evaluation

15. 4. Market and Costs4. Market and Costs
SWOT/1
Strengths could include:
• personal and flexible customer service
• special features or benefits that your product offers
• specialist knowledge or skills
!
Weaknesses could include:
• limited financial resources
• lack of an established reputation
• inefficient accounting systems
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http://www.infoentrepreneurs.org/en/guides/create-your-marketing-strategy/

16. 4. Market and Costs4. Market and Costs
SWOT/2
Opportunities could include:
• increased demand from a particular market sector
• using the Internet to reach new markets
• new technologies that allow you to improve product quality
!
Threats could include:
• the emergence of a new competitor
• more sophisticated, attractive or cheaper versions of your product or service
• new legislation increasing your costs
• a downturn in the economy, reducing overall demand
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http://www.infoentrepreneurs.org/en/guides/create-your-marketing-strategy/

17. 4. Market and Costs4. Market and Costs
Here’s the problem with target markets: They’re too big.
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18. 4. Market and Costs4. Market and Costs
http://www.inc.com/guides/201104/how-to-narrow-your-target-market.html
Narrowing your target
market
"Companies that try to be all things to all customers are
sure to fail.”
• The Dangers of Being Unfocused
• Become an Expert in one Area (Starbucks!)
• Do the Market Research
• Tweak your Marketing
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19. 4. Market and Costs
http://www.educationbusinessblog.com/2007/07/target_market_selection_1.html?p=42
Matter of balancing
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20. 4. Market and Costs
Kinds
B2B
B2C
http://plantostart.com/how-to-define-target-market-product/
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21. 4. Market and Costs4. Market and Costs
B2B
Your business model is to make a product or service and
charge other companies for using it. The advantage of
this model is that companies have money and they are
willing to spend it on a product/service, which improves
their daily operations, helps them sell more or
communicate better. Google, Cisco, MySQL and others
are using this model.
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http://thelaukaitis.wordpress.com/2013/04/18/starting-your-business-2-business-model-and-target-market/

22. 4. Market and Costs4. Market and Costs
B2C
Your business model is to make a product or service and
charge consumers for using it. Even though most people
think this is a very profitable model, most often
companies need to have at least hundreds of thousands
of users in order to earn enough money to maintain and
expand the business. This model is being used by
Starbucks, McDonald’s, Amazon and others.
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http://thelaukaitis.wordpress.com/2013/04/18/starting-your-business-2-business-model-and-target-market/

23. 4. Market and Costs
All you need to know
about costs
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24. 4. Market and Costs
Costs
In production, research, retail, and accounting, a cost is
the value of money that has been used up to produce
something, and hence is not available for use anymore.
Two kind of costs:
• Direct costs
• Indirect costs
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25. 4. Market and Costs
Direct costs
Costs that can be identified specifically with a particular
project or activity, or that can be directly assigned to them
with a high degree of accuracy.
Direct costs generally includes:
• Salary and wages
• Material, supplies and equipment purchased directly
for the specific project
• Communication and travels costs
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26. 4. Market and Costs
Indirect costs
Costs that are not classified as direct
Indirect costs generally includes:
• Salary of administrative staff providing normal support
activities
• Office supplies, computers
• Local telephone calls
• Memberships
=> Overhead
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27. 4. Market and Costs
Bykes
Direct costs:
• Metals
• Wages for assembly
!
Indirect costs:
• Abrasive, glue, pink
• Rent
• Insurance
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28. 4. Market and Costs
Actual cost of doing
business
Before you can price a product or a service, you need
to know your cost to produce it.
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29. 4. Market and Costs
Photographer
!
• How much charge a photo?
• Minimum fee?
• No costs?
!
A useful tool: the Cost of Business calculator. It list annual
expenses, but it depends on your inputs which can be hard to
estimate.
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30. 4. Market and Costs
Cost of doing business
calculator/1
!
Expenses
• Office and/or studio (rent, mortgage payments, taxes,
insurances, home maintenance, …)
• Phone (cell and/or landline and faxes) – remember to
include also the cost of the phone itself
• Photo/Video/Audio Equipment and Accessories
• Equipment services and Repairs
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https://nppa.org/calculator

31. 4. Market and Costs
Cost of doing business
calculator/2
• Computer(s) (harware and software)
• Broadband internet
• Web hosting/Portal services
• Vehicle Expenses (Lease, Insurance, Maintenance)
• Office supplies and Furnitures
• Postage and Shipping
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https://nppa.org/calculator

32. 4. Market and Costs
Cost of doing business
calculator/3
• Professional Development
• Advertising and Promotion
• Subsciption and Dues
• Equipment and Business Insurance
• Health Insurance/Deductibles/Copays
• Legal and Accounting Services
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https://nppa.org/calculator

33. 4. Market and Costs
Cost of doing business
calculator/4
• Taxes and Licenses (Business and Self-Employment)
• Office Assistance (Payroll, Answering Service, Intern,
etc.)
• Utilities
• Travel and Entertainment
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https://nppa.org/calculator

34. 4. Market and Costs
Cost of doing business
calculator/5
• Income factors
• Desired Annual Salary
• Non-assigment Income
• Number of Days You Can Bill Per Year
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https://nppa.org/calculator

35. 4. Market and Costs
Cost of doing business
calculator /6
https://nppa.org/calculator
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36. 4. Market and Costs
Accounting
• The difference between cash and accrual basis
accounting has to do with the time frame in which
revenues and expenses are recorded and reported.
!
• Cash basis accounting will suffice if your business is
a simple one. However, the accrual basis will give a
more accurate picture of the results of business
operations.
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37. 4. Market and Costs
Cash Accounting
• Revenues are reported on the income statement in the
period in which the cash is received from customers.
• Expenses are reported on the income statement when
the cash is paid out.
• Focus on the amount of cash in bank and on making
sure all bills are paid.
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38. 4. Market and Costs
Cash Accounting
https://www.youtube.com/watch?v=FfdpupKByiU
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39. 4. Market and Costs
Accrual Basis Accounting
• Revenues are reported on the income statement when
they are earned - which often occurs before the cash
is received from the customers.
• Expenses are reported on the income statement in the
period when they occur or when they expire - which is
often in a period different from when the payment is
made.
• Provides more information about the business and
gives meaningfull financial reports.
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40. 4. Market and Costs
Accrual Basis Accounting
!
https://www.youtube.com/watch?v=NNhyZFHAzaA
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41. 4. Market and Costs
Cash vs Accrual Basis
Accounting
!
!
https://www.youtube.com/watch?v=LU_6amWC6H8
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42. 4. Market and Costs
Next week
Business model.
!
!
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