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Creating Your Business Plan

Creating Your Business Plan. Marketing Section. Target Market. Def : Individuals or companies that are interested in your particular product or service and are willing to pay for it (Who & Where) Put yourself in your customers’ shoes. How To Identify Target Market.

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Creating Your Business Plan

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  1. Creating Your Business Plan Marketing Section

  2. Target Market • Def: Individuals or companies that are interested in your particular product or service and are willing to pay for it (Who & Where) • Put yourself in your customers’ shoes

  3. How To Identify Target Market • The following are questions you must ask: • Final Consumer • Age, Gender, Income, Religion, Race • Location • How do they spend their time/money • Needs or wants satisfied • How many live in area • Demand for product • Where do they currently buy • What are they willing to pay • Competitive advantage • Business Consumer • Industry • Location • Needs or Wants satisfied

  4. Market Segments • Def: Groups of customers within a large market who share common characteristics • Example: • Leisure services market is broken into following segments: • Outdoor Adventurers • Frequent Vacationers • Couples who eat out often • Targeting the entire market would make ZERO sense. • Restaurant segment is broken down further: • Fast Food • Sit down • Italian Food/Chinese Food

  5. Customer Profile • Def: Description of the characteristics of the person or company that is likely to purchase a product/service • Demographics • Psychographics • Use-based data • Geographic data

  6. Sample Customer Profile • Sporting Goods Store • Individual 23 to 52 years of age • Participates in sports • Wants good quality sports equipment • Looks for good prices • Lives in Mendham • Average household income $42,000K/yr

  7. Demographics • Def: Data that describes a group in terms of the following: • Age • Marital Status • Family Size • Ethnicity • Gender • Profession • Education • Income

  8. Psychographics • Def: Data that describes a group of people in terms of the following: • Tastes • Opinions • Personality Traits • Lifestyle Habits

  9. Use-Based Data • Def: Data that helps you determine how often potential customers use a particular service • Ex: If you were starting a travel agency, how often do potential customers travel

  10. Geographic Data • Def: Data that helps you determine where potential customers live and how far they travel to do business with you • Ex: If you were opening a coffee shop it would be important to know that people are not willing to travel more than a mile for coffee

  11. Market Research • Def: A system for collecting, recording, and analyzing information about customers, competitors, products/services • Can be expensive and time consuming • Primary Data vs. Secondary Data

  12. Primary • Information collected for the very first time • Used to identify and understand target market • Options • Surveys • Observation • Focus Groups • Disadvantages • Time consuming and Expensive

  13. Secondary Data • Found in already published sources • Places to find it: • Publications issued by government or community organizations • US Census Bureau • Chamber of Commerce • Books on industry • Websites for Government or Business • Books on Entrepreneurs • Trade Magazines and Journals • Newspaper articles and statistics

  14. 6 Steps of Market Research • 1. Define Question • Who is target market? • 2. Determine Data Needed • What data do you need to collect • 3. Collect Data • How will you go about collecting? • 4. Analyze Data • 5. Take Action • How will you use data to make decisions • 6. Evaluate Results • Gage the decisions you make on data

  15. Know Your competition • Direct Competition: A business that makes most of its money selling the same or similar products/services to the same market • Indirect Competition: A business that makes only a small amount of its money selling the same or similar products/services to the same market

  16. Competitive Analysis • 1. Make a list of competitors • 2. Summarize the products and prices offered • 3. Strengths and weaknesses of competition • 4. Strategies and objectives of competition • 5. Determine opportunities in market • 6. Threats to business of competition

  17. How to combat competition • Build Loyalty • If customers want to only shop at your business you don’t have worry about competition • How to build loyalty • Listen and respond to feedback • Superior service • More convenient hours • Store-specific credit cards • Personal notes or cards to say happy b-day/thanx • Frequent-buyer programs

  18. Marketing strategy • A plan that identifies how the goals you wish to achieve through marketing will be achieved • It should address • Product introductionor innovation • Pricing • Distribution • Promotion • Sales or market share • Projected Profitability

  19. Marketing plan • Product or Service • Target Market • Competition • Marketing Budget • Business Location • Pricing Strategy • Promotional Strategy • Distribution Strategy

  20. Product • Product Mix • Different products you will offer • Features • Colors, Size, Quality, Hours, Warranties, Delivery • Benefits • Healthy, cost effective, safe, reliable, long lasting • Branding • Name, symbol, design used • Packaging • Positioning

  21. Pricing Objectives • Before you select strategy, you need to establish objective. • Maximize Sales • Discourage Competition • Establish Image • Increase Profits • Attract Customers

  22. Return on Investment (roi) • The amount earned as a result of the investment (usually expressed as %) • If you want to receive a 15% return on your investment of $5,000 you would need to price your product so that it will earn $750 • $5,000 x .15 = $750

  23. Market share • Business’s percentage of total sales generated by all companies in the same market • If MiniappleUS sells $192,500 in a market with a total size of $1,750,000, then you have an 11% market share. • If you have a new product then you have 100% market share

  24. Market share (continued)

  25. Market share • Ways to increase market share: • Lower Prices • Advertising • Networking • If MiniappleUS wants 40% of the market and a 10% ROI I would need to generate $700,000 of the $1,750,000 of the market (1.75M x .40) • I decide to lower prices to gain traffic and once I increase market share I can raise prices slightly to increase my ROI.

  26. Pricing (Goods) • Demand Based Pricing • Find out what consumers are willing to pay for your product and price accordingly • Cost-Based Pricing • Using the wholesale cost and determine price with markup price. • If you chose to markup 40% for artichoke hearts that cost $1.77 wholesale you would do the following • $1.77 x .40 = $.71 • $1.77 + $.71 = $2.48 • You would then sell your artichoke hearts at $2.48

  27. Pricing for Services • Time Based Pricing • A plumber charges $100 an hour for a job that is 1.5 hours would take in $150. • You must determine if you want to charge separately for parts and materials. • Bundling • Combining under one charge rather than making customer pay for each part of the service • Internet, Phone, TV

  28. Pricing for idea • Licensing • Process of selling your idea to a company for the development and launch of new product • Payment: • Up Front Payment • Royalties • Payment on percentage of sales • Annual Minimum • You get paid a minimum amount each year regardless of sales

  29. Pricing Strategies • Introductory Pricing • Sales will be low, marketing costs high, and little profit will be made at beginning of product life cycle • Price Skimming • Used when a product is new and unique and starts with a high price to recover costs for development • As more competitors enter, price may be dropped • Penetration Pricing • Low prices to build a strong customer base • Discourages competition

  30. Pricing stategies (Cont) • Psychological Pricing • Based on belief that certain prices have impact on how customer percieves product • Prestige Pricing • Selling high to create a feeling of superiority • Odd/Even Pricing • Suggests that customers are sensitive to certain ending numbers ($29.99 vs $30.00) • Price Lining • Different levels of pricing for items • Customers go to price they can afford • Promotional Pricing • Limited time pricing to increase sales • Multiple Unit Pricing • 10 for $10 which suggests a bargain and customers will buy more than if priced individually

  31. Pricing Strategies (Cont) • Discount Pricing • Customers are offered reduced price • Cash Discounts • Pay before this time, save money • Company gets cash quicker • Quantity Discounts • Buy more and save • Cuts down costs on business selling expenses • Seasonal Discounts • Used for selling seasonal merchandise out of season

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