Market area size and trend
Market area : Specify your intended market. In what geographical area is your market to be located?
Market size: Once you have identified your market, determine the size of that market. This may be done in unit sales and in Kenya shillings. It is useful to have several years of sales figures so that comparisons can be made.
Market trends and outlook
While historical data in market size is important, it is not correct to merely project from that data into the future. Other factors may cause the market to change drastically. One way of estimating the outlook for the future is to analyse the trends that are occurring or
are expected to occur in the market. The analysis of these trends is important because it is not only used to determine the market size, but also to determine how best you can operate in the market. For example, if you intend to open up a food store, you may find that there is a definite trend of people eating away from home, particularly at fast food restaurants.
This trend, if it continues, will have a positive effect in the food stores. Knowing the trend tells you much about the expected size of your market and also points out questions that you will want to consider when deciding to operate your store, e.g.
- Will you want to locate your store in an area where there are many or few fast food outlets/
- Will you want to include fast food items in your stores?
- Will you want to advertise the advantages of eating at home and the disadvantages of eating out?
- To determine your research may require primary and secondary data sources.
- To determine the trends in the market you have to identified the trends that are relevant and of interest to you;
One of the greatest needs of the owners of small businesses is to understand and develop marketing programmes for their products and services. Small business success is based on the ability to build a growing body of satisfied customers. Modern marketing programmes are built around “the marketing concept” and performance, which directs the owners to focus their efforts to identifying, satisfying and following the customer’s needs all at a profit.
The marketing concept
The marketing concept rests on the importance of customers to a business and states that:
- all business policies and activities should be aimed at satisfying customer needs, profitable sales volume is a better company goal than maximum sales volume
When applying the marketing concept, a small business should:
1. Determine the needs of their customers (market research)
2. Analyze their competitive advantages (market strategy)
3. Select specific markets to serve ( target marketing )
4. Determine how to satisfy those needs ( market mix)
In order to manage the marketing functions successfully, information about the market is necessary. Frequently a small market research program, based on a questionnaire presented to present customers and or prospective customers, can disclose problems and
areas of dissatisfaction that can be easily remedied, or new products or services that could be offered successfully.
Market research should also encompass and identify trends that may affect sale profitability levels. Population shifts legal developments, and the local economic situation should be monitored to enable early identification of problems and opportunities.
Competitor activity also should be monitored; competitors may be entering or leaving the market. For example it is very useful to know your competitors strategies are (i.e , how do they compete?).
Marketing strategy includes identifying customer groups (target markets ) , which a small business can serve than its large competitors , and tailoring its product offerings prices , distribution, promotion al efforts and services towards that particular market segment ( managing the market mix). Ideally the strategy should try and address customer needs which currently are not been met in the market place and which represent adequate potential size and profitability. A good strategy implies that a small business cannot be all things to all people and must analyze its market and it’s on capabilities and so as to focus on a target market.
Owners of small businesses have limited resources to spend on marketing activities. Concentrating their marketing efforts in one or two key segments is the basics of target marketing. Market segmentation is the process of dividing the total market for a product or service into groups with similar needs, such that each group is likely to respond favorably to a specific marketing strategy in order to divide the total market into appropriate segments an entrepreneur must consider segmentation variable which are parameters that identify the particular dimensions that distinguish one form of business behavior from another The major ways to segment a market are:
1. Geographical segmentation: specializing in serving the needs of customers in a particular geographical are. (for example a neighborhood shop may send advertisements only to people living one half kilometers of the shop)
2. Customer segmentation: identifying and promoting to those group of people who are most likely to buy the product. In other words, selling to heavy users before developing new users
3. Demographic segmentation: these refer to certain characteristics that describe customers and their purchasing power for example age, marital status, gender, sex and income.
Managing the market mix
There are four key marketing decisions areas in a marketing program. They are:
- Product and services: product decisions will transform the basic product or service idea into a bundle of satisfaction. Effective product strategies for a small business may include concentrating in a narrow product line developing a highly specialized
product or service or providing a product –service e package containing unusual amount of service.
- Promotion: promotion activities will communicate the necessary information to target markets this marketing decision area includes advertising, salesmanship and other promotional activities in general. High quality salesmanship is a must for
small businesses because of their limited ability to advertise heavily.
- Price: pricing declensions will set an acceptable exchange value on the total product or service determining price levels and/ pricing policies (including credit policy)is the major factor affecting total revenue . Generally, higher prices mean lower
volumes and vice versa; however small businesses can often command higher prices because of the personalized service they can offer.
- Distribution: these are distribution activities regarding the delivering of the products to the customers. The manufacturer and wholesaler must decide how to distribute their products. working through established distributors or manufacturers ‘ agents generally is most visible for small manufacturers small retailers should consider cost and traffic flow as two major factors in location and site selection , especially advertising rent can be reciprocal. In other words, lowcost, low-traffic, location means you must spend more in advertising to build traffic.
The marketing mix is used to describe how owners can combine these four areas into an overall marketing program. The nature of the product or service also is important in location-al decisions. in purchases are made largely on impulse (e.g. . , soda or candy )then high traffic and visibility are critical on the other hand , location is less a concern for products or /-services that customers are willing to go out of their way to find ( e.g. hotel supplies).
Evaluating marketing performance after marketing programme decisions are made, owners need to evaluate how well decisions have turned out. Standards of performance need to be established so that results can be evaluated against them sound data on industry norms and past performance provide the basis for comparing against present performance. Owners should evaluate their business performance at least quarterly.
The key questions to ask are:
1. Is the business doing all it can to be customer –oriented?
2. Do the employees make sure the customer’s needs are truly satisfied and leave the customers with a feeling that they would enjoy coming back?
3. Is it easy for the customer to find what he or she wants and at a competitive price?
Sometimes, technology can be vital to a service company, such as the case of the Internet provider that uses wireless connections as a competitive edge, or the local company that offers conference rooms for video conferencing. An accounting practice might gain a
competitive advantage from proprietary software or wide-area network connections to its clients. A medical laboratory might depend completely on certain expensive technologies for medical diagnostics. A travel agency might depend on its connection to an airline
Technology can be critical to a manufacturing business in at least two ways: first, the technology involved in assembly or manufacturing, such as in the manufacture of computer chips; and second, the technology incorporated in your product, such as
proprietary technology that enhances the value of the product. In either case, technology can be a critical competitive edge. If you are writing a plan for outsiders, then you need to describe the technology and how well or thoroughly you have the technology protected in
your business, through contracts, patents, and other protection.
Technology might be a negative factor, something to be included in a plan because a threat should be dealt with. For example, that same travel agency that depends on a computerized reservation system might also note growing competition from Internet
reservations systems available to consumers who prefer to buy direct. Not all businesses depend on technology. Technology might also be irrelevant for your business. If so, you can delete this topic if it doesn’t seem important.
Now you want to present your outlook for future products or services. Do you have a long-term product strategy? How are products developed? Is there a relationship between market segments, market demand, market needs, and product development? Here again, what you include depends on the nature of your plan. In some cases future products are the most important point for investors looking to buy into your company’s future. On the other hand, a bank is not going to lend you money for product development or hopes for future products; so in a plan accompanying a Loan Application, there would probably be much less stress on this point.
You may also need to deal with the issue of confidentiality. When a business plan includes sensitive information on future products, then it should be carefully monitored, with good documentation of who receives copies of the plan. Recipients might reasonably be asked to sign non-disclosure statements and those statements should be kept on file.
It is generally a good idea to include specific pieces of sales literature and collateral as attachments or appendices to your plan. Examples would be copies of advertisements, brochures, direct mail pieces, catalogs, and technical specifications. When a plan is
presented to someone outside the company, sales literature is a practical way to both explain your services and present the look and feel of the company. If it is relevant for your business, you should also use this topic to discuss your present situation regarding company literature and your future plans. Is your sales literature a good match to your services and the image your company wants to present? How is it designed and produced? Could you improve it significantly, or cut the cost, or add additional benefits?
Depending on the purpose of your plan, you should provide good, practical information on the products or services you sell. Give your plan readers what they will need to evaluate the plan. Make sure they understand the need you serve, how well you satisfy that need, and why your customers buy from you instead of somebody else. Ideally, the descriptions in this chapter make your sales forecast seem realistic. Your point of view may change, but if you start with a well thought out point of view at least you will have the perspective and data to make considered changes.
Milestones are simply interim way points or goals. They should be constructed so that the completion of a milestone provides a powerful indicator that you are on the right course. Missing a milestone requires that you consider the reasons for failure, rethink the
ultimate goals of the company, or both.
When I help companies construct milestones I usually like to bucket them into three categories: Technology, Market and People. I also like to consider what stage the company is in, again I usually like to bucket stages into three categories – Proof of Concept, Going to
Market and Scaling to Profitability. Different milestones are appropriate for each stage but in general you want to pick things that are pivot points for both risk and opportunity.
In the proof of concept stage technology milestones should focus on proving the feasibility of the core technology. For example, in a software or Internet company, there are often key algorithms that need to be developed. What milestones need to be achieved so that these algorithms provide compelling results to justify the essence of your company’s value proposition?
Market milestones should be chosen so that completion provides substantial proof that a large enough market exists to continue to the next stage. For example, you might complete a compellation of published market research on existing and related markets, gather market sizing information for your target market and conduct primary research and interviews with a representative set of your target customer base.
With Milestones, you can:
Plan your PR and advertising campaigns.
Track sales and see if your efforts are paying off.
Relate sales trends to marketing activities.
Present implementation schedules to your customers.
Plan and track all of your marketing and sales projects.
Keep lines of communications open on team projects.
In addition to storing, maintaining and ordering your inventory, we have trained and qualified team of agents available to quickly pick, pack, label and ship your products within minutes, not days. A complete business plan describes what you sell: either products, services, or both. This part of the plan is mainly description. Sometimes it will include tables that provide more details, such as a bill of materials or detailed price lists. More frequently, however, this section is mainly text. It normally appears in the plan, after the company description, but before the market analysis.
The most important marketing milestones will provide further validation of the market and identify missing elements of the product through feedback from broad cross sections of target customers. It’s equally important to have milestones around developing a product specification based on that feedback as well as a marketing plan that includes initial sales or customer acquisition targets. Choose milestones and market metrics that prove to you and your Board the company is establishing market traction.
In the go-to market stage the company will hopefully be scaling quickly, requiring people to do a variety of jobs and exercise additional skills. Implement the milestone process deeper into the company will allow you to develop a broader evaluation process for more
people than you put in place in the proof of concept phase.
Once you have firmly established yourself in the market (good initial customer base, broadly used by consumers etc.), the next stage is scaling to profitability. For technology milestones you will want to consider milestones around product cycle times, cost to deliver and other goals that will allow you to deliver a cost and feature competitive product.
Marketing milestones will largely revolve around scaling the sales or customer acquisition process economically. If you are an Internet company you should carefully monitor customer acquisition costs against lifetime value of the customer and drive towards
making the customer profitable. In a more traditional software or hardware company, focus on milestones that guide you to a set of customers and sales processes that are repeatable.