Download Chapter 3 Analyzing the Market, Customers, and Competition

Chapter 3 Analyzing the Market, Customers, and Competition
Click on the topics below for the summary of
Each topic. Use the links below to access the
Other materials available for this chapter.
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What are the five steps to formulate a successful marketing plan?
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What is a marketing strategy and what are the target markets for an opportunity?
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What are the e five steps taken in completing a successful database-marketing plan?
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What are the steps taken in conducting a competitive analysis?
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What are the three methods used to prepare a price and sales strategy.
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When should you consider using e-commerce applications?
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What are the various direct and e-marketing methods used to sell the product or
service.
Click on these links below to access the other materials available for this chapter.
PowerPoint
Chapter Case
Analytical Tools
Conducting primary and Secondary research
Model of competition
Chapter review
What are the five steps to formulate a successful marketing plan?
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Set Marketing Objectives: Marketing objectives are likely to be based on
sales revenues and market share. They may also include related objectives
such as sales presentations,
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Get the Product Out: Sales and Distribution, Begin with how a business
will deliver its products or services to customers. Will the business
employ its own sales force for direct marketing; or will dealers,
distributors or jobbers be used? How will they be compensated?
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Set a Pricing Strategy: Pricing should be considered as part of the overall
marketing strategy. The entrepreneur needs to generate a rationale to
explain the pricing strategy and anticipate its impact on gross profit Raise
Visibility: Advertising, Public Relations, and Promotion
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Raise Visibility: Advertising, Public Relations, and Promotion In many
instances, public relations will play an important role on attempts to
generate sales. Usually, the focus is on the concept and creative content of
the communications campaign, the media used, and extent to which each
will be employed.
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Future Marketing Activities The marketing plan should consider sales
strategies aimed at sustaining growth. For example, a company’s
immediate plans might involve penetrating only the domestic market,
while in the future the same company might consider a license for its
products in some international markets or perhaps even a joint venture
with a venture in similar markets.
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What is a marketing strategy and what are the target markets for an opportunity?
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Target marketing is the strategy used by most successful businesses today.
Usually, a company ignores segments that have limited growth, because the
product will not generate sufficient sales to sustain the company’s profitability or
allow the company to compete effectively.
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Marketing tactics are developed for each target market, which is called strategy
market segmentation. Once markets have been targeted, the entrepreneur should
develop a marketing program for penetrating each segment. The business plan
will help to identify the markets and their selection. Each of the target markets
should be treated almost as a separate marketing program.
What are the five steps taken in completing a successful database-marketing plan?
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Pinpoint objectives. The entrepreneur must understand the company’s goals
before the database marketing system can be automated. Is it to increase the
customer base? To double sales of a product line?
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Determine who should be in the database. Determine what types of customers
have the most potential. Then construct the database,
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Develop a plan. After the objectives are set and the database is constructed, will
it be time to devise a marketing program. Generally it will fall into one of three
categories: direct marketing, rewards for repeat purchases, or relationshipbuilding promotions for long-time customers that generate profits.
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Measure results. Generate periodic status reports to determine such items as cost
per contact and cost per sale. . If results are positive, expand to include the entire
market segment.
What are the steps taken in conducting a competitive analysis?
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Creating a competitor profile provides the entrepreneur with a detailed assessment
of the competitive environment. It is helpful to know the key players, their
personalities, and marketed positions in each firm with which the company will
be competing. How do they compete for business in terms of product, service,
location, and promotion?
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In many situations, competitors use different methods to gain market dominance.
Do the competitors vie for price? Some may pursue price-sensitive market
segments while others seek the business of those who want improved service,
quality, convenience, value, rapid delivery, or a wide selection of product options.
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It is particularly important to identify which businesses will provide the most
significant competition and predict what they will likely do. Analyze the situation
by asking the questions relating to product, price, industry competitors, and
management
What are the three methods used to prepare a price and sales strategy?
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Once the marketing analysis and competition review are established, the
entrepreneur should begin to develop the pricing and sales plan. Pricing is the
key to the process of controlling costs and showing a profit
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Value method: Demonstrating value is part of pricing a new strategy. Price
should not be based simply on cost, plus a modest profit. Instead, price should be
based on the value of the product or service to the customer. If the customer does
not think the price is reasonable, then not only should the entrepreneur consider a
price change, but also a new image for the product or service.
Rationale Method: The entrepreneur must explain why his prices differ from
those of the competitors. For instance, does the new business perform a function
faster or more efficiently? Lower prices can be justified that way. Or, is the new
product created with greater care and better materials? A higher cost can
communicate this.
Positioning Method: One way to position a product is to charge a high price when
competition and substitution are minimal another is to “match competition” by
pricing slightly under the competitor’s rates to expand one’s own market share
(for example, Motorola or Verizon cellular phones).
A third is to substantially under-price the market, so as to exclude competitors
altogether (for example, Dell computers focused on direct sales at slightly lower
pricing, which enabled them to expand their market shares).
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When should you consider using e-commerce applications?
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Electronic commerce is becoming a marketing and competitive necessity for startup and growing companies. It will change the way many companies market their
products and do business.
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Therefore, it is worthwhile for the entrepreneur to shop for, invest in, or lease
electronic commerce technologies. For the entrepreneur, it will mean competing
more readily for domestic and global sales and delivering new products for the
electronic commerce marketplace.
What are the various direct and e-marketing methods used to sell the product or service?
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Direct-mail marketing provides a medium to reach a large number of customers
quickly. It is selective because it allows business owners to pre-select the
recipients and easily measure the response.
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Telemarketing: is the use of telephone communications to sell merchandise
directly to consumers. It is one of the fastest-growing direct market channels
available and has become a direct-marketing tool. Financial service groups, credit
card companies, and magazine/newspaper subscriptions all use this method with
mixed success.
In many cases, firms have switched to fully automated telemarketing systems.
Telemarketing systems now can use automatic-dialing and recorded-message
players (ADRMPs) to dial numbers and play advertising messages that are voice
activated and even that record orders from customers or forward the call to an
operator
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Home Page Opportunities: The entrepreneur should create a Home Page to
market and provide information about the business’s products or services on the
Internet. A Home Page can also serve as a natural jumping-off point for
electronic buying and selling.
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Good sites are driven by a business objective that needs to be solved, and the
Internet is the best way to solve it. Therefore, establish a purpose for the web site
before creating one.
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Marketing on the Internet: Companies have tried using banner ads with mixed
results to sell their products on targeted web sites. Other methods include using
the Internet to get coupons for household products.
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Secure Payment Over the Internet: Because of the public nature of the Internet,
consumers have been reluctant to use it for transmitting payments. Before it can
be part of “business as usual,” electronic commerce must provide the same levels
of privacy, integrity, and trust inherent in existing business practices. Fortunately,
these problems can be overcome through the use of digital certificates.
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Digital certificates are electronic credentials that bring greater security and
integrity to Internet commerce. Using advanced encryption techniques, digital
certificates give messages a unique electronic signature that identifies the sending
party, ensures that the message was not altered or copied en route, and verifies
that the message was sent and received.