September 27

• How do entrepreneurs determine who will buy their products?

  • Who has traditionally bought similar products

  • Ask family and friends

• How do entrepreneurs organize and analyze market research?

  • Must make surveys actionable

  • You are not the market, so you have to get a lot of information

  • Analyze your area and community to save money and reputation

  • The earlier you do the market analysis, the better off you’ll be

The Function of Marketing

• Marketing is the process or technique of promoting, selling, and distributing a product or service

• The function of marketing in an entrepreneurial venture is an important one - it defines customers, wants and needs, and delivers goods and services to fulfill those needs. If marketing fails to accurately project consumer wants and needs, other business functions such as production, management, and finance will suffer

• Entrepreneurs who invest time and resources into market research at the onset of a business are better prepared to create products that will lead to profitability

• The better you define your target market, the better you can fine-tune your marketing and products.

Marketing Concept

• Method of selling that involves analyzing customer wants and needs and aiming to fulfill them better than competitors, it involves following three elements:

  1. Customer needs and wants - extensive research to produce products that aren’t in demand within an economy

  2. Company goals - Aligning the business functions to customer needs, means, every action a company performs should match its goal of satisfying customers (market share - owning percentage of the market)

  3. Profits - Companies that build long-term returning customers create a relationship conducive to increased profits

Target Market

• A target market is a specific group of people a business will sell to

• Can be grouped by age, behavior, geographic location, or others

• Understanding target market is important because listing specific consumers, organizations, or businesses that your business will target

  • Critical first step in creating marketing plan

• Hot Topic’s target market is not senior citizens

• Ideal customer

• HEB targets families, geographically oriented (2-mile radius)

Market Identification

• Concept of a market refers to a place where buyers and sellers exchange goods and services, but it also refers to a group of customers who might purchase a product

• Method of choosing target market is called market identification

• The goal of market identification is to discover where, how, and with whom a business will be most profitable when selling

• Businesses consider following questions to assess potential target markets:

  • What problem does the product solve?

  • Where is the demand for the product?

  • Who is demanding the product?

  • How does the competition solve customer problems?

• The Cheesecake Factory targets celebrations (birthdays), while Tex-Mex restaurants will target those that are looking for quick meal.

Market Segmentation

• Identify which vertical that the firm operates in

• Used to narrow down the market into small, specific groups

• Common characteristics based on:

  • Geographic segmentation

    • Ski resort will not be opened in West Texas

  • Demographic segmentation

    • Less competition, underserved

    • Not much population to support the firm

    • Homeowners, ethnicity, age range, gender

    • Socioeconomic demographic: Lululemon vs Walmart leggings

  • Psychographic segmentation

    • How people think, the reasoning process of customers

    • Ads for various medications, won’t show the disease

    • Psychology - they’re afraid of certain things, so they will show success (fear & envy provocation, pathos!)

      • Understand the buying patterns and match marketing campaign

  • Behavioral segmentation

    • How and why people act

    • Gas stations will be at intersections, right-to-right

    • Landowners will charge more commercial land for right-to-right spots, because people don’t like to go left and pull in

    • What causes them to buy

    • What drives people’s behavior

Market Research

• Process of gathering information

Marketing Information Management

• Act, skill, tools of using all that information combined together

• Gathering information about products, conducting research into consumer wants, needs, and preferences and analyzing competitors

• Direct impact on other functions of marketing

• Important to understand the difference between factual data and misinformation

• Focus groups: Small group of people and survey

• Primary data: Surveys, focus groups, in-person interviews, observations, field trials

• Secondary data: Business statistics and industry data from sources like the US Census Bureau (e.g., Small Business Association)

Market Research Process

• Identify industry trends, potential markets, analyze demand, forecast sales, and make other business decisions

1. Identify the problem

2. Determine a research approach

3. Design research instrument

4. Collect data

5. Analyze results

6. Communicate results

Competition Research

• To market effectively, businesses must understand their competitive position, or how they relate to competitors within an industry through market analyze

• Competitive positioning: Examination of a business’ enter marketing process and competitors to understand how well products can compete. To analyze competitive position, businesses must study the following factors:

  • Market profile

  • Target market

  • Competition analysis

  • Product differentiation

Market Analysis

1. Identify competitors

2. Track competitive factors

3. Identify factors as strengths or weaknesses

4. Rank customer needs and wants

5. Analyze

Review

• SWOT Analysis: Every part of business plan (strengths, weaknesses, opportunities, threats)

  • Strengths: Places where business has an advantage over others

    • Lean into, advertise in marketing

    • Leveraging for partnerships & funding & contracts

    • Keep and guard the strengths when changing or growth model

  • Weaknesses: Places where a business is at a disadvantage in the market

    • Work around them, mitigate/compensate

    • Transparency with investors

    • Fix them in the future when growing

    • Partnerships to mend each others’ weak spots

    • Minimizing the risk

    • Ignore if too costly to fix, not relevant to business strategy, and all businesses in competition

  • Opportunities: Outside factors that the business can use to its advantage

    • Example: Hurricanes and storms for handyman service

    • Struggling competitors to buyout that business

    • Thomas Jefferson believed in small federal government, but the Louisiana Purchase turned that around, shifted US government to accommodate opportunity

    • Plan of action to take advantage of opportunities depending on verticals

  • Threats: outside factors that may negatively impact the business

    • Geopolitical, i.e. supply chain deficiency

    • Transportation and traffic blockage

    • Storms, tornadoes that disrupts storefront

Marketing Analysis in a Business Plan

• Market eneds that could be filled witha. new business

• Format varies from industry to industry

• Four standard components:

  1. Identify the target market: Analyze consumer groups

  2. Analysis of the Competition: Other business provide similar products or services

  3. Outlook in Industry: Recognize current and future growth

  4. Owners personal strengths: Personal attributes & skills