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Basic Marketing Questions

Marketing the New Venture Dr. Alan L. Carsrud The Eugenio Pino & Family Global Entrepreneurship Center Florida International University. What products or services are you selling? To whom do you sell? Does someone represent you or distribute your products or services?

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Basic Marketing Questions

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  1. Marketing the New VentureDr. Alan L. CarsrudThe Eugenio Pino & Family Global Entrepreneurship CenterFlorida International University

  2. What products or services are you selling? To whom do you sell? Does someone represent you or distribute your products or services? How do you promote sales? How do you price your output? What do customers expect? Basic Marketing Questions

  3. Remember Terminology MARKET The set of all actual and potential buyers of a product POTENTIAL MARKET The set of consumers who profess a sufficient level of interest in the market offer AVAILABLE MARKET The set of consumers who have interest, income, and access to a particular market offer TARGET MARKET The part of the available market the company decides to pursue MARKET DEMAND The total volume of a product that would be purchased by a defined customer group in a defined geographical area in a defined time period in a defined marketing environment under a defined marketing program

  4. Market Segmentation What is a market segment? Why is it important?

  5. Set of potential customers Who have similar needs Who reference each other when buying Are alike in the way they: Perceive value View products and services Purchase products and services What is a “Market Segment”?

  6. Easier to understand customer needs Focus “whole solution” to a narrower set of customer needs Easier to become a leader in a smaller market (Big fish in small pond) More effective use of marketing dollars Generally more profitable Why Define a Market Segment?

  7. Markets: Geographic Variables Pacific, Mountain, West North Central, West South Central, East North Central, East South Central, South Atlantic, Middle Atlantic, New England Region Under 4,999; 5,000-19,999; 20,000-49,999 . . . 1,000,000-3,999,999; 4,000,000 and over City ormetro size Density Urban, rural, suburban Climate Northern, southern, tropical

  8. Markets: Demographic Variables Age Gender Occupation Family size Education Nationality Religion Income Ethnicity

  9. Markets: Psychographic Variables Lifestyle Personality Hobbies Compulsive TV viewing habits Outgoing Social activities Authoritarian Club memberships Ambitious Vacation preferences

  10. Markets: Usage Variables Occasions Regular occasion, special occasion Quality, service, economy, speed Benefits Nonuser, ex-user, potential, first-time, regular User status Light user, medium user, heavy user Usage rate Loyalty status None, medium, strong, absolute Buyer-readiness stage Unaware, aware, informed, interested, intends to buy Attitude toward product Enthusiastic, positive, indifferent, negative, hostile

  11. Originally a General Electric study Now the Strategic Planning Institute Studied 2600 business units since 1972 Evaluated 28 factors related to ROI Determined the factor that most affected ROI was market share PIMS: Profit Impact of Marketing Strategies

  12. Firms with market shares over 40% have an avg. ROI 2 1/2 times more than firms with market shares under 10% Increasing market share an additional 10% results in an additional 5 point increase in ROI PIMS

  13. Market share of up to 10% = 13.2% ROI 10% - 20%, ROI = 18.0% 20% - 30%, = 23.6% 30% - 40%, = 24.4% Over 40% market share, ROI = 32.3% Profitability Increases with Market Share

  14. Conclusion: Don’t enter a new market segments unless you can capture 25 -30% market share in a few years

  15. Define market segment small enough to allow you to capture 25% to 30% share Be a “Big fish in small pond” Ideal: Be the only supplier in a very narrowly defined market. But: Is the market large enough for future growth? Entrepreneurial Strategy:

  16. Product & Service Adoption 34% 34% Rate of adoption 13.5% 16% 2.5% Innovators Early adopters Early majority Late majority Laggards

  17. Product/service must be an innovation (example internet courses, dating) Product/service must be functional, but not perfect Draft manuals ok Have them beta test Want to talk with developers Marketing to “Innovators”

  18. Direct sell the “dream”, but clearly define scope & deliverables Relate to their specific objectives Have them reference other visionaries who have bought; your best salesmen Price is secondary: want it right, complete, quickly & on time Marketing To Early Adopter

  19. Proven product or services, based on standards, many satisfied customers, market leadership Want competition: lower prices, alternatives Industry specific seminars and conferences Develop long term relationships Like one-stop shopping but slow to buy Marketing To “Pragmatists”

  20. “Back side” of the curve = 1/3 population Significant opportunity for sales & profits Don’t like change Want only mature whole products or known services, fully packaged and supported....at a low price Buy through known distribution channels The “Conservatives”

  21. Last 1/6 of population = 17% Don’t buy anything unless they have to Just now buying microwave ovens & VCRs Not worth talking about Not worth me making this slide! Enough said.... Laggards

  22. QUESTIONS?

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