There are two factors that we have to consider when analyzing a market, they are the customer and competitor.
In analyzing the market, the first step is to segment the population. Segmentation is the process of dividing the population into groups with similar characteristics. This can be divided into demographic (age, sex, religion), geographic (living areas) and psychographic (lifestyle, income, personality). After that, the next step is targeting, here we have to choose which portion of the segment are we going to cater to. This chosen target market should be the most suitable and potential for the company's offering. The last step is positioning where the company needs to compare the product to be launched to the products in the market, give it a competitive advantage that is distinctive from other products and can be remembered clearly by the customer.
The next process is value chain analysis. It consists of the primary and support activities involved in a company. Primary activities are the main activities that a company do everyday such as purchasing (and any other inbound logistics), operations, sales (and any other outbound logistics), marketing, sales and service. While support activities are the other things a company do to enhance the primary activities, such as firm infrastructure, human resources management, technology and procurements. These two activities will directly affect the profit margin that the company will generate in the end of accounting period. In order to gain more profit margin, a company with penetration pricing strategy will have to cut down the costs from these two activities so that a lower selling price may be set and higher market share may be obtained. However, for a company with market skimming approach, costs minimization may be done as long as it doesn't affect the product quality.
Monday, February 28, 2011
Monday, February 21, 2011
Five Forces and Product Life Cycle Analysis
Market is the place where demand push and pull of goods or services occur and where business transactions happen. While, industry is the people or companies selling similar goods or services to the same target market. Lastly, sector is the smaller part of industry with different segment.
In creating new business, we have to make a wise decision in which market, industry or segment where we want to operate. This decision requires many factors (both internal and external) to be analyzed carefully so that we can make the right decision. We don't want to enter a market with too intense competition because the chance of winning will be small but an unexploited market with lesser competition will open up chances. There are basically 2 methods that we learned today that can help us analyzing market competitiveness, Five Forces and Product Life Cycle Analysis.
Five Forces Analysis takes into account the external factors that affect sector competitiveness, they are threat of new entrants, bargaining power of buyers, threat of substitute products or services, bargaining power of suppliers and rivalry among existing competitors. We have to understand these five factors in the sector that we want to enter and decide whether they give us opportunities or threats. If more opportunities than threats are presented then we can enter this market easily, but if the result is the contrary then entering this sector may not be possible.
Product Life Cycle represents the stages a product in the market will go through before it should be drawn back and replaced by another product. These stages include introduction, growth, maturity and decline. For us, it is recommended to enter a market with a product in the growth stage because the competition is not as intense as in the maturity stage so that we will not need to make a major innovation in the product, but just a minor alteration of the currently existing product in the market.
These two analysis are very useful for us when we are deciding on setting up a new business. They will help us determine the competitiveness of a certain market, setting up other marketing strategies, allocate resources and deciding on the product innovation that we have to make.
In creating new business, we have to make a wise decision in which market, industry or segment where we want to operate. This decision requires many factors (both internal and external) to be analyzed carefully so that we can make the right decision. We don't want to enter a market with too intense competition because the chance of winning will be small but an unexploited market with lesser competition will open up chances. There are basically 2 methods that we learned today that can help us analyzing market competitiveness, Five Forces and Product Life Cycle Analysis.
Five Forces Analysis takes into account the external factors that affect sector competitiveness, they are threat of new entrants, bargaining power of buyers, threat of substitute products or services, bargaining power of suppliers and rivalry among existing competitors. We have to understand these five factors in the sector that we want to enter and decide whether they give us opportunities or threats. If more opportunities than threats are presented then we can enter this market easily, but if the result is the contrary then entering this sector may not be possible.
Product Life Cycle represents the stages a product in the market will go through before it should be drawn back and replaced by another product. These stages include introduction, growth, maturity and decline. For us, it is recommended to enter a market with a product in the growth stage because the competition is not as intense as in the maturity stage so that we will not need to make a major innovation in the product, but just a minor alteration of the currently existing product in the market.
These two analysis are very useful for us when we are deciding on setting up a new business. They will help us determine the competitiveness of a certain market, setting up other marketing strategies, allocate resources and deciding on the product innovation that we have to make.
Monday, February 14, 2011
Innovation, Competitive Advantage and Sustainability
In our second meeting, we learned about product innovation. It is the invention, creation and introduction of a brand new good or service to the market. Yes, as an entrepreneur we have to be smart in analyzing the market and innovating a product to create a new market for it. In this phase, creativity is tested so that the product that we come up with can be well received by the market and bring us profit. That's the main idea behind product innovation. Innovation is a very important process because we don't want to be just a copycat of other people's product and earn little revenue before the product enters its decline stage but creating a brand image that will benefit the whole company.
The thing about product innovation is, the product should have a competitive advantage compared to other products in the market. Competitive advantage itself is a special factor that the product has over any other products, can be in terms of quality, function and any other factors. For a new innovated product to be able to strive in the market and win over its competitors, it has to have competitive advantage.
We all know that a business is a going concern, it means it will continue to operate to an indefinite future. Indeed, in operating a business we have to remember that it has to be sustainable. Competitors will come up copying and bringing up new ideas, that is why we have to continue to innovate to retain our sustainability.
Even for the small-scale businesses that we're going to do this semester, we have to be innovative in order to gain our own market and lesser competition. This may involve high risk, but with a thorough analysis and research, the right strategy can be formed to achieve our goal.
The thing about product innovation is, the product should have a competitive advantage compared to other products in the market. Competitive advantage itself is a special factor that the product has over any other products, can be in terms of quality, function and any other factors. For a new innovated product to be able to strive in the market and win over its competitors, it has to have competitive advantage.
We all know that a business is a going concern, it means it will continue to operate to an indefinite future. Indeed, in operating a business we have to remember that it has to be sustainable. Competitors will come up copying and bringing up new ideas, that is why we have to continue to innovate to retain our sustainability.
Even for the small-scale businesses that we're going to do this semester, we have to be innovative in order to gain our own market and lesser competition. This may involve high risk, but with a thorough analysis and research, the right strategy can be formed to achieve our goal.
Monday, February 7, 2011
Strategic Marketing Report
Today is my first day back to campus.. It's been almost 8 months since the last time I went to classes, worked on assignments and projects (remembering that I spent the last semester away in Bali for internship).. Well, as usual I will not expect something big on the first day, probably some introductions, get-together and stuff like that.. However, I found myself sitting in front of my laptop, making blog for marketing class assignment! Geeez....... Ooooh, well let's do the assignment and get it over with so that I can go back to my DVDs..
For our first meeting, we were introduced to marketing strategy and I found that it is so important because we need to make use of our limited resources on the greatest opportunity available so that we can increase sales, gain profit and continue doing business! Basically, business is like a war with the marketing team in the front line, without the right strategy, we will not be able to defeat our enemy and win the battle.
More than that, we also learned about The G-STIC Action Planning Pyramid which is composed of Goal, Strategy, Tactic, Implementation and Control. This is the guideline to be followed when any people (or company) want to achieve something, starting from the very top of the triangle which is the Goal itself. First of all we need to have a goal so that we can stay focused on our mission then we can plan our strategies and tactics to achieve that goal. After everything is well planned then we can now begin to implement our strategies and tactics and lastly control our performance progress towards the goal that we've set. This action planning pyramid can be applied not only for businesses but in any areas of our life including our studies, career or even love life!
What got my attention the most was when the lecturer told us that we're not going to learn about the marketing used in multinational or large companies (the one that I've learned in Business Studies class in high school) but more on the entrepreneurial marketing that will be very useful for us to start our own business next semester. Wow, great idea! I was really excited....
For our first meeting, we were introduced to marketing strategy and I found that it is so important because we need to make use of our limited resources on the greatest opportunity available so that we can increase sales, gain profit and continue doing business! Basically, business is like a war with the marketing team in the front line, without the right strategy, we will not be able to defeat our enemy and win the battle.
More than that, we also learned about The G-STIC Action Planning Pyramid which is composed of Goal, Strategy, Tactic, Implementation and Control. This is the guideline to be followed when any people (or company) want to achieve something, starting from the very top of the triangle which is the Goal itself. First of all we need to have a goal so that we can stay focused on our mission then we can plan our strategies and tactics to achieve that goal. After everything is well planned then we can now begin to implement our strategies and tactics and lastly control our performance progress towards the goal that we've set. This action planning pyramid can be applied not only for businesses but in any areas of our life including our studies, career or even love life!
What got my attention the most was when the lecturer told us that we're not going to learn about the marketing used in multinational or large companies (the one that I've learned in Business Studies class in high school) but more on the entrepreneurial marketing that will be very useful for us to start our own business next semester. Wow, great idea! I was really excited....
Subscribe to:
Posts (Atom)