Target Marketing
Here is a customer profile of Marine Art of California, a start-up company in Newport Beach, marketing the works of California artists through a direct mail-order catalog. The product line is a unique combination of art, gift items and jewelry, all tied together by a marine or nautical theme.
Who are my customers?
1. Profile:
Economic level: middle to upper-class
Psychological makeup: art lover, jewelry lover, fashion conscious, ocean lover, eclectic taste, college educated, discriminating buyer, upwardly mobile life-style.
Age: 35 to 55
Sex: Male/Female
Income level: $75,000 and above.
Habits: high-expense entertainment, travel, marine-oriented hobbies (shell/dolphin collectors, scuba diver, boat/yacht owner, etc.), patrons of performing arts, concerts and museums.
Work: professional, business owners, business executives, middle management, interior designers
Shop: middle to high-profile retail establishments.
2. Location:
Orange County: coastal areas - home value of $500,000 and above.
San Francisco County, San Diego County, San Bernardino County
3. Market size:
Mail list purchased through wholesale mail list companies. The consumer base will range from 20,000 to 100,000 in the first year of operations.
4. Competition:
Minimal due to unique 2-pronged marketing concept of marketing exclusively California marine art, custom-designed jewelry and giftware by way of (1) direct mail-order catalog and (2) retail showroom. No known operation in their category.
5. Other factors:
As acting distributor for several artists, I am able to retain exclusive marketing rights and, in most cases, have contracted to purchase at 10 to 15% below published whole sale price lists.
Wednesday, December 8, 2010
STP and Feasibility
| Segment, Target & Position ("STP") Identifying those certain variables which are relevant to our product is called "Consumer Profiling". We indicate the age range, gender, income, educational level, psychographics, hobbies, interests, or other pertinent information identifying your group or market. Can you determine from looking at the U.S. Census how many people fill that profile? (See http://factfinder.census.gov/home/saff/main.html?_lang=en ). |
Once you have made the profiling, you can target your efforts on a more focused group within that segment and to winning them as your customers. We need to know what they buy, how they spend their time, and how to reach them and communicate with them. Which marketing vehicle can we use to best reach them: direct marketing, advertising on the TV, radio, newspapers, magazines or what?
Positioning is the act of designing the company's offering and image so that they occupy a meaningful and distinct competitive position in the target customers' minds. We must develop a market-focused value proposition as to why the target market should buy our product. We may consider the proposition on service like quick delivery of the product, or selling tender meats and poultry, or in the case of a car, reliability and safety.
Feasibility
Once we have determined whom our potential customers are, we need to know if it is worthwhile to target this group. Are there enough profiled customers out there to buy enough of our product so that it is feasible to go into this business? We wouldn't want to start a business and find out that the targeted group is not interested in our product or there aren't enough of them when they do buy in order to satisfy our own goals and profit levels.
We must also consider the price at which we expect to sell our product. When all is said and done will the quantity sold at the price offered be enough to make a profit. In order to determine this we must know how much it will cost to open our doors. What will the start-up costs be? Will we need to rent or buy space? Purchase equipment and supplies?
Operating Budget
Once you have established how much you will need to start your business you will have to create an operating budget. Determine from your start up costs those that will recur over time, such as your rent, electricity, salaries, advertising, etc. These recurring expenses are the start of your operating budget. These recurring expenses will mostly be Fixed Costs. These Fixed Costs will be used to determine your breakeven point, that level of sales at which you don't make a profit or a loss -- you come out even. Mathematically the formula is
Breakeven point (units) = Fixed Costs divided by (Selling price minus the Unit Variable Cost)
This means that you have to determine a sales price.
Tuesday, November 16, 2010
Business Concept based on Trends
Many of you may have thought about starting a business at some point in time. Many of us have thought about a new invention, process or production improvement that we may be able to patent and call our own. But before we can expect to make some money on our idea and build a business there are some things that we must investigate before we venture out and spend our own money and the money of others to start a business.
We also need to know what makes a business, company or project interesting to an investor. Why would an investor put money into one business and not another. What is the attraction?
Trend Analysis
One of the things we must look at is what are the trends that are happening today? What situation is developing where consumers are buying items that are creating a trend. What are the needs of today's society and what are the characteristics of that society? What is happening in your region or in the United States? If we are catching a trend from the beginning of the trend, then we can be assured that our sales will be growing with that trend as the trend catches on. Trends last for a period of at least 10 years. So we can be assured that our sales will be growing and we will be around for 10 years.
An investor would look at the trends and compare the potential market growth to your sales trend. Are your sales increasing and growing in market share? Are you and your management team capturing the market with your product, and are you capable of maintaining that growth with your expertise and acumen? Would you gain the confidence of an investor or a banker?
Another thing to think about is whether we are able to change the way people do things. Are we making life easier or more convenient for them with our product? Take a look at Amazon.com. Amazon.com changed the way people purchase books. Consumers no longer have to go to a "bricks and mortar" store to select their books. They merely go to the Internet at Amazon.com and put in a title or author and all the books available are listed as a result of that search. The customer orders the book and it is delivered within a week to their door. You don't even have to go outside! After you read the book, you can sell it on Amazon.com, and you can read critiques of the book and offer you own. With this direct mail ordering, Amazon.com can afford to offer their products at a lower price than the competition.
Think about Starbucks, the coffee vendor. Starbucks started in Seattle, Washington where people were developing and acquiring tastes for flavored coffee. Starbucks' management realized the trend was growing in Seattle and grabbed onto it. Now Starbucks locations can be seen in many cities across the United States. Starbucks hit on the fact that Americans were interested in flavored coffees and developing a taste for good coffees. Not only was this taste developing, but Americans were willing to pay the premium prices that Starbucks charges for this richly brewed java! Starbucks provided an environment where patrons could read their daily newspapers, read their email on their lap tops while sitting and enjoying their coffee at their leisure.
Market Research Required
Another consideration that we must think about is whether someone out there would be interested in purchasing our product or even visiting our retail store. We have to do our market research from two perspectives: who is our consumer and who is our competition. Who are the consumers we want to attract? Do they have the right demographic profile: age, gender, income level, education, etc. to be able to purchase our product and even enjoy it? Moreover, what do they buy, what motivates them to buy, and why would they purchase your product? Competition can be fierce or weak. We must know what we are up against in the way of product offerings and also become aware of potential changes to product development which may threaten our own product offerings.
We also need to know what makes a business, company or project interesting to an investor. Why would an investor put money into one business and not another. What is the attraction?
Trend Analysis
One of the things we must look at is what are the trends that are happening today? What situation is developing where consumers are buying items that are creating a trend. What are the needs of today's society and what are the characteristics of that society? What is happening in your region or in the United States? If we are catching a trend from the beginning of the trend, then we can be assured that our sales will be growing with that trend as the trend catches on. Trends last for a period of at least 10 years. So we can be assured that our sales will be growing and we will be around for 10 years.
An investor would look at the trends and compare the potential market growth to your sales trend. Are your sales increasing and growing in market share? Are you and your management team capturing the market with your product, and are you capable of maintaining that growth with your expertise and acumen? Would you gain the confidence of an investor or a banker?
Another thing to think about is whether we are able to change the way people do things. Are we making life easier or more convenient for them with our product? Take a look at Amazon.com. Amazon.com changed the way people purchase books. Consumers no longer have to go to a "bricks and mortar" store to select their books. They merely go to the Internet at Amazon.com and put in a title or author and all the books available are listed as a result of that search. The customer orders the book and it is delivered within a week to their door. You don't even have to go outside! After you read the book, you can sell it on Amazon.com, and you can read critiques of the book and offer you own. With this direct mail ordering, Amazon.com can afford to offer their products at a lower price than the competition.
Think about Starbucks, the coffee vendor. Starbucks started in Seattle, Washington where people were developing and acquiring tastes for flavored coffee. Starbucks' management realized the trend was growing in Seattle and grabbed onto it. Now Starbucks locations can be seen in many cities across the United States. Starbucks hit on the fact that Americans were interested in flavored coffees and developing a taste for good coffees. Not only was this taste developing, but Americans were willing to pay the premium prices that Starbucks charges for this richly brewed java! Starbucks provided an environment where patrons could read their daily newspapers, read their email on their lap tops while sitting and enjoying their coffee at their leisure.
Market Research Required
Another consideration that we must think about is whether someone out there would be interested in purchasing our product or even visiting our retail store. We have to do our market research from two perspectives: who is our consumer and who is our competition. Who are the consumers we want to attract? Do they have the right demographic profile: age, gender, income level, education, etc. to be able to purchase our product and even enjoy it? Moreover, what do they buy, what motivates them to buy, and why would they purchase your product? Competition can be fierce or weak. We must know what we are up against in the way of product offerings and also become aware of potential changes to product development which may threaten our own product offerings.
Friday, November 12, 2010
Choosing a Legal Entity
Before we set up our business, we must think about whether we are acting alone or with partners. We must also examine our purpose in establishing a business. Are we establishing it because we
A sole proprietorship is merely a company with one owner doing business under his chosen name for the business. It is the simpliest and cheapest business structure to form. Merely decide upon a name for the business, and file it with the Secretary of State in the state in which you will be doing business, and obtain a license for the business.
The beauty of a sole proprietorship is that you are in full control of your business, and you are the sole decision maker and creative presence. All the responsibility is on the owner's shoulders, and once the owner passes away, the entity as registered passes away with him.
What are the tax implications of the sole proprietorship? All the liabilities of the business are the responsibilty of the owner. The owner is exposed to all taxes. How does a sole proprietorship pay its taxes?The profits and losses of the business are entered onto Schedule C (for a sole proprietorship) and "Passed-through" to the owner's 1040 Form.
The ability to raise capital for the business in a sole proprietorship is limited by the amount of money the individual owner can raise based on his own collateral, creditworthiness and capacity.
Another form we can opt for is that of a partnership. Two or more co-owners can come together under a partnership. Usually the partners split the responsibilities and run the business. A Partnership Agreement must be drawn up which indicates the rules and regulations of running the partnership, adding investments, transferring partnership interests, and dissolving the partnership. A partnership has a predetermined life, usually of 40 years. Again, you file your business name and your partnership agreement with the Secretary of State.
The liability for the business is not as great as in the sole proprietorship, however, each partner is responsible for the liabilities of the partnership as a "joint and several" obligation. The profits and losses of the partnership are indicated on Form 1065, and the individual percentage of the partnership profits and losses are reported on Schedule K and K-1. The profits and losses are again passed through to the individual partner's 1040 Form.
The ability to raise capital for the business is not as restricted as in a sole proprietorship. There are more individuals who collectively have more borrowing power and collateral than the sole proprietor.
A corporation is considered an entity or an individual by the state and by the Internal Revenue Service, and thus it files its own tax form, unlike the previous two structures. A corporation can be a corporation of one or of many owner-investors. The evidence of owning a piece of the corporation is in the form of a stock certificate given in exchange for cash. Liabilities for the business are kept in the corporation. The individual owners are not responsible for the liabilities of the corporation. Therefore, there is limited liability and the individual is protected by the corporation.
In setting up a corporation you need to have prepared the Articles of Incorporation and the By-Laws, obtain a Corporate Seal and file with the Secretary of State.
Since the corporation is considered an entity, it must file its own income tax reports, file annual reports and hold shareholders' meetings. It is a more expensive form of business, however, the protection it affords owners in the way of tax liabilities can far outweigh the costs.
Also, a corporation exists forever. There is no limitation on its life. Raising capital is easier than the sole proprietorship and partnership because you merely sell shares of stock to raise additional funds. It is the profits and history of the corporation and its performance in its industry that will govern its creditworthiness and soundness as an investment.
The decision as to which form of organization to choose should not be taken lightly. You should discuss the advantages and disadvantages with an attorney and an accountant.
.
For additional information on choosing a structure for your business, you can refer to the Small Business Administration site www.sba.gov on structuring your business.
- were downsized
- feel we can run a business better than our boss because we are smarter than he is and have more energy
- can't take direction from someone else
- feel we want to grow something, perhaps a hobby, and make it a megacompany in the future and get rich
- want to leave something to our children for them to run and develop further
A sole proprietorship is merely a company with one owner doing business under his chosen name for the business. It is the simpliest and cheapest business structure to form. Merely decide upon a name for the business, and file it with the Secretary of State in the state in which you will be doing business, and obtain a license for the business.
The beauty of a sole proprietorship is that you are in full control of your business, and you are the sole decision maker and creative presence. All the responsibility is on the owner's shoulders, and once the owner passes away, the entity as registered passes away with him.
What are the tax implications of the sole proprietorship? All the liabilities of the business are the responsibilty of the owner. The owner is exposed to all taxes. How does a sole proprietorship pay its taxes?The profits and losses of the business are entered onto Schedule C (for a sole proprietorship) and "Passed-through" to the owner's 1040 Form.
The ability to raise capital for the business in a sole proprietorship is limited by the amount of money the individual owner can raise based on his own collateral, creditworthiness and capacity.
Another form we can opt for is that of a partnership. Two or more co-owners can come together under a partnership. Usually the partners split the responsibilities and run the business. A Partnership Agreement must be drawn up which indicates the rules and regulations of running the partnership, adding investments, transferring partnership interests, and dissolving the partnership. A partnership has a predetermined life, usually of 40 years. Again, you file your business name and your partnership agreement with the Secretary of State.
The liability for the business is not as great as in the sole proprietorship, however, each partner is responsible for the liabilities of the partnership as a "joint and several" obligation. The profits and losses of the partnership are indicated on Form 1065, and the individual percentage of the partnership profits and losses are reported on Schedule K and K-1. The profits and losses are again passed through to the individual partner's 1040 Form.
The ability to raise capital for the business is not as restricted as in a sole proprietorship. There are more individuals who collectively have more borrowing power and collateral than the sole proprietor.
A corporation is considered an entity or an individual by the state and by the Internal Revenue Service, and thus it files its own tax form, unlike the previous two structures. A corporation can be a corporation of one or of many owner-investors. The evidence of owning a piece of the corporation is in the form of a stock certificate given in exchange for cash. Liabilities for the business are kept in the corporation. The individual owners are not responsible for the liabilities of the corporation. Therefore, there is limited liability and the individual is protected by the corporation.
In setting up a corporation you need to have prepared the Articles of Incorporation and the By-Laws, obtain a Corporate Seal and file with the Secretary of State.
Since the corporation is considered an entity, it must file its own income tax reports, file annual reports and hold shareholders' meetings. It is a more expensive form of business, however, the protection it affords owners in the way of tax liabilities can far outweigh the costs.
Also, a corporation exists forever. There is no limitation on its life. Raising capital is easier than the sole proprietorship and partnership because you merely sell shares of stock to raise additional funds. It is the profits and history of the corporation and its performance in its industry that will govern its creditworthiness and soundness as an investment.
The decision as to which form of organization to choose should not be taken lightly. You should discuss the advantages and disadvantages with an attorney and an accountant.
.
For additional information on choosing a structure for your business, you can refer to the Small Business Administration site www.sba.gov on structuring your business.
Wednesday, September 29, 2010
Importance of Market Research
Another consideration we must think about is whether someone out there would be interested in purchasing our product or even visiting our retail store. We have to do our market research from two perspectives: who is our consumer and who are our competitors. Who are the consumers we want to attract? Do they have the right demographic profile: age, gender, income level, education, etc. to be able to purchase our product and even enjoy it? Moreover, what do they buy, what motivates them to buy, and why would they purchase your product? Competition can be fierce or weak. We must know what we are up against in the way of product offerings and also become aware of potential changes to product development which may threaten our own product offerings.
SWOT Analysis
In earlier essays we discussed SWOT analysis as a way of investigating our own personal abilities to become an entrepreneur. We can also use SWOT analysis to investigate the competition. Knowing the competition is critical. After all "Business is War!" General Colin Powell or General Schwartzkoff wouldn't commit our military to battle if they didn't know what they were up against. We must know everything about our competition, especially their strengths and weaknesses. You wouldn't go to war and not know what you are up against!
With competitive SWOT Analysis we look at the competition's strengths from every aspect: product, price, distribution and promotion. We also look at their weaknesses. And then we compare our own strengths and weaknesses to theirs. What makes our product or idea so much better than theirs? If we cannot identify a competitive advantage over the competition, or be able to differentiate our product in a meaningful way, then we should not proceed with our idea.
Our business concept must be fully explored in order to be successful. Why would someone want to purchase your product or venture into your store? The question is "Will the customers come, and will they buy?"
SWOT Analysis
In earlier essays we discussed SWOT analysis as a way of investigating our own personal abilities to become an entrepreneur. We can also use SWOT analysis to investigate the competition. Knowing the competition is critical. After all "Business is War!" General Colin Powell or General Schwartzkoff wouldn't commit our military to battle if they didn't know what they were up against. We must know everything about our competition, especially their strengths and weaknesses. You wouldn't go to war and not know what you are up against!
With competitive SWOT Analysis we look at the competition's strengths from every aspect: product, price, distribution and promotion. We also look at their weaknesses. And then we compare our own strengths and weaknesses to theirs. What makes our product or idea so much better than theirs? If we cannot identify a competitive advantage over the competition, or be able to differentiate our product in a meaningful way, then we should not proceed with our idea.
Our business concept must be fully explored in order to be successful. Why would someone want to purchase your product or venture into your store? The question is "Will the customers come, and will they buy?"
Friday, September 10, 2010
The 4 Ps or Tools of Marketing
Marketers have tools at their disposal with which to control their offerings to consumers. These tools are called the "4 P's of Marketing" or the "Tools of Marketing". Specifically, these are
With the exception of Price all of the tools are costs.
Price
Price is one of the components of the Sales or Revenues formula. Specifically, price per unit is multiplied by the number of units sold [Price x # of units = Sales].
But how do we determine the price of our product? We will become acquainted with the costs to manufacture or to acquire or to source our product. We have special design features which we build into our product and we also determine the quality of our product. We may use excellent components in order to make an excellent product. Therefore, we control the design, durability and features of the product and accordingly the costs for the product to arrive at the price the customer will pay for the item. We also have to consider our competition - what are they selling a similar product to ours for? Our formula then will include the cost of the product, a margin for quality, and our profit margin.
However, we must not forget that our customers know the value of things (you know that "educated consumer"), and we cannot charge more than what they will pay for it Remember, "it's what the market will bear", you cannot charge more than what the customer is willing to pay.
Product Design and Features
We create the product to meet the unmet needs of the target community, and its design and purpose or use. The culmination of our thoughts and vision is the product we will be selling. We control what the product is, what goes into making the product, whether we will outsource it or manufacture it ourselves, and, most importantly, we decide upon the quality of the product. After all, the higher the quality, the higher the price we can charge.
Place (Distribution)
The way we "get our product to market" (distribution channel) has a further implication upon the cost structure of the product. We can determine whether we will be a direct merchant, charging or not charging for the shipping to the customer, or we may want to use our own fleet of trucks to deliver the product to the retailer or the ultimate consumer.
Depending upon the size and durability of the product we may want to employ a wholesaler who will be responsible for the ultimate distribution of the product. Whatever method we decide upon, we must realize that the more middlemen involved in getting our product to market the more costs are involved and the more expensive our product is to the consumer.
Promotion
How we reach our targeted customers to make them aware of our product or location is a consideration of cost and effectiveness. We can take an ad in a regional or local paper; make a 30 sec. or 60 sec. spot for the radio to be delivered by the host live, or tape it to be played on the radio. If we have the money we can also create a commercial video and buy time on a television channel that will reach our market. This is more expensive, although glamerous to have your ad on TV, but the reality of it is, it may not be for the small business.
- Price
- Product
- Place (distribution)
- Promotion
Monday, September 6, 2010
SWOT Analysis
To be able to determine whether you have what it takes to be an entrepreneur, you must perform a self-examination of your strengths and weaknesses or a SWOT analysis.
A SWOT analysis contains the following 4 areas of introspection:
S - Identify your strengths. Imagination, ability to sell yourself and your ideas, persistence, confidence, and expertise in a particular industry, as well as personal and business potential, etc.
W - Identify weaknesses. Is there a time limitation, a health issue, no management experience, lack of financial stability, or lack of people skills?
O - Identify opportunities. Is there an opportunity for an internship prior to opening the business to establish a network of resources, or to take courses that will prepare the prospective entrepreneur for business ownership?
T - Identify threats. Consider such issues as health concerns, lack of financial stability, and personal or family issues.
To further expand upon the above and to assist you in thinking about your SWOT analysis, I have included below some self-assessment questions for you to consider:
.
- What do you see yourself doing over the next two to five years?
- What are your personal goals?
- Why do you want to open a business?
- What type of business are you interested in starting and why?
- What skills do you have in this area?
- What type of work experience do you have in this area?
- In what areas do you need improvement?
- What steps can you take to gain the experience or skills you will need to operate your business successfully?
Monday, August 30, 2010
Where Does It Begin?
Business Concept
Many of you may have thought about starting a business at some point in time. Many of us have thought about a new invention, process or production improvement that we may be able to patent and call our own. Yes, that Business Concept begins with an idea! It arises out of a need of consumers that is not currently being met or satisfied. Just think of the recent immigrant who cannot find the ingredients for his home cooking, or the large size woman who cannot find styles appropriate for her size and occupation.
Feasibility or Validation
The entrepreneur will look "outside the box" and find a product that will be the answer to unmet needs. But before we can expect to make some money on our idea and build a business there are some things that we must investigate before we venture out and spend our own money and the money of others in order to start a business. Yes, you guessed it, you must do Market Research, and you must search and search for trends, the competition and even your customers. Therefore, a business concept must meet four requirements in order to be feasible:
Many of you may have thought about starting a business at some point in time. Many of us have thought about a new invention, process or production improvement that we may be able to patent and call our own. Yes, that Business Concept begins with an idea! It arises out of a need of consumers that is not currently being met or satisfied. Just think of the recent immigrant who cannot find the ingredients for his home cooking, or the large size woman who cannot find styles appropriate for her size and occupation.
Feasibility or Validation
- There must be a group of customers willing to purchase the product or product lines featured by the business at the price offered. (Target Market)
- The market must be large enough to support the business and generate a profit. (Feasibility Issue)
- The entrepreneur must be able to differentiate his or her product and business from that of the competition. (Competitive Advantage)
- The entrepreneur must be able to finance the business -- either personally or through funding sources. (Financial Attractiveness)
Target Market
In order to be effective marketers and effective entrepreneurs we must decide to whom it is that we will be selling. Why would someone want to buy our product? What need are we fulfilling when they do buy from us? What is motivating them to buy our product? We can only learn this by studying the consumers we want to sell to.
You Cannot Cater to the Masses
The old cliché says that "we can't be all things to all people". There's another which says "give them what they want! "We must focus our ideas toward a specific group which has wants and needs for that product which have not been met previously. So we must isolate the consumer group that we will eventually call our customers. We must separate that certain group from the masses. We must segment the market. A market segment consists of a large identifiable group within a market. If we practice segment marketing we recognize that customers differ in their wants, purchasing power, geographical locations, buying attitudes, and buying habits.
The benefits of segment marketing or segmentation are that it can create a more fine-tuned product/service offering and a more appropriate price for the target audience. Segmentation leads to specialization. And specialization leads to expertise with that market. Niches are subsets of the segmented market.
We can segment along several different lines, for example, by ethnicity, gender, age, geographic location, hobbies, occupation, etc.
The benefits of segment marketing are that it can create a more fine-tuned product/service offering and a more appropriate price for the target audience. Segment marketing leads to specialization. And specialization leads to expertise with that market. Niches are subsets of the segmented market.
Niche Marketing
A niche is a small market whose needs are not being met. Niches typically attract smaller companies. Niche marketers know their customers so well and provide them with what they want that they are able to charge a premium for their products and the customer is willing to pay that premium. Since the niche marketer knows his customers and products so well he is able to benefit by economies of scale. He is able to change his product/service offering because he is watching the changes in the niche market as the niche markets develops over time. The niche segment is not likely to attract other competitors, or the nicher is able to defend itself, and is able to grow and profit from catering to the target market.
You Cannot Cater to the Masses
The old cliché says that "we can't be all things to all people". There's another which says "give them what they want! "We must focus our ideas toward a specific group which has wants and needs for that product which have not been met previously. So we must isolate the consumer group that we will eventually call our customers. We must separate that certain group from the masses. We must segment the market. A market segment consists of a large identifiable group within a market. If we practice segment marketing we recognize that customers differ in their wants, purchasing power, geographical locations, buying attitudes, and buying habits.
 |
| Bull's Eye - Focus |
Segment Marketing
The benefits of segment marketing or segmentation are that it can create a more fine-tuned product/service offering and a more appropriate price for the target audience. Segmentation leads to specialization. And specialization leads to expertise with that market. Niches are subsets of the segmented market.
We can segment along several different lines, for example, by ethnicity, gender, age, geographic location, hobbies, occupation, etc.
The benefits of segment marketing are that it can create a more fine-tuned product/service offering and a more appropriate price for the target audience. Segment marketing leads to specialization. And specialization leads to expertise with that market. Niches are subsets of the segmented market.
Niche Marketing
A niche is a small market whose needs are not being met. Niches typically attract smaller companies. Niche marketers know their customers so well and provide them with what they want that they are able to charge a premium for their products and the customer is willing to pay that premium. Since the niche marketer knows his customers and products so well he is able to benefit by economies of scale. He is able to change his product/service offering because he is watching the changes in the niche market as the niche markets develops over time. The niche segment is not likely to attract other competitors, or the nicher is able to defend itself, and is able to grow and profit from catering to the target market.
Trends
Yaooh! What's Happenin . .?
One of the things we must look at is what are the trends that are happening today?
Successful Trend Captors
Another thing to think about is whether we are able to change the way people do things and add value. Are we making life easier or more convenient for them with our product? (the Service and Convenience or Fast Action Trend). Let's look at Amazon.com. Amazon.com changed the way people purchase books. Consumers no longer have to go to a "bricks and mortar" store to select their books. They merely go to the Internet at Amazon.com and put in a title or author and all the books available are listed as a result of that search. The customer orders the book and it is delivered within a week to their door. You don't even have to go outside! After you read the book, you can sell it on Amazon.com, and you can read critiques of the book and offer you own. With this direct mail ordering format, Amazon.com can afford to offer their products at a lower price than the competition.
Think about Starbucks, the coffee vendor. Starbucks started in Seattle, Washington where people were developing and acquiring tastes for flavored coffee. Starbucks' management realized the trend was growing in Seattle and grabbed onto it. Now Starbucks locations can be seen in many cities across the United States and in Europe. Starbucks hit on the fact that Americans were interested in flavored coffees and developing a taste for good coffees. Not only was this taste developing, but Americans were willing to pay the premium prices that Starbucks charges for its richly brewed java! Starbucks created an environment where patrons could read their daily newspapers, read their email on their lap tops while sitting and enjoying their coffee at their leisure.
One of the things we must look at is what are the trends that are happening today?
- What situation is developing where consumers are buying items that are creating a trend?
- What are the needs and wants of today's society and what are the characteristics of that society?
- What is happening in your region or in the United States?
An investor would look at the trends and compare the potential market growth to your sales trend. Are your sales increasing and growing in market share? Are you and your management team capturing the market with your product, and are you capable of maintaining that growth with your expertise and acumen? Would you gain the confidence of an investor or a banker?
Successful Trend Captors
Monday, August 23, 2010
Do you have what it takes to be an Entrepreneur?
"Success depends on acting on dreams."
- Estee Lauder, Chairman of the Board, Estee Lauder, NY, NY
From time to time you may have considered opening your own business. But many of us are stumped as to how to start one and what kind of business we should open. Should it be a mom and pop operation or should we purchase a franchise. But before we even start to consider the foregoing we should look at ourselves and consider our lifestyle, education, skill set, and ambition. Performing an introspection and examination of ourselves will determine whether we have what it takes to be an entrepreneur.
There are many traits that go into making a good entrepreneur. Studies have been undertaken to find out what it takes to be an entrepreneur, and the most common traits have been found to be the following:
• Passion/Desire - The successful entrepreneur possesses passion to be one. He burns with desire to succeed. When one is passionate about what they are doing they loose all sense of time and the task is effortless. Launching a new business requires long hours and many challenges.
• Determination/Perseverance - Entrepreneurs are determined. No one can get them to change their minds. They do not give up easily even when it might be wise to do so. They will figure out the path they need to take in order to attain their goals. Successful businesses require time, and successful entrepreneurs confess that it can take 4 to 5 years before the money starts rolling in.
• Responsibility - Entrepreneurs must take on the responsibility of running a business, employing people, paying the payroll, bills and taxes.
• Health and Energy - The demands of starting and running a business requires a lot of energy, stamina and good health to keep up the pace required to make that business successful. Health affects one's ability to think clearly and to handle situations in a controlled manner. Customers and employees need to know that the entrepreneur has the stamina and skills to handle any situation that may come his way. The entrepreneur must also know how to make time for himself.
• Ability to Work Independently - As an entrepreneur you become the chief cook and bottle washer. You are the janitor, secretary, bookkeeper and strategic planner. Recognizing the necessity to do whatever it takes to get the job done to ultimately make the business a success is critical.
• Respect for Money - Many businesses get into trouble because they spend too much money at the outset. Successful entrepreneurs are conservative and careful with their money. They spend on what is necessary and save the rest.
• Ability to Manage Time Wisely - Since the entrepreneur is working with little or no staff and limited budgets, the ability to plan and to prioritize effectively is crucial. It is not uncommon for entrepreneurs to work 70 to 80 hours a week during the initial stages of establishing the business and still leave the office with many tasks unfinished. Good entrepreneurs will utilize the personnel they do employ to their best advantage, and delegate duties and responsibility and enable employees to fulfill their duties.
• Dependability - Do what you say you will do to open the store on time and deliver goods within the time frame indicated. Consumers have come to expect excellent service. And they will expect it from you. Doing so is your competitive advantage.
• Flexibility - "Times they are a changing", and entrepreneurs must be able to adapt to the changing demands of customers and their businesses. Small businesses are able to change quickly and adapt their processes or operations to meet the current demand. Large corporations are not able to do this.
Many people say that an entrepreneur has to be born, but I say that you can be educated to be one. Of course, you have to have it in you to want to excel at whatever you do, and you can read case after case study and pick up the skills and awareness of trends in business to advance and take hold of an opportunity.
- Estee Lauder, Chairman of the Board, Estee Lauder, NY, NY
From time to time you may have considered opening your own business. But many of us are stumped as to how to start one and what kind of business we should open. Should it be a mom and pop operation or should we purchase a franchise. But before we even start to consider the foregoing we should look at ourselves and consider our lifestyle, education, skill set, and ambition. Performing an introspection and examination of ourselves will determine whether we have what it takes to be an entrepreneur.
There are many traits that go into making a good entrepreneur. Studies have been undertaken to find out what it takes to be an entrepreneur, and the most common traits have been found to be the following:
• Passion/Desire - The successful entrepreneur possesses passion to be one. He burns with desire to succeed. When one is passionate about what they are doing they loose all sense of time and the task is effortless. Launching a new business requires long hours and many challenges.
• Determination/Perseverance - Entrepreneurs are determined. No one can get them to change their minds. They do not give up easily even when it might be wise to do so. They will figure out the path they need to take in order to attain their goals. Successful businesses require time, and successful entrepreneurs confess that it can take 4 to 5 years before the money starts rolling in.
• Responsibility - Entrepreneurs must take on the responsibility of running a business, employing people, paying the payroll, bills and taxes.
• Health and Energy - The demands of starting and running a business requires a lot of energy, stamina and good health to keep up the pace required to make that business successful. Health affects one's ability to think clearly and to handle situations in a controlled manner. Customers and employees need to know that the entrepreneur has the stamina and skills to handle any situation that may come his way. The entrepreneur must also know how to make time for himself.
• Ability to Work Independently - As an entrepreneur you become the chief cook and bottle washer. You are the janitor, secretary, bookkeeper and strategic planner. Recognizing the necessity to do whatever it takes to get the job done to ultimately make the business a success is critical.
• Respect for Money - Many businesses get into trouble because they spend too much money at the outset. Successful entrepreneurs are conservative and careful with their money. They spend on what is necessary and save the rest.
• Ability to Manage Time Wisely - Since the entrepreneur is working with little or no staff and limited budgets, the ability to plan and to prioritize effectively is crucial. It is not uncommon for entrepreneurs to work 70 to 80 hours a week during the initial stages of establishing the business and still leave the office with many tasks unfinished. Good entrepreneurs will utilize the personnel they do employ to their best advantage, and delegate duties and responsibility and enable employees to fulfill their duties.
• Dependability - Do what you say you will do to open the store on time and deliver goods within the time frame indicated. Consumers have come to expect excellent service. And they will expect it from you. Doing so is your competitive advantage.
• Flexibility - "Times they are a changing", and entrepreneurs must be able to adapt to the changing demands of customers and their businesses. Small businesses are able to change quickly and adapt their processes or operations to meet the current demand. Large corporations are not able to do this.
Many people say that an entrepreneur has to be born, but I say that you can be educated to be one. Of course, you have to have it in you to want to excel at whatever you do, and you can read case after case study and pick up the skills and awareness of trends in business to advance and take hold of an opportunity.
Subscribe to:
Posts (Atom)