Business plan
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200123L5BP-marketingforyournewbusinessventureNJF.pptxMarketing for your new business venture
Business Planning Lecture 5
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Today’s Session
Understand principles underlying marketing for small firms/start ups
What market will your business be in? Evaluating market size
Finding customers
“A small business is as different to a large business as a caterpillar is to a butterfly.” (Edith Penrose, 1959)
Resource constrained
No power in the market place
Face greater certainty internally
Face less certainty externally
So need to be creative!
No single definition
Marketing is about the creation of value
Traditionally was considered to be about businesses creating profit and customers deriving utility/usefulness
Changing context: “the activity, set of institutions and processes for creating, communicating, delivering and exchanging offerings that have value for customers, clients, partners and society at large” (AMA 2013)
The Marketing Concept
Quick check
Who has studied marketing before? Eg A-level, BTEC, 2nd year Principles and Practice of Marketing, BSc in Marketing?
If you haven’t, or you’re a bit rusty, check out the additional material that I’ll be putting onto the VLE to support your learning
What follows is adapted to the context of a start up business!
Defining and Sizing the Market
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Market sizing
Market sizing – Ampleforth Abbey Cider
| Level of model | How defined (2014 figs) | Number |
| Total market | Total value of all cider sales in UK | £911.2m |
| Available market | Craft cider market | £75m |
| Total achievable sales | Actual sales | £0.12m |
| Turning that into volume sales | Assumed average price of £2.85 | 42,105 units |
| Market share | Total value/actual sales | 0.16 |
Note: in this case, sales and achievable market are the same – the cider makers are working at full capacity.
Sources: http://www.ons.gov.uk/ons/rel/prodcom/prodcom-provisional-results/popular-summer-products-sold-by-uk-manufactures/sty-prod-summer.html; http://www.harpers.co.uk/sectors/retailers/craft-cider-boom-sees-brits-spend-extra-10m-on-pricy-ciders/370032.article; http://www.insidermedia.com/yorkshire/entrepreneur/father-wulstan-peterburs-ampleforth-abbey
Ampleforth abbey cider is produced by the Benedictine monks at Ampleforth – it’s basically a micro-brewery for cider.
Total market is defined as total cider market
You might find this 3-scale version is enough to give you the clarity you need on market size and the level of market share you’re going for. Note too how it uses 3 different data sources to compile the picture
Alex- the article this is based on talks about the cider “bringing in £120k” – that could be profit, in which case unit sales will be higher! But for the purposes of the exercise this will do! Could point out that this a danger of using 3rd party data…so 42k units is the minimum we think they’re selling – esay to do of course when you’re inside the business – message here is that students need to common sense their data, think hard about what it’s saying, how robust it is, scope the risk around it
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KEY MESSAGE
What we’re doing at each stage is a ‘reasonableness’ check
Does market really exist for the product we’re trying to sell?
Is it big enough, is it free enough of competition for us to make the profit we need to?
What is the scale of the opportunity?
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No such thing as risk free business – what we want to see is that you’ve thought about, scoped and mitigated the risk – if your break even point requires you take 100% of a highly competed market you’ve got a problem! But if you’ve only got to take 0.2% AND your competitor analysis shows you can differentiate yourself in the market, then the risk looks like it might be worth taking.
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Many businesses face peaks and troughs - seasonality e.g. Christmas; students; tourists
Consider counterbalancing seasonal peaks and troughs:
varying products or services
targeting different segments
Seasonality
Who are your customers and how will you attract their attention?
Direct and indirect customers
Direct customer is someone dealing directly with the supplier
Indirect customer is someone who deals with the supplier through an intermediary (agent, etc.)
In this simple example, the milk farmer’s direct customer is the supermarket…
….and the milk farmer’s indirect customer is the consumer or household shopper
Work out who your direct customers and consumers will be
What market do you want to serve?
Who will your customer(s) be on Day 1 of your business?
This Photo by Unknown Author is licensed under CC BY-NC
Eg:
Is your business idea related to sustainable clothing?
Or clothing for women aged 50-70?
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What is your marketing philosophy?
Will you sell your product/service once to lots of customers? (transactional marketing)
Or do you aim to build long-term relationships and repeat business? (relationship marketing)
Will you customise your product for each customer (personalisation?) or mass produce it?
Can you build some form of experience into the product/service (experiential marketing)?
Identifying your market
Segmentation and targeting
Geographic - where people live)
Demographic - based on age, gender, family size, education, income, and social class)
Psychographic – personality, values, lifestyle
Behavioural - how the product/service is used
BUT dangers in trying to ‘average out’ the market
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Segmentation
Source: http://segments.sportengland.org/querySegments.aspx
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Positioning
Positioning is the act of designing the company’s offering and image to create a meaningful and distinct competitive position in the target customer’s mind (Kotler, 2003).
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Positioning
Image source: http://www.businessinsider.com/patagonia-business-strategy-2014-9?IR=T
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Low cost, issues about supply chain
Premium price, focussed on environmental issues
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How will you attract prospective customers?
Branding: bundles of values
Integrated marketing communications: Be consistent across all channels to all stakeholder audiences (not just customers)
Guerilla marketing: unconventional advertising strategies
Social media marketing/PR
BE CREATIVE!
Concepts that might be useful
“A customer experience represented by a collection of images and ideas; often, it refers to a symbol such as a name, logo, slogan and design scheme
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Nike’s IMC
Nike community
Nike GPS app, Nike GPS Sportwatch, and Nike Fuel Band
Traditional media:
TV, print etc.
CSR
PR
Employee relationships
Digital
Social media:
Internet ads,
a YouTube channel,
Facebook pages
Twitter-enabled billboards
Internet paid searches
Direct marketing
Mobile marketing
Experiential
(e.g. Nike iD, an online store where customers could design their own shoes
Sponsorship
(e.g. World Cup; Olympic Games)
Endorsements
Events
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Summary
Need to know what market you are in and who your customers are
Need to know
How many units you are planning to sell
The price you are planning to sell them at
What market share that represents (volume or value)
Be consistent
If you’re assuming a high price, must be consistent with the positioning of your product in the market
Think about the cost of different media – be creative rather than profligate
Some examples
https://blogs.constantcontact.com/successful-marketing-campaigns/
https://blog.hootsuite.com/social-media-campaign-strategy/
https://www.bbc.co.uk/news/uk-england-hampshire-51129840
https://www.bbc.co.uk/news/uk-wales-50658677
https://www.youtube.com/watch?v=-3oWl_u0Y3g (try to imagine how much the media coverage would have cost if they’d had to pay for it!) – you can see the whole ad here: https://www.youtube.com/watch?v=pDtCXO71FJU
Some reading
Gholston K,. Kuofie M., & Hakim A.C. (2016) Social Media for Marketing by Small Businesses Journal of Marketing and Management, 7(1), 24-39
He, W., Wang F., Chen, Y., Zha, S. (2017)An exploratory investigation of social media adoption by small businesses Information Technology Management 18:149–160
NB if you want further reading suggestions on specific topics, get in touch with me!
