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Business Notes |
STEP 1: Consumer Analysis: All marketing plans should begin with the thought of your customers (consumers) first. What will be their wants or needs? People do not have the same needs or desire as the next person does. So you have to figure out what group (segment) of people in the world you want to target to sell your goods. Starting with this question first will begin the formation of your business plan. To figure out what your business should be or if the business you have started already can be successful, you have to ask yourself these very important questions:
This is a good question to ask yourself because knowing the answer can can give you the confidence you will need in selling you product. Knowing what is the need for your product will also cause you to see who will need your product. In doing so it'll cause you to reach a bigger customer base. Example: If someone decides to sell spring water from a spring they own. They may bottle up the water and begin putting it in supermarkets as a means of reaching the public. If you address what is the need you will realize that there are sectors in the city or state that have no supermarkets or stores but because most of the people in the area is health conscious, there is a need for spring water in the area. You have just discovered potential consumers. By answering the need you will realize that most of these people believe in drinking 8 glasses of water a day, yet they must spend at least 8 hours or more on their job. Sooooo the next target would be their work place. Seeing if you can place a water cooler in their employers company. If you succeed in doing this, you have created a guarenteed monthly. income (residual income) Do you see how the sales of your spring water has increased just by answering the question of What is the need? * Who is buying and who is using the product? If your going to pay for advertising your product then you definately need to ask yourself this question. If not you may spend lots of money on a advertisement campaign that would make as much sense as trying to sell salt to a snail. For example, If you sell mens underwear or socks, it would be wise to place ads in Sports Illustrated magazines where you just know this is a mans magazine and all men are going to see your advertisement..right? Wrong! If you think about it and, according to consumer reports, the majority of people who buy mens draws and socks as a result of a advertisement are females. Be it mothers, or wives, or sisters, or daughters. Women are more prone to getting caught up into the "cottony soft" or "feels good to the skin" phrases. They'll want whatever will make that mans day a little bit better. When the man buys the magazine, especially sports magazines, he has only one thing on his mind..sports, and maybe the models. So carefully think about where your advertising money will be spent. Asking yourself Who is buying vs who is using the product? is a question that must be answered. * What is the buying process? You must walk through the steps that a person takes to buy a product. This is called the buying process. There are steps to this process. In the business world these steps can be known as the adoption process, the problem solving process, the Learn/Feel/Do process, or the AIDA which stands for Attention/Intrest/Desire/Action.
Awareness At some point a person will realize that they need something. What made them realize this? Advertising is a great way to influence people. A lot of prestige items are sold every year based on the notion that having the product puts you with the "in crowd" in other words it makes you cool. How will you influence your customes to purchase your product? Information Search People will want to know more about your product. How will you make this information available to them? Some businesses put displays with videos explaining the product. Examples of this can be seen at places like Bed Bath and Beyond. This process captures the buyers attention. Not only that, it also makes your product stand out against those who didn't take the time to provide information on the product as thourough as the one who provided the video did. People who give out taste samples of their products at supermarkets are taking advantage of this process as well. Evaluate the Alternatives Pretend like you the customer. What is the other choice they will make compared to buying your product? If you sell motorcycles, for some the price may be a little too steep. So what will their next choice be? More than likely a moped. You job as far as advertising goes, would be to highlight the great difference between a motorcycle and a moped. Then placing this information in places for your customers to see. Using this approach has the possibility of changing that customers mind about using the alternative before they even begin to consider a alternative. At some point the potential customer may visit a motorcycle repair shop in the area. Make sure you have your advertisements placed in the local repair shops where they can be seen. Imagine the increase in sales you can have if your local motorcycle mechanics are in support of your motorcycles! While evaluating the alternatives to selling your motorcycles, you may think of what is known as a influencer. If you market and advertise your motorcycle as the "choice of professionals". Your influencer would be the "choice of professionals." If you can sell the word "professionals" then all biker clubs who claim to be professionals would be in support of, as well as purchase your motorcycles. This means that distribution will be just as important as well once you've sold people on your product. If it's not readily available to your customers then they'll more than likely go with the 2nd best choice. A perfect example of this is when a person goes to the store and wants a Pepsi soda. If there is no Pepsi 9 times out of 10 they'll choose the cocoa cola over a unheard of brand, no matter how curious they are about the unheard of brand. Now you can see how everything you've been studying so far works hand in glove to sell your product to customers you may not have ever reached. The Purchase Decision The customer has decided to purchase your product. That doesn't mean it's over yet. In some cases this could just be a trial purchase. Which means if the purchase was expensive they're walking away feeling a little uncomfortable. If you've practiced a good marketing strategy then through good sales people, advertisements, warranties, printed publications, and internet, you've provided enough information to make your customer feel confident about making the purchase. Product Evaluation If the product was a expensive purchase, the consumer may get home and begin to ask themself. Did I make a mistake? This is known as buyers remorse or postpurchase dissonance. When you see car commercials, they are not just trying to reach potential customers. They are also placing a sense of confidence in the customer who just recently brought one of their cars. Highlighting the cars features gives the customer bragging points about the car. The commercial also does the bragging for the individual who is not the bragging type. Doing research can help you when it comes to structuring your buying process. For example, research will help you find out how many people know about your product and just not buying it or how many people just haven't heard of your product period. If 90 out of 100 people know about the product then your focus would be on, why aren't they buying. If 90 out of 100 people don't even know your product exists then your focus would be getting people to know that your product exists in the market place. Knowing which one of these 2 questions apply to your marketing strategy will help you to understand and manage your advertising more effectively. * Is the Product a High or low-involvement product High Involvement Products are products that the buyer feels he/she is taking a risk when they make the purchase. Buying items such as dvd players, motorcycles, cars, hiring attorneys, plastic surgeons (especially service businesses like attorneys and plastic surgeons, since you can't get your money back) and computers. These are just a few examples of "high involvement products or purchases. Low Involvement Products are items that a buyer feels no risk at all in making a purchase. A example of this would be the purchase of a piece of candy, a tube of tooth paste, tissue, and soap. If your not satisfied with the outcome of using the product you can just throw it away or give it away and know not to buy that particular item again. One of the greatest things one can accomplish is to take a low-involvement product and turn it into a high involvement product. A perfect example of this was the sneaker. The sneaker started out as just a shoe for sports or gym class and ended up becoming a status symbol in the ghettos. You even hear stories of people getting robbed or even killed for their sneakers. Especially during the early 80's. I was almost a victim of this in my teens, but fortunately a police car rode by slowly which made the 6 or 7 boys take off running. * How can I segment the market Segments are groups of similar potential buyers with similar needs, desires, and wants. If you are selling a product you must find what segment will be intrested in your product. Once you find your segment, you must then research and find if there is enough customers in that segment worth marketing or selling your product to. If you do this research before investing in a business it will save you a whole lot of time and especially money. Example: Lets say you live in a small city and you hear a few men complain about not being able to find a local shoe store for men. Hearing this from enough men gives you the idea to want to open a mens shoe store. You now have your segment which would be men. Now there are two typical ways that most minority people will begin their business adventure. One of the ways would be to run out and buy a whole bunch of mens shoes at wholesale prices, spending roughly $1,000.00. Then you begin either selling them on the streets or lease a store front which costs with overhead (electricity bill, phone bill, insurance, ect.) a minimum of $1,300 a month. Now your in business selling mens shoes and guess what? There are customers coming in and buying your shoes! On the other hand, you have a person who does the research of the segment first. He/She finds out that there are 1,000 people who live in the city, only 100 of those people are men, and out of that 100 only 60 of them are employed. On average men will purchase about 3 pairs of shoes per year. So 60 working men multiplied by 3 pairs of shoes yearly means you stand to sell approximately 180 shoes per year. Which can be broken down to you selling a average of only 15 shoes per month. Guess whos going to be very very angry at the end of the year. Now you can see why there are no mens shoe stores in town. So segment research is very, very important when it comes to business. There are 4 major segment types.
This ends Step 1 of 7 of notes. |