Market Assessment for Small Businesses

Lecture Contents Marketing Mix/ Demand/ Demand Estimation Sampling Plan/ Data Collection and Analysis Market Survey – key components and problems

Marketing Mix Who could be your customers?Target market Which types of products will you offer, e.g. only ceiling fans and table fans or ceiling fans, table fans and wall fans? Product Mix What will be design and the look of the fans: 3 or 4 wings, 23 or 36 blade or both? Product features Will you reach the customers through wholesalers or retailers? Distribution channel How much will you charge the customers?Pricing decision How will your customers know that your product is in the market? How do you influence him to buy your product? Promoting the product

Demand/ Demand Estimation Market Demand for a product/service is expressed as the total volume of the product/service that would be bought by a defined customer group in a defined geographical area over a defined time period in a defined marketing environment under a defined marketing program. Use of Demand Estimates Analysis of Market Opportunities Planning of Market Efforts Control of Marketing Performance

Assessment of Market Know about profit possibility Design a product well Have a right brand name Decide right price Employ right people Buy specific raw material Establish required distribution system Have effective advertising and promotion Have right packaging for different quantities Have short and long term planning Have profitable finance policy Decide about future expansion Have right equipment and tools Decide about product life and precautions

Components of Demand Estimates Product – its usage and users Total volume – physical or rupee or both Bought – market measure: volume ordered, shipped, paid for, received or consumed Customer group – whole market or any particular segment Geographical area – well-defined geographical boundaries Time period – reference to a stated period of time Marketing environment – macro (PESTLE) & micro factors

Sampling Plan Who is to be surveyed? Sample Unit How many to be surveyed and how to select them? Sample Size (depends on the product and target group) How should the respondents be chosen? Sampling procedure (I) Random Sample (II) Stratified or Quota Sample (III) Cluster Sample (IV) Systematic Sample (serial/patterned/chain sampling)

Data Collection & Analysis –affecting factors A respondent might not be available Some respondents may refuse to answer Some respondents may be biased Interviewers may be biased Interviewers may write their own answers to save their labor

Data Collection Studies on Influences of Uncontrollable General business or economic forecasting Economic factors affecting the sales volume and opportunities (e.g. level of consumer credit, business expansion plans) Shifts in the nature of the market Motivational research (e.g. consumer & consumer buying motives) Studies on Competitive Situation Competitive position of company products Comparative studies of competitive products Evaluation of new competitive products or development of new competitive products Price policies, discount structures, etc. of competitors Advertising & Selling practices of competitors

Data Collection Studies on Influences of Controllable Determination of consumer or consumer acceptance of proposed new products or services Establishment or revision of sales territories Evaluation of existing sales method Analysis of salesmens activities Appraisals of proposed changes in sales method Price studies Exploring or determining new uses of existing products Product simplification or completeness of a product line Studying distribution costs, setting sales quotas Development of Standards of sales performance Sales compensation, evaluation, review or revision Advertising effectiveness, Selection of advertising media Packaging research, Effectiveness of promotional devices

Data Collection Studies of Focusing on Market Measurement and Planning Analysis of market size (for specific products) Estimate demand for new/proposed new products Sales forecasting for the industry or company Analysis of market characteristics for specific products Analysis of territorial potential or sales opportunities Studies of trends in market size of products Measurement of territorial variations in sales Studies of relative profitability of different markets Market test or test-market operations on new or improved products Studies of changes in the importance of different types of customers

Data Analysis Use Scientific Methods Use Creativity & imagination to have a right picture of the market Use multiple methodology to double check the result & avoid errors Relate the cost of information to its value in the project If required, use model building (tables, graphs, etc.) Mathematical models can be helpful for understanding information

Market Survey – Key components Introduction End Products, End users, Suitability & Strength of selecting a particular product ProductSpecifications, Sized, Brands, Packing, Selling Price, etc. Assessment of Demand Class & Type of consumers, PLC & present status, Demand - Past pattern & Future projections, Consumption Patterns & Purchase frequency, Buying criteria & influencing factors Supply Position Current availability & production capacity vs. utilization, present indigenous & imported supply, price comparisons Marketing Practices Prevailing marketing practices – distribution, delivery & faster sales service, credit policy, packing/forwarding, taxation & commission, Purchasing procedures, lead time Marketing Plans & Strategies Own market share of supply-demand gap, Strength & special services to be offered, Possible clientele & likelihood of their buying from you

Market Survey – Problems Language problem Lack of interest of the respondent Inability to understand a question Bias for the interviewer or product or company Status problem in giving the right answer A respondent may not feel safe in giving the right answer