Business

Positioning

Designing the company's offering and image to occupy a distinctive place in the minds of the target market(s). Ex: Market to appeal to this target

Segmenting

Dividing a market into distinct groups with distinct needs, characteristics, or behavior who might require separate products or marketing mixes. (ex. different age groups)

business plan: table of contents

Lists major section headings (bold), subsections (normal font), page #'s

business plan: Competition and competitive advantage

Major competitors (name and location), market share, price, competitive advantages and disadvantages, What makes product or service unique

value proposition

is the set of benefits or values a company promises to deliver to customers to satisfy their needs 1. define your target customers 2. estimate total # of customers 3/4: determine penetration rate, 5: apply and reevalute over time

business plan: Financials

income statements, cash flow statements, balance sheet, startup costs, etc.

Angel Investors

individuals who invest in start-up companies with high growth potential in exchange for a share of ownership

competitor based pricing

involves setting prices based on competitors' strategies, prices, costs, and market offerings

skimming the market pricing

high pricing to take market share or brand acceptance

cost based pricing

setting prices based on the costs of producing, distributing, and selling the product plus a fair rate of return for effort and risk

value based pricing

setting the price at a level that seems to the customer to be a good price compared to the prices of other options

Consumer decision making journey (3 steps)

-Awareness/Need Recognition - a consumer first realizes a product or service is available and that they might want or need it -Evaluation - a consumer researches the product and considers competing products in order to form opinions -Purchase - a consumer decides to actually purchase a product

things marketers should keep in mind

-Consumer concerns - what does a consumer care about at each stage? What are they thinking about, worried about, or motivated by? -Marketer messages - what can we tell or provide consumers to help reduce their concerns and increase their motivation to move to the next stage? -Marketing channels - where are the most effective places to put our marketer messages?

how much does financing cost (with investor)

-Expect business to make best decisions for the firm (and so for them!) -Maximize share price of stock: (Share price of a stock today= price of a piece of the company today= what someone is willing to pay for a company TODAY, given what the person hopes the company will do in the future.)

Who uses financial statements?

-Internal Users (Board of Directors, marketing managers, production supervisors, etc. Managerial Accounting - accounting for internal decision makers) -External Users (Investors, creditors, government agencies, etc. Financial Accounting - accounting for external decision makers)

who do we want to interview? how do we find people to interview? how do we get deeper information?

-broad group of potential customers -family/friends, public, online, etc. -ask why, deep questions

how do you finance your business?

-get a lender (ex. bank, pay back with interest) -investor (takes part of the business)

Outline of a typical interview

1. Approach and overview 2. Consent 3. Opener questions - broad, easy questions that relate to what you said the interview was about 4. Core questions 5. Any sensitive core questions and demographics 6. Hearty thank you and request for additional contacts

why do we make a business plan

1. To Create External Legitimacy: the business is accepted or treated as viable by organizations or people outside the small business or the owner's family. 2. To Create Internal Understanding: employees, investors, and family members in the business know the business's purposes and operations

business plan: The Organization

: Legal form of business, Organizational structure Employees (full time/part time, permanent/seasonal, family/non-family) Key personnel (YOU ☺): background, accomplishments, experience (in life and in business) ALSO RELATED SERVICE PROVIDERS AND LOCATION

income statement

A financial statement showing the revenue and expenses for a fiscal period.

balance sheet

A financial statement that reports assets, liabilities, and owner's equity on a specific date.

business plan: Executive summary

A one- to two-page (250-500 words) overview of the business, business model, market, expectations, and immediate goals.

business plan: cover letter

A one-page document that introduces the business plan and the business owner and indicates why the recipient is being asked to read the plan.

targeting

Choosing the segment(s) that will allow an organization to most efficiently and effectively attain its marketing goals. Ex: Choose an age group to target

business plan: The Company

Describe the product or service, explain how the customer uses the product (pictures or descriptions for unique products), Proprietary technology (patents)

Value Proposition

How your product/service will make a difference in for the customer or the industry

venture capital

Money that is invested in new or emerging companies that are perceived as having great profit potential

business plan: Marketing strategy

Overall strategy, specific ways you apply strategy to secure sales, Longer-term competitive plan that shows how you protect your firm from efforts of the competition to unseat you

Marketing Mix (4 P's)

Product, Price, Place, Promotion

how much does financing cost (with lender)

Repay principle and interest Lenders have lower levels of risk compared to investors

statement of retained earnings

Reports the way that net income and the distribution of dividends affected the financial position of the company during the accounting period.

"penetrating the market" pricing

Set a low initial price in order to penetrate the market quickly and to attract a large number of buyers quickly to gain market share

business plan: Market and target customer

Total population of people or firms you plan to sell to Target customer section: who would buy (what are they like?), where are they, how do they buy, how often, how to keep them? Use Demographics data (our librarian!)

Factors to Consider When Setting Prices

Value-based pricing (customer driven) Cost-based pricing (product driven) Competitor-based (market driven) Skimming the market (strategy driven) Penetrating the market (strategy driven)

information we can get by interviewing potential customers

What do consumers like and dislike about your idea? Any suggestions or ideas to improve it? Will they buy your product or service? At what price? How often? Is your product or service different from competitors? How? Are the differences enough to make them switch? What are competitors doing well? Poorly?

business plan

a formal written document that describes the nature of a business and how it will operate -product or service -industry -market -manner of operating (production, marketing, management) -financial outcomes (emphasis on the firm's present and future

Capacity of a system is limited by its ________________, which is the slowest process in the system

bottleneck

business plan: title page

company name, contact information, date this version of the plan was completed, proprietary statement to protect your ideas

parts of a business plan

cover letter title page table of contents executive summary the company the industry the market the organization the financials the appendix

business plan: Company background

description of the company, the firm's current status, and the history of the business

public fundraising

ex. stock market. having the public invest

Capacity analysis analyzes how _______ a system can generate output

fast

value proposition formula

for who the that unlike our business is available

why are financial sheets important

make decisions, assessing cash flow, understanding resources.

what does operation management do

manages the process of converting input into output

statment of cash flows

measures activities involving cash receipts and cash payments over an interval of time

business plan: Appendices

owner's resume (1 page), product or service pictures or specifications, signed contracts, results from marketing studies or pilot sales efforts, Industry reports

Marketing Strategy: who to serve (STP)

segmenting (divide market into different groups) targeting (target a specific group) positioning (appeal to the specific group)

consumer satisfaction

the extent to which a firm fulfills a customer's needs, desires, and expectations

business plan: the industry

the other firms producing this product or service (competition). Want your firm to look like a potentially solid competitor

price is between

the price floor and the price ceiling

How to differentiate your products from competition for value proposition

unique selling points