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