BUSN101: Midterm II Topics 9-16

Market

a set of actual and potential buyers of a product or service

Customer Value

consumer's assessment of the product's overall capacity to satisfy his or her needs

Angel Investors

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

Target Customer

- Try to identify the most important characteristics of your target customers: e.g., income, relevant locations/neighborhoods, dog ownership - Obtain census or population statistics that break down populations according to your target criteria, quantify these, and add them up.

Demands

-Human wants that are backed by buying power.

Marketing Management

art and science of choosing target markets and building profitable relationships with them •What customers will we serve? •How can we best serve these customers?

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

basic elements to included in a business or feasibility plan

Value based pricing

customer driven -assess customer needs and value perceptions -set target price to match customer perceived value -determine costs that can be incurred -design product to deliver desired value at target price

Customer decision making journey

describes the steps that a consumer goes through from first realizing a product exists all the way through to finally purchasing it: Awareness/Need Recognition, Evaluation, Purchase

External legitimacy •The extent to which a small business is taken for granted, accepted, or treated as viable by organizations or people outside the small business or the owner's family. Internal understanding •The extent to which employees, investors, and family members in the business know the business's purposes and operations

discuss why business planning is important

Marketing Myopia

focusing only on existing wants and losing sight of underlying consumer needs

Finance

management of money

Competitor Based Pricing

market driven

inputs

materials, knowledge, information

Penetration Rate

number in the priority population exposed or reached

cover letter

one-page document on business stationery that introduces the business plan and the business owner to the recipient and indicates why the recipient is being asked to read the plan (letterhead)

Cost based pricing

product driven -design a good product -determine product costs -set price based on cost -convince buyers of product's value

Leading Questions

questions that predispose a respondent to answer in a certain way

Crowdfunding

raising money for a project or venture by obtaining many small amounts of money from many people ex. Oculus VR

Creditor

a person who believes that he will be paid back the money that he loaned

Non-judging language

"That's interesting" "Oh wow," "Ok" "Uh huh"

Probing

"What did you mean when you said...?" "Can you give me an example?"

Needs

-A state of felt deprivation. -Physical—food, clothing, warmth, safety -Social—belonging and affection -Individual—knowledge and self-expression

Place

-channels -coverage -locations -transport

Income Statement: - revenue and expenses, net income Balance Sheet: -assets, liabilities, total stockholder's equity= total liabilities and stock holders equity,, equal to assets

Be able to identify a Balance Sheet and an Income Statement

Price ceiling

Max is customer perception of value

Targeting

Choosing the segment(s) that will allow an organization to most efficiently and effectively attain its marketing goals.

1. Top-down, using industry and research reports 2. Bottom-up, using data from early estimates of sales 3. Value theory, using conjecture about buyer willingness to pay

Understand how to approach market sizing (Top-Down, Bottom-Up, or Value Theory)

Positioning

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

Investor

External User,,person who puts money into a project to earn a profit

venture capitalists

Individuals or companies that invest in new businesses in exchange for partial ownership of those businesses. ex. Uber

•Smile, be friendly •Tell them you're a student •Tell them you're working on a school project •Ask them if they have 5-10 minutes (or correct estimated time) to answer some questions •If recording, ask permission

Know tips for approaching interviewees

Snowballing

Know tips for interviewing

Transformation Process

Manufacturing, service

value proposition

Small business owners' unique selling points that will be used to differentiate their products and/ or services from those of the competition.

business strategy

The Market: Marketing strategy •Overall strategy your firm pursues in the market •Sales plan that shows specific ways you apply strategy to secure sales from your customers •Longer-term competitive plan that shows how you protect your firm from efforts of the competition to unseat you

Purchase

a consumer decides to actually purchase a product

Market skimming

strategy driven -a strategy with high initial prices to "skim" revenue layers from the market --Product quality and image must support the price ---Buyers must want the product at the price --Costs of producing the product in small volume should not cancel the advantage of higher prices --Competitors should not be able to enter the market easily

Marketing Penetration

strategy driven -sets a low initial price in order to penetrate the market quickly and deeply to attract a large number of buyers quickly to gain market share --Price sensitive market --Inverse relationship of production and distribution cost to sales growth --Low prices must keep competition out of the market

Potential Market Size

target market times penetration rate

Exchange

the act of obtaining a desired object from someone by offering something in return.

Customer Satisfaction

the extent to which a product's perceived performance matches expectations. If the product's performance falls short of expectations, the buyer is dissatisfied, but if performance matches or exceeds expectations, the buyer is satisfied.

Equity

the money a company currently holds

Total Available Market

all customers who have the means to purchase the product/service

Loans

amounts of money borrowed which will accumulate interest

Interest

A sum paid or charged for the use of money or for borrowing money

Capacity

-Maximum output rate that can be sustained --throughput less than or equal to capacity -analyzes how fast a system can generate output -But we need to start with defining a measure for capacity --Miles per hour (MPH) is a measure for vehicle speed --What would be some appropriate measures for production speed? -Some examples --Number of cookies per day (or per hour, per minute) --Dozens of cookies per day (or per hour, per minute) -Let's go with dozens of cookies per hour --Nothing wrong with others

Income Statement

-Shows how profitable a company was during a specific period of time (revenue minus expenses) -Summarizes all revenue and expenses over a period of time (month, quarter, or year) Revenue - Expenses = Net Income (or net loss) Aka Profit! •If there is more than one item of revenue or expense, usually include a total

Balance sheet

-Shows what the company owns (assets) and owes (liabilities) at a point in time -Assets, liabilities, and stockholders' equity at a point in time A = L + SE

Wants

-The form that a human need takes as shaped by culture and individual personality. -As society evolves, the wants of its members expand. -People have narrow basic needs but almost unlimited wants.

Price

-list price -discounts -payment period -credit terms

Marketing

-process by which companies create value for customers and build strong customer relationships to capture value from customers in return -manages customer demand, generates sales

Product

-product variety -quality -design -features

Promotion

-sales promotion -advertising -sales force -public relations

Price

-the sum of all the values that consumers give up in order to gain the benefits of having or using a product or service -only element in the marketing mix that produces revenue; all other elements represent costs -communicates to the market the company's intended value positioning

Budget

A plan for making and spending money

Costs

An amount that must be paid or spent to buy or obtain something. The effort, loss or sacrifice necessary to achieve or obtain something.

Revenue

An increase in owner's equity resulting from the operation of a business

Cycle time

Average time between completion of successive units of products CT=1/capacity ex. cycle time of 6 minutes/cookie= 1/10 dozen cookies/hour== 0.1 hour/ dozen cookie

Segmentation

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

Cost-based pricing can be described as a strategy to determine the selling prices of a company's products based on their production costs, while value-based pricing is a strategy of setting prices of a product or service based on its value perceived by customers.

Understand Cost-based vs Value-Based pricing

1. Self funding 2. Angel investors 3. Personal investors 4. Venture capitalists 5. Crowdfunding 6. Listing on stock exchange

Understand six ways to finance your business

Price Floor

Minimum is company cost to serve

Manufacturing organizations produce physical, tangible goods that can be stored in inventory before they are needed. Service organizations produce intangible products that cannot be produced ahead of time.

Understand and be able to discuss the differences between Manufacturing and Service organizations

1. How do you get money to start or expand your business? 2. How much does the money "cost"?

Understand and be able to discuss what Finance is and does

business model canvas

One way of presenting much of the same information. essentially a one page summary of the main elements of a Business Plan

•Approach and overview •Consent •Opener questions - broad, easy questions that relate to what you said the interview was about •Core questions •Any sensitive core questions and demographics •Hearty thank you and request for additional contacts

Plan a timeline, outline or interview guide for an interview—what to include?

Operations Management

Planning, scheduling and control of activities that transform inputs into finished goods and services inputs--> transformation process (manufacturing, service) --> outputs

The 4 P's

Product, Price, Place, Promotion

Profit

Revenue - Expenses = Net Income (or net loss)

solves challenging problems manages the process of converting input to output

Understand and be able to discuss what Operations Management is

Internal Users: Managerial Accounting - accounting for internal decision makers External Users: Financial Accounting - accounting for external decision makers

Understand the difference between Financial and Managerial Accounting

STP

Segmentation, Targeting, Positioning

-the process with the smallest capacity in the system -Bottleneck is the "weakest link" in the system, but it determines the overall capacity ("speed" ) of the entire system -To increase the capacity of the entire system, we need to --Identify the bottleneck --Elevate the capacity of the bottleneck Capacity of a system is limited by its bottleneck, which is the slowest process in the system

Understand and be able to discuss why Capacity and Bottlenecks are important in Operations Management

1.Define your target customer 2.Estimate the total number of target customers 3.Determine your penetration rate 4.Calculate the potential market size: volume and value 5.Apply and re-evaluate over time

Understand how to calculate the size of a market (the five steps we will follow)

•Consumers you know personally, from work, or in clubs •Friends of friends and family •Recruiting on social media •Asking people on campus •Asking people in a safe, public place •Public means not inside a business or on private property

Understand how to find customers to interview (including techniques such as snowballing)

Price skimming sets prices higher to attract customers most interested in the product or service to maximize short-term profits. Penetration pricing uses lower prices to build a customer base for new products or services.

Understand the difference between market skimming vs market penetration pricing

Competitive pricing is the process of selecting strategic price points to best take advantage of a product or service based market relative to competition.

Understand the role of competitor pricing in relation to your own

Following these steps to estimate your market size (value) is by no means an exact science. Still, there are ways to maximize the effectiveness of this exercise: •At the time you make your first estimate, examine each assumption you make and what would cause it to change. To factor in the risks of change, calculate best-case and worst-case scenarios in addition to your expected scenario. •Over time, monitor the accuracy of your initial assumptions and whether you need to modify them.

Understand why to re-evaluate market share over time

Manufacturing organization

Use operations management in the transformation process of turning raw materials into physical goods

1. needs, wants, and demands 2. market offerings (products, services, and experiences) 3. value and satisfaction 4. exchanges, transactions, and relationships 5. markets

What are the five Core Marketing Concepts?

1. Understand the marketplace and customers needs and wants 2. Design a customer-driven marketing strategy 3. Construct an integrated marketing program that delivers superior value 4. Build profitable relationships and create customer delight 5. Capture value from customers to create profits and customer equity

What are the main steps in the Marketing Process?

Pricing is one of the four main elements of the marketing mix. Pricing is the only revenue-generating element in the marketing mix (the other three elements are cost centres—that is, they add to a company's cost). Pricing is strongly linked to the business model.

What is price and how does it fit in to the Marketing Mix?

Market Share

a company's product sales as a percentage of total sales for that industry

Awareness

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

Expense

a decrease in owner's equity resulting from the operation of a business

business plan

a document designed to detail the major characteristics of a firm—its product or service, its industry, its market, its manner of operating (production, marketing, management), and its financial outcomes with an emphasis on the firm's present and future .

Interview guide

a list of all the questions and possible probes an interviewer asks in an interview, as well as notes about how the interviewer will begin and end the interview

Stock exchange

a market for buying and selling stock ex. Meta,, public stock exchange

Marketing Offers

some combination of products, services, information, or experiences offered to a market to satisfy a need or want (NOT limited to physical products!)

Assets

the things a company owns that have a dollar value; they generate cash flow, improve sales or reduce expenses in the future. Recorded at their original cost

Liabilities

things the company owes to others

Transactions

trade between two parties. -Involves at least two things of value, agreed upon conditions of time and place.

"Ask"

what person is asking from investors

Self-funding

when the owner of the business uses their personal finance to fund the business ex. Apple

executive summary

•A one- to two-page (250-500 words) overview of the business, its business model, market, expectations, and immediate goals. •Typically put at the start of a business plan and is the most popular summary form for a business plan.

Lenders

•Examples: •Commercial Banks , Credit unions, Other online lenders

Principle

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