Comprehensive Market Study for Business Success
Market Study
The market consists of the collection and analysis of background on the demand and supply, for purposes of determining the feasibility of the project in order to ascertain the true potential of this in the various markets in which it participates, and the effects on revenues and operating expenditures.
Their study is important because this is a fundamental cause of business failures.
The study can meet two objectives:
• Feasibility of Market: This refers to the study of history that should provide arguments to define the position that the project can achieve in the market.
• Profitability of the Project Relative to the Market: The idea is that the study does not lose sight of determining the profitability of the project.
Participating Markets in the Project
• Provider Market: Where inputs used in operating the project are traded.
• Competitor Market: Direct and indirect. Direct includes companies that develop and sell products similar to the project. Indirect refers to companies that require services and supplies that the project will use.
• Vendor Market: Involves the study of systems that ensure timely delivery of products to consumers.
• Consumer Market: This is where the direct marketing strategy that will be implemented by the project takes place.
• Foreign Market: This market is linked to international trade, coupled with import and export transactions of goods and services.
Stages of Market Research
The most common way to address this market research is according to the chronological nature of the information discussed:
a) Historical Analysis of the Market: This is the study of market statistics that would explain its past behavior.
• Through any use of projection techniques, trends, seasonality, and cyclical periods of demand and price variables can be inferred.
• Cause-effect relationships between a variable and demand and prices.
b) Analysis of the Current Situation: This is the study of history that explains the current market characteristics.
c) Analysis of the Future Situation: The study is based on the information collected and should estimate the value of market variables during the operation of the project.
Conclusions of Market Research
– Commercial Strategy: The set of variables that the company can handle with the specific purpose of acquiring customers and positioning the product of the project.
Tentative Sales: Sales volume estimated by the lifespan of the project.
– Assumptions of Market Share: Size the size of the project will reach the market.
The market study shall be completed according to the information collected and analyzed, determining the desirability of continuing the study of the project or abandoning the idea of implementation.
Business Strategy
• Selecting the Target Segment: This is for the consumer segment to which they intend to sell the product of the project. It is also known as target market or market goal.
• Development of 4P: Corresponds to the definition of the mix, i.e., determining the combination of marketing tools:
• Product,
• Promotion,
• Price,
• Place or Distribution Channels.
Target-Market Project
The definition of market goal of a project follows a market segmentation analysis, taking into consideration that the market is large and heterogeneous. Each company must locate a portion of it and keep it, which may increase it.
Market Segmentation:
1. Identify segmentation variables and segment the market.
2. Develop segment profiles.
Setting targets for the market:
3. Evaluate the attractiveness of each segment.
4. Select the segment(s) goal.
Product Positioning:
5. Identify possible positioning concepts for each target segment.
6. Select, develop, and bring the concept of positioning.
Major Segmentation Variables
Geographic Variable:
Region, size, commune, city size, density, climate.
• This variable requires the division of markets into different geographical units such as countries, states, regions, counties, cities, or neighborhoods. The project can choose to operate in one or in certain geographic areas or operate in all but paying attention to local variations in needs and geographical preferences.
Demographic Variable:
Age, gender, family size, family life cycle, income, occupation, education, religion, race, nationality.
This consists of dividing markets into groups according to demographic variables such as those outlined in the attached table. These demographic variables are the most popular bases for distinguishing between groups of clients. One reason for this is that consumer wants, preferences, and usage rates are often closely related to demographic variables. Another reason is that these variables are easier to measure than most other segmentation variables.
Psychographic Variable:
Social class, lifestyle, personality.
In this segmentation, buyers are divided into different groups based on their social class, lifestyle, and/or character traits. People classified within the same demographic group can exhibit very different psychographic profiles.
Behavioral Variable:
Occasions, benefits, user status, usage rating, rule of loyalty, stage of readiness, attitude toward the product.
In behavioral segmentation, individuals are divided into groups based on their knowledge, attitudes, use, or response to a product. Many markets believe that behavioral variables are the best starting point to form market segments.
Marketing and Commercial Mix (4P)
The Product (Goods or Services)
The project should specify clearly all the features of satisfactor, which is the means by which it fills a need, not just the content but the set of elements and attributes that compose it.
Shape, size, color, aroma, design, utility, packaging, marking, quality, after-sales service, transportation, accessibility, weight, volume, ecological, recycling, storing, taste, conditions, use, durability.
Characteristics of Goods and Services
Property:
• Tangible
• Ownership is transferred at the time of purchase
• Resale
• Demonstration pre-purchase
• Store
• Production precedes consumption
• Production and consumption in different time slots
• Transportable
• Sales and production are separate functions
Services:
• Intangible
• Generally not transferred ownership
• No resale
• No product before purchase
• Do not store
• Production and consumption are simultaneous and occur in the same place
• Cannot carry
• Sales and production functions cannot be separated
Prices and Sales Conditions
Must specify the price to take the products in the project, which cannot be insulated from competitive market conditions.
Selection of Method of Establishing the Price
Pricing with Gross Margin:
Unit cost = Variable + Fixed Costs / Units sold
Price with gross margin = Unit Cost / (1 – desired return on sales)
Pricing for Specific Performance:
Price with performance goal = Unit Cost + x capital invested desired performance / Unit sales
Volume balance = Total Fixed Cost / Price – Unit Variable Cost
Pricing According to the Current Index:
The pricing under this model is based largely on competitors’ prices and pays less attention to their costs or demand. The project product can be sold at a price equal to, higher than, or lower than its competitors.
In more competitive markets, the project will adopt a price not lower than that prevailing in the market.
If the market is less competitive, the price may be a secondary endpoint, especially in those markets where the brand is very important.
On the pricing of the product of the project, payment terms and discounts that may exist should also be considered.
The Plaza or Distribution Channels
It is for intermediate conduits or channels comprising various economic institutions, wholesalers, and retailers joining the producer to the consumer.
-Distribution channels form a group or network of communication between producer and consumer, and the length of the chain or the extent of the network depends on market size, product diversification, and the spread of consumers.
If considering the use of distributors, it should be borne in mind that prices and conditions assumed by them will not be the consumer who buys, but those that can be set in negotiations with the dealer.
– If the product does not use intermediaries, the project must be clear on how the product will reach the target market consumers because it has an impact on operational costs.
Decisions on the Amount of Intermediaries
• Intensive Distribution: Involves supplying products in various places. The goods must be placed in public places.
• Selective Distribution: Uses more than one but not all brokers willing to handle a particular product. This type of distribution allows the producer to ensure adequate coverage of the market with greater control and lower cost than intensive distribution.
• Exclusive Distribution: Limits the number of intermediaries to manage their products. By granting exclusive distribution, the manufacturer expects to have more aggressive sales and more informed intermediaries, maintaining better control over policies regarding price, promotion, credit, and other services.
Product Promotion Project
Advocacy is a social communication that seeks to affect the behavior of individuals, groups, and communities for the company.
Through the promotion, the intention is to:
• Alter the hierarchy of consumer needs
• Emphasize the character of the product as a satisfier
• Induce new needs
These concepts suggest the idea of advertising, but marketing is broader than that; it includes actions such as sampling products, sales force, contests and sweepstakes, temporary price reductions, etc.
In any case, the most used is publicity.
Advertising is a communication or message intended to persuade the consumer by capturing their attention, generating interest, provoking desire, and motivating action.