Market Research and Business Strategy Development

Posted on Dec 10, 2024 in Economy

Market Research: Understanding Supply and Demand

Market research involves collecting and analyzing background information about supply and demand to determine the feasibility of a project. The market study should determine, according to the information collected, whether it is feasible to continue the study of the project or abandon the idea.

Study Objectives

  • Market Feasibility: Define the position that the project can achieve.
  • Profitability of the project relative to the market.

Markets Involved in the Project

  • Supplier market: Where inputs for project operation are traded.
  • Market competitor
    • Direct: Companies that produce or sell similar products.
    • Indirect: Companies that need the same services that the project will use.
  • Consumer market: Where the business strategy will be addressed.
  • Foreign markets: International trade.

Stages of Market Study

  • Historic market analysis: Statistical data from the past.
  • Current situation analysis: A study of history that explains the current market characteristics.
  • Future situation analysis: Estimation of market variables during the operation of the project in terms of the information collected.

Market Study Conclusions

  • Business Strategy: Manipulated variables to reach customers and offer the product of the project.
  • Sales-tentative program: Estimated volume of sales over the life of the project.
  • Scenario market share: Size of the project’s reach in the market.

Business Strategy

Target Market Selection

The segment of consumers who will use the product (target market).

Development of the 4Ps

Defining the commercial mix of tools (product, promotion, price, place, or distribution channels).

Market Segmentation

  • Identify segmentation variables and segment the market (demographic, geographic, psychographic, behavioral).
  • Develop segment profiles.

Market Targeting

  • Evaluate the attractiveness of each segment.
  • Select the target segment(s).

Product Positioning

  • Identify potential positioning concepts for each target segment.
  • Select, develop, and implement the positioning concept.

Main Variables of Segmentation

  • Geographical variables: Region, commune size, city size, density, climate.
  • Demographic variables: Age, sex, family size, family life cycle, income, occupation, education, religion, race, nationality.
  • Psychographic variables: Social class, lifestyle, personality.
  • Behavioral variables: Occasions, benefits, user status, usage rate, loyalty status, readiness stage, attitude toward the product.

Marketing and Business Mix (4Ps)

The product (or service) should have clearly defined characteristics (shape, size, color, scent, design, usability, packaging, brand, quality, etc.).

Characteristics of Goods and Services

Goods

  • Tangible
  • Property is transferred at the time of purchase
  • Retail
  • Demonstration pre-purchase
  • Storable
  • Production precedes consumption
  • Production and consumption occur in different time slots
  • Transportable
  • Production and sales are separate functions

Services

  • Intangible
  • Usually, ownership is not transferred
  • No resale
  • There is no product before purchase
  • Not storable
  • Production and consumption are simultaneous and occur in the same place
  • Cannot be transported
  • Sales and production functions cannot be separated

Prices and Sales Conditions

You must specify the product price, which must take into account competitive market conditions.

Selecting the Method for Pricing

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 + (desired performance x capital invested / Unit Sales)

Volume balance = Total Fixed Cost / (Price – Unit Variable Cost)

Pricing to the Current Rate

It is based on the price of ignoring competition and demand costs.

Distribution Channels

Conduits or channels are composed of various intermediaries, wholesale and retail financial institutions that link the producer to the consumer.

Number of Intermediate Decisions

  • Intensive distribution: The product is supplied in various places; the goods must be in public places.
  • Selective distribution: To ensure adequate coverage of the market, some, not all, intermediaries are used to handle the particular product.
  • Exclusive distribution: Limits the number of intermediaries to handle the product.

Product Promotion

Use social media to search for factors affecting the behavior of individuals.

Objectives

  • Changing consumer needs hierarchy.
  • Emphasize the product’s satisfying characteristics.
  • Inducing new needs.