Marketing Research for Strategic Decision Making
The two most common uses of marketing research are for diagnostic analysis to understand the market and the firm's current performance, and opportunity analysis to define any unexploited opportunities for growth. Marketing research studies include consumer studies, distribution studies, semantic scaling, multidimensional scaling, intelligence studies, projections, and conjoint analysis. A few of these are outlined below.
* Semantic scaling: a very simple rating of how consumers perceive the physical attributes of a product, and what the ideal values of those attributes would be. Semantic scaling is not very accurate since the consumers are polled according to an ordinal ranking so mathematical averaging is not possible. For example, 8 is not necessarily twice as much as 4 in an ordinal ranking system. Furthermore, each person uses the scale differently.
* Multidimensional scaling (MDS) addresses the problems associated with semantic scaling by polling the consumer for pair-wise comparisons between products or between one product and the ideal. The assumption is that while people cannot report reliably which attributes drive their choices, they can report perceptions of similarities between brands. However, MDS analyses do not indicate the relative importance between attributes.
* Conjoint analysis infers the relative importance of attributes by presenting consumers with a set of features of two hypothetical products and asking them which product they prefer. This question is repeated over several sets of attribute values. The results allow one to predict which attributes are the more important, the combination of attribute values that is the most preferred. From this information, the expected market share of a given design can be estimated.
Multi-Product Resource Allocation
The most common resource allocation methods are:
* Percentage of sales
* Executive judgement
* All-you-can-afford
* Match competitors
* Last year based
Another method is called decision calculus. Managers are asked four questions:
What would sales be with:
1. no sales force
2. half the current effort
3. 50% greater effort
4. a saturation level of effort.
From these answers, one can determine the parameters of the S-curve response function and use linear programming techniques to determine resource allocations.
Decision algorithms that result in extreme solutions, such as allocating most of the sales force to one product while neglecting another product often do not yield practical solutions.
For mature products, sales increase very little as a function of advertising expenditures. For newer products however, there is a very positive correlation.
Portfolio models may be used to allocate resources among major product lines or business units. The BCG growth-share matrix is one such model.
New Product Diffusion Curve
As a new product diffuses into the market, some types of consumers such as innovators and early adopters buy the product before other consumers. The product adoption follows a trajectory that is shaped like a bell curve and is known as the product diffusion curve. The marketing strategy should take this adoption curve into account and address factors that influence the rate of adoption by the different types of consumers.
Dynamic Product Management Strategies
Two fundamental issues of product management are whether to pioneer or follow, and how to manage the product over its life cycle.
Order of market entry is very important. In fact, the forecasted market share relative to the pioneering brand is the pioneering brand's share divided by the square root of the order of entry. For example, the brand that entered third is forecasted to have 1/√3 times the market share of the first entrant (Marketing Science, Vol. 14, No. 3, Part 2 of 2, 1995.) This rule was determined empirically.
The pioneering advantage is obtained from both the supply and demand side. From the supply side, there are raw material advantages, better experience effects to provide a cost advantage, and channel preemption. On the demand side, there is the advantage of familiarity, the chance to set a standard, and the choice of perceptual position.
Once a firm gains a pioneering advantage, it can maintain it by improving the product, creating a standard, advertise that it was the first, and introduce a new product in the market that may cannibalize the first but deter other firms from entering.
There also are disadvantages to being the pioneer. Being first allows a competitor to leapfrog the early technology. The incumbent develops inertia in its R&D and may not be a flexible as newcomers. Developing an industry has costs that the pioneer must bear alone, and the way the industry develops and its potential size are not deterministic.
In general, products are clustered in the low-low or high-high categories. If a product is in a mixed category, after introduction it will tend to move to the low-low or high-high one.
Increasing the breadth of the product line as several advantages. A firm can better serve multiple segments, it can occupy more of the distributors' shelf space, it offers customers a more complete selection, and it preempts competition. While a wider range of products will cause a firm to cannibalize some of its own sales, it is better to do so oneself rather than let the competition do so.
The drawbacks of broad product lines are reduced volume for each brand (cannibalization), greater manufacturing complexity, increased inventory, more management resources required, more advertising (or less per brand), clutter and confusion in advertising for both customers and distributors.
To increase profits from existing brands, a firm can improve its production efficiency, increase the demand through more users, more uses, and more usage. A firm also can defend its existing base through line extensions (expand on a current brand), flanker brands (new brands in an existing product area), and brand extensions.
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Developing Your Product
Your first step will be to develop a great product. You're probably thinking that's easier said than done, but it's really not. The absolute best product is one that you can develop yourself and deliver over the Internet. With today's technology, there is absolutely no reason why you can't create your own product. The knowledge you have within your own mind is extremely valuable. Everybody is good at something, has a special talent or some specialized knowledge. Use this knowledge to create a product.
The key to developing a great product is exclusiveness. Your product should be unique and not be in competition with hundreds of other similar products. You must give your potential customers exactly what they want. Develop a high-quality product that fills a void to increase your chance of success.
Another consideration of great importance is your target market. Keep in mind, the Internet is a global marketplace. Develop a product with a large geographic target and a wide appeal. A great product will fulfill a need or desire and provide instant gratification.
Before you develop your product, do some research -- find out exactly what people want and develop your product accordingly.
The most important consideration when developing your product is quality. Your product should not only deliver what you promise, but should go above and beyond the expected and overdeliver. Your customers satisfaction is of the utmost importance.
business plans and marketing strategy
free business planning and marketing tips, samples, examples and tools - how to write a business plan, techniques for writing a marketing strategy, strategic business plans and sales plans
Writing business plans and marketing strategy can be simple.
See the free business plan and marketing plan sample/template.
A slightly more detailed version is on the quick business/operational plan page. Business planning might appear very complex but in essence it's common sense, and begins with some very simple business start-up principles.
To explore personal direction and change (for example for early planning of self-employment or new business start-up) see the passion-to-profit exercise and template on the teambuilding exercises page.
Planning a new business or business project must at some stage address a few financial details, and challenges and opportunities relating to modern technology, the internet, websites, etc.
However the techniques of how to write strategic business plans (or a strategic marketing plan) remain basically straight-forward.
Business planning and marketing strategy are mostly common-sense and logic, based on cause and effect.
Here are tips, examples, techniques, tools and a process for writing a marketing strategy, business and sales plans, to produce effective results. This free online guide explains how to put together a marketing strategy, basic business plan, and a sales plan, including free templates and examples, such as the Ansoff and Boston matrix tools. New pages are being added soon on advertising, sales promotion, PR (public relations) and press releases, sales enquiry lead generation, advertising copy-writing, internet and website marketing, in the meanwhile see the marketing tips page for free marketing and advertising techniques and advice.
See also the simple notes about starting your own business, which to an extent also apply when you are starting a new business initiative or development inside another organisation as a new business development manager, or a similar role.
Here's a free profit and loss account spreadsheet template tool (xls) for incorporating these factors and financials into a more formal phased business trading plan, which also serves as a business forecasting and reporting tool too.
Adapt it to suit your purposes. This plan example is also available as a PDF, see the Profit and Loss Account (P&L) Small Enterprise Business Plan Example (PDF). The numbers could be anything: ten times less, ten times more, a hundred times more - the principle is the same.
Towards the end of this article there is also a simple template/framework for a feasibility study or justification report, such as might be required to win funding, authorisation or approval for starting a project, or the continuation of a project or group, in a commercial or voluntary situation.
If you are starting a new business you might also find the tips and information about buying a franchise business to be helpful, since they cover many basic points about choice of business activity and early planning.
(Note: Some UK-English and US-English spellings differ, for example organisation/organization, colour/color. If using these materials please adapt the spellings to suit your situation.)
how to write strategic marketing plans, business plans and sales plans
People use various terms referring to the business planning process - business plans, business strategy, marketing strategy, strategic business planning, sales planning - they all cover the same basic principles. When faced with business planning or strategy development task it's important to clarify exactly what is required: clarify what needs to be done rather than assume the aim from the description given to it - terms are confused and mean different things to different people. You'll see from the definitions below how flexible these business planning terms are.
business planning definitions
a plan - a statement of intent - a calculated intention to organize effort and resource to achieve an outcome - in this context a plan is in written form, comprising explanation, justification and relevant numerical and financial statistical data. In a business context a plan's numerical data - costs and revenues - are normally scheduled over at least one trading year, broken down weekly, monthly quarterly and cumulatively.
a business - an activity or entity, irrespective of size and autonomy, which is engaged in an activity, normally the provision of products and/or services, to produce commercial gain, extending to non-commercial organizations whose aim may or may not be profit (hence why public service sector schools and hospitals are in this context referred to as 'businesses').
business plan - this is now rightly a very general and flexible term, applicable to the planned activities and aims of any entity, individual group or organization where effort is being converted into results, for example: a small company; a large company; a corner shop; a local window-cleaning business; a regional business; a multi-million pound multi-national corporation; a charity; a school; a hospital; a local council; a government agency or department; a joint-venture; a project within a business or department; a business unit, division, or department within another organization or company, a profit centre or cost centre within an an organization or business; the responsibility of a team or group or an individual. The business entity could also be a proposed start-up, a new business development within an existing organization, a new joint-venture, or any new organizational or business project which aims to convert action into results. The extent to which a business plan includes costs and overheads activities and resources (eg., production, research and development, warehouse, storage, transport, distribution, wastage, shrinkage, head office, training, bad debts, etc) depends on the needs of the business and the purpose of the plan. Large 'executive-level' business plans therefore look rather like a 'predictive profit and loss account', fully itemised down to the 'bottom line'. Business plans written at business unit or departmental level do not generally include financial data outside the department concerned. Most business plans are in effect sales plans or marketing plans or departmental plans, which form the main bias of this guide.
strategy - originally a military term, in a business planning context strategy/strategic means/pertains to why and how the plan will work, in relation to all factors of influence upon the business entity and activity, particularly including competitors (thus the use of a military combative term), customers and demographics, technology and communications.
marketing - believed by many to mean the same as advertising or sales promotion, marketing actually means and covers everything from company culture and positioning, through market research, new business/product development, advertising and promotion, PR (public/press relations), and arguably all of the sales functions as well. Marketing is the process by which a business decides what it will sell, to whom, when and how, and then does it.
marketing plan - logically a plan which details what a business will sell, to whom, when and how, implicitly including the business/marketing strategy. The extent to which financial and commercial numerical data is included depends on the needs of the business. The extent to which this details the sales plan also depends on the needs of the business.