Mississippi State University
MGT 3323
Entrepreneurship
Daniel T. Holt
Assistant Professor of
Management
“The people’s university”
-- Dr. Mark Keenum
Administrative Issues
• Industry, Competitor, & Target Market Analysis—Due 5 Mar
• Get started early (represents 20% of your grade & 20 – 25 pages are
expected)
• Primary data
• Analysis of original research data that you collect (for instance, buying preferences
of your target market—you must do this as part of your assignment)
• Secondary data
• Analysis of data that are publicly available (for instances, analysis of industry study
data, Census Bureau data, company reports
• These are found through several sources—reference the list of sources that are
included on the assignment sheets
A few that might be helpful are…
Standard & Poor’s Industry Survey (in the library’s reference section)
Annual Statement Studies published by the Risk Management Association (in
the library’s reference section)
Feasibility Analysis
• A more stringent test designed to take the best ideas that
emerge from the First Screen and more fully assess the
feasibility
• Includes…
• First phase (due 5 Mar)
• Analysis of the Industry
• Analysis of competitors & how you’re different
• Analysis of the target market (requires first hand data from customers—we’ll talk
about this today)
• Second phase (due 26 Mar)
• Financial feasibility
• Final phase (due 9 Apr)
• Revisions & improvements to first two phases
• And…
Suppliers
Distribution channels
Location analysis
Technology and service analysis
Planning Process
Business Opportunity Insight
Existing Markets
New Markets
Existing Products
New Products
Most simple ideas.
Face stiff competition because
existing firms
Practical
Practical
May be the most difficult as
they are expensive and
may require considerable
capital with R&D.
Determining Industries
http://www.naics.com/search.htm
• Your demands…
• A definition of the industry (see p. 103-104)
• Industry characteristics
• Explain how the industry is segmented and where your business fits into
that segmentation
• Explain the portion or specific market within your broader industry that you
plan to target
• Industry size
• Normally displayed in dollars over 3 to 5 years
• Industry growth rate
• Displayed as a percentage over 3 to 5 years
• Consider looking at the local market it possible
See the Census
• Industry sales projections
• Report the next year to 3 years
• Consult trade associations
Industry Participants
•
Describe segmentation—there are many ways to segment
•
Product
• The computer industry might be segmented by PC, laptop, server equipment, or
software
•
Customer
• The computer industry might also be segmented by customers such as business,
individual, government, or schools
•
Financially
• Some firms (as we have discussed compete on price) positioning themselves for a
target group financially (i.e., higher price ranges)
•
•
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Nature of the participants in an industry
Size of the industry
Growth potential
Profitability (bizstats.com; more refined estimates in the Annual Statement
Studies)
Key issues
•
Key trends & long term prospects for new products & services (consult trade
associations)
Lets watch a pitch….
http://www.msnbc.msn.com/id/14855230/
What industry?
Online Retail Industry
Industry Issues
• Industry size
• Normally displayed in dollars over 3 to 5 years
• Industry growth rate
• Displayed as a percentage over 3 to 5 years
• Consider looking at the local market it possible
• See the Census
• Industry sales projections
• Report the next year to 3 years
• Consult trade associations
Industry Issues
• Industry size
• US online retail sector had total revenue of $134.9 billion in
2009
• The electronics segment was the sector's most lucrative in
2009, with total revenue of $32 billion, equivalent to 23.7%
of the sector's overall value
• Industry growth rate
• Represented a compound annual growth rate (CAGR) of
11.5% for the period spanning 2005-2009
• Industry sales projections
• Performance of the market is forecast to decelerate, with
an anticipated CAGR of 10.5% for the five year period
2009-2014, which
Industry Size
$ Billion
€ Billion
Percent
Growth
2005
87.4
62.9
2006
107.0
77.0
22.4%
2007
126.7
91.1
18.4%
2008
132.3
95.1
4.4%
2009
134.9
97.0
2.0%
Average Growth
11.5%
Source: Datamonitor (note from last week (see slides; access through Business Source Complete;
Search for this included “Industry profile” AND “United States” AND Datamonitor AND retail)
Competitors
• Direct competitors
• Businesses that offer a product similar
to yours
• Indirect competitors
• Businesses that offer close substitutes
to your product
• Future competitors
• Businesses that could move into direct
or indirect competitor roles
Your demands….
•
An identification of direct and indirect competitors (see p. 134-137)
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•
•
•
•
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•
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A description of where these competitors are located and how accessible they
are to customers
A description of the products and services competitors offer (varieties,
inventories)
Competitors’ prices and costs
The types of customers competitors attract
Competitors’ strengths and weaknesses
Competitors marketing and distribution systems
Barriers created by the competitors
A description of the methods for generating revenue in the industry
Your venture’s values and benefits directly compared to your competitors
against meaningful criteria that you define
A competitive analysis grid (p. 138)
Resources
• Consult the following to share avoid mistakes
• http://www.gaebler.com
• Company information
• Hoovers on-line
Http://www.hoovers.com/
• Professional Associations
http://idii.com/resource/associations.htm
http://www.weddles.com/associations/index.cfm
• Business patterns
• http://www.census.gov/econ/cdp/index.html
Resources
• Community specifics can be identified through
• US Census Bureau
http://www.factfinder.census.gov/home/saff/main.html?_lang=en
• City-Data
http://www.city-data.com/
• Income data for communities
• Quickfacts through US Census Bureau
http://quickfacts.census.gov/qfd/index.html
• Social trends
• Gallup
• http://www.gallup.com/home.aspx
• Consumer expenditure survey
• http://www.bls.gov/cex/
Resources
• Company information
• Hoovers on-line
Http://www.hoovers.com/
• Professional Associations
http://idii.com/resource/associations.htm
http://www.weddles.com/associations/index.cfm
Who is the target market for your
venture?
Consider your Business Model
• Are you a business selling to a….
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•
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•
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Business
Customer
Government
Non-profit
Combination
Who is my market?
• “Everyone wants my product or service.”
• Mass marketing
• Multi-segment appeal
• Pits by JJ
• Niche appeal
• Jalapeño Madness (5,538 Facebook “Likes”)
• Micro-market appeal
• Llama Brew (413 Facebook “Likes”)
Marketing Bases
• Demographics
• Gender, age, income
• Geographic
• City, county, state, region
• Psychographic (attitudes, opinions, & interests)
• Political affiliations, recreational hobbies
• Behaviors
• Activities, professions
Describe Your Buyer
Give me a “persona” of the person (or organization)
who will use buy your product
http://www.policeauctions.com/
http://www.prada.com/
Marketing Bases
• Demographics
• Gender, age, income
• Geographic
• City, county, state, region
• Psychographic (attitudes, opinions, & interests)
• Political affiliations, recreational hobbies
• Behaviors
• Activities, professions
Buying intentions
• How likely would a person be to buy the product or
service
• How much would they spend for the product or
service
• How frequently would they make a purchase
• What features are most important as they consider
such a purchase
• Where do they purchase similar products now
• How much do they spend on a typical purchase
How many of these people are
there?
Who is the customer?
• Demographics
• Gender, age, income
• Geographic
• City, county, state, region
• Psychographic (attitudes, opinions, & interests)
• Political affiliations, recreational hobbies
• Behaviors
• Activities, professions
How many are there?
Demands
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•
Clearly describe your individual customers (i.e., characteristics and
preferences)—narrow this to a meaningful segment (see p. 128-129)
Determine the number of customers…
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•
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that are available in your market area (and present the process of that you used to arrive
at this number)
that you can reasonably expect to purchase your product or service
Collect first-hand data from potential customers that are within your target
market to assess (see p. 70-71 and present a copy of the instrument that
you use along with the summary statistics for each item included):
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The benefits these individuals desire
The similar products and services these individuals currently buy and how
much they pay for these similar products and services
These individuals’ satisfaction with the competitors
The trade-offs these individuals will accept between price and benefits
The ways that these individuals find out about products and services
How purchasing decisions are made for products and services like yours
How much these individuals would be willing to pay for your particular product
or service
Next time….
• Marketing plan
• Extra-credit opportunity—turn something upside
down
• Product—the good or service a firm offers to its target
market
• Price—the price represents the amount paid for the product
• Promotion—activities taken by a firm to communicate the
merits of its product to the largest market
• Placement (or distribution)—activities that move the
product from its place of origin to the consumer
Questions, Comments, or
Criticisms?