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Unit Four Planning Your Venture. What is Market Analysis? Who are your customers? How are they identified? Who are your customers? How are they identified?

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Presentation on theme: "Unit Four Planning Your Venture. What is Market Analysis? Who are your customers? How are they identified? Who are your customers? How are they identified?"— Presentation transcript:

1 Unit Four Planning Your Venture

2 What is Market Analysis? Who are your customers? How are they identified? Who are your customers? How are they identified? What problems might you encounter entering the market? What problems might you encounter entering the market? Where will you be located? Where will you be located? What laws and government regulations should you be aware of? What laws and government regulations should you be aware of?

3 Unit 4 Vocabulary Appointments Appointments Bait-and-Switch Advertising Bait-and-Switch Advertising Barriers to Entry Barriers to Entry Brand Loyalty Brand Loyalty Business Risk Business Risk Capacity Capacity Carrying Capacity Carrying Capacity Census Tract Census Tract Competitive Advantage Competitive Advantage Complexity Complexity Consideration Consideration Contract Contract Copyright Copyright Customer Needs Analysis Customer Needs Analysis Customer Profile Customer Profile Descriptive Research Descriptive Research Economic Base Economic Base Economic Risk Economic Risk Economies of Scale Economies of Scale Equal Employment Opportunity Commission Equal Employment Opportunity Commission Exploratory Research Exploratory Research Extended Coverage Extended Coverage Façade Façade Fidelity bonds Fidelity bonds Focus Group Focus Group Geographics Geographics Historical Research Historical Research Human Risk Human Risk Incentive Incentive

4 Unit 4 Vocabulary Incubator Incubator Industrial Markets Industrial Markets Industrial Park Industrial Park Industry Industry Insurance Policy Insurance Policy Intellectual Property Law Intellectual Property Law Layout Layout License License Market Market Market Positioning Market Positioning Market Research Market Research Market Segmentation Market Segmentation Market Segments Market Segments Market Share Market Share Mass Marketing Mass Marketing Patent Patent Patent Pending Patent Pending Permit Permit Price Discrimination Price Discrimination Psychographics Psychographics Public Domain Public Domain Risk Risk Secondary Data Secondary Data Service Mark Service Mark Target Market Target Market Trade Area Trade Area Trademark Trademark Uniform Commercial Code Uniform Commercial Code Warranty of Merchantability Warranty of Merchantability Workstation Workstation Wrongful Termination Wrongful Termination

5 Unit 4 Essential Question 1 (MKT-EN-2) What are the fundamental concepts of business ownership? What are the fundamental concepts of business ownership?

6 Essential Question 1A (MKT-EN-4H) What is the market segment for your proposed business? What is the market segment for your proposed business?

7 Conducting Market Research Types of Research Exploratory Research: Used when little is known about a subject. Descriptive Research: Used when you want to determine the status of something. Historical Research: Used when studying the past.

8 Conducting Market Research The Research Process Define information needs. Collect secondary data. Collect primary data. Organize the data. Analyze the data. –Is there a market for the product? –How big is the market? –Will the industry support the business?

9 Analyzing the Industry Industry: A collection of businesses with a common line of product or service. Factors of an Industry –Carrying Capacity: The industry’s ability to support new growth. Is there room for a new business like yours?

10 Analyzing the Industry Factors of an Industry –Uncertainty: The degree of stability or instability in an industry. Industries that are fast-changing present a high degree of uncertainty. –Complexity: The number and diversity of contacts that a business must deal with. The more suppliers, customers, and competitors, the more complex the business environment.

11 Analyzing the Industry Factors of an Industry –Stage of Life: Where the business is in the business cycle; birth, growth, maturity, or decline. The business owner must develop business strategies that are compatible with the stage of the business’s life.

12 Analyzing the Industry Are there Barriers to Entry? Things that keep new business from entering the industry or succeeding in the industry.

13 Analyzing the Industry Barriers to Entry –Economies of Scale: Big businesses can produce products more quickly and cheaper than small businesses.  Can be overcome by finding a niche that no one else serves.

14 Analyzing the Industry Barriers to Entry –Brand Loyalty: Occurs when customers buy products from companies they know.  Can be overcome by increasing your brand awareness, which requires money for advertising.

15 Analyzing the Industry Sources of Supply –Must have access to affordable sources of inventory, raw materials, and goods.  Supplier location  Trade discounts  Alternate sources

16 Analyzing the Industry Technology –Allows companies to improve their business process.  Maintains competitiveness  Must be periodically updated

17 Analyzing the Industry Competition –Know the market share: the portion of the total sales generated by all the competing companies in a given market. –Is there a niche: a small segment of the market, usually based on customer needs. –Identify the market position: a specific market niche for a product.

18 Analyzing the Industry Competition –Determine the competitive advantage: a feature that makes a product more desirable than its competitor’s products. –Gather competitive intelligence: Visit the competitor’s outlets. Buy your competitor’s products. Search the internet and your competitors website.

19 Identifying Your Customers Market: A group of all potential customers (people or businesses) who share common needs and wants, and who have the ability and willingness to buy the product. Target Market: The segment of the market that the company will focus its efforts. Market Segmentation: Dividing the total market into smaller groups of people who share specific needs and characteristics.

20 Market Segmentation Geographics Segmentation of the market based on where people live.

21 Market Segmentation Demographics Statistics that describe a population in terms of personal characteristics. These include age, gender, income, ethnic background, education, etc.

22 Market Segmentation Psychographics Involves the study of customers based on lifestyle, and the attitudes and values that shape it.

23 Market Segmentation Product Benefits Built in features of products in response to consumer needs and wants.

24 Market Segmentation Consumer Market: Customers who buy products for personal use. Industrial Market: Customers who buy products for business use.

25 Developing a Customer Profile Combining geographic, demographic, psychographic, and product benefit data to get a complete picture of your potential customers. –Who are my customers? –What do they generally buy, and how do they hear about the products and services they buy? –How often do they buy? –How can my business meet their needs?

26 Essential Question 1B (MKT-EN-2F) What are the types of risks that businesses encounter ? What are the types of risks that businesses encounter ?

27 Risk Management Risk: The possibility of financial loss. Risk can be managed by using the best available marketing information, analyzing opportunities, and making decisions to balance risk with adequate monetary returns.

28 Kinds of Risk Economic Risks  Occur from changes in overall business conditions. Amount or type of competition Changing consumer lifestyles Population changes Product obsolescence Government regulation Inflation Recession

29 Kinds of Risk Natural Risks  Result from natural causes. Floods Tornados Hurricanes Fire Lightning Droughts Earthquakes Unexpected changes in normal weather conditions

30 Kinds of Risk Human Risks  Caused by human mistakes and the unpredictability of employees and customers. Customer or employee dishonesty Employee carelessness Employee incompetence Customer or employee accidents Employee illness Customer non-payment of accounts

31 Handling Business Risk Risk Prevention and Control  Screening and Training Employees  Providing Safe Conditions and Safety Instruction  Preventing External Theft  Controlling Employee Theft

32 Handling Business Risk Risk Transfer  Purchasing Insurance Property Insurance Personal Liability Insurance Product Liability Insurance Worker’s Compensation Insurance

33 Handling Business Risk Risk Transfer  Guarantees and Warranties  Transfer through Ownership Sole Proprietorship Partnership Corporation  C-Corporation  S-Corporation Limited Liability Company (LLC)

34 Handling Business Risk Risk Retention  Businesses retain certain business risks and assume the responsibility for them because it is impossible to prevent or transfer these risks. Risk Avoidance  Foresight and anticipation will allow businesses to avoid certain risks.

35 Essential Question 1C (MKT-EN-2E) What are the relevant government regulations relating to the operation of a business? What are the relevant government regulations relating to the operation of a business?

36 Laws that Affect Employees Title VII of the Civil Rights Act: Forbids sexual harassment: any unwelcome sexual conduct. Title VII of the Civil Rights Act: Forbids sexual harassment: any unwelcome sexual conduct. Americans With Disabilities Act: Requires employers to provide reasonable accommodations to the workplace. Americans With Disabilities Act: Requires employers to provide reasonable accommodations to the workplace. Family Medical Leave Act (FMLA): Employers who have 50 or more employees must provide up to 12 weeks of unpaid leave to their employees for family medical related issues. Family Medical Leave Act (FMLA): Employers who have 50 or more employees must provide up to 12 weeks of unpaid leave to their employees for family medical related issues.

37 Laws that Affect Employees Equal Pay Act of 1963: Men and women must receive the same pay for the same work. Equal Pay Act of 1963: Men and women must receive the same pay for the same work. Fair Labor Standards Act of 1938: Fair Labor Standards Act of 1938: Established the minimum wage at $1 per hour. Established the minimum wage at $1 per hour. Established the maximum full time workweek at 40 hours. Established the maximum full time workweek at 40 hours. Established minimum child full time labor age at 16. Established minimum child full time labor age at 16. Wrongful Termination: When an employee is terminated for wrongful reasons. Wrongful Termination: When an employee is terminated for wrongful reasons. Notify employees in writing of rules violations. Notify employees in writing of rules violations. Maintain good records to help prevent unwanted lawsuits. Maintain good records to help prevent unwanted lawsuits.

38 Laws that Affect Fair Trade Clayton Act of 1914 and Robinson-Patman Act of 1936: Prohibit price discrimination: Business cannot sell the same product to different people at different prices. Clayton Act of 1914 and Robinson-Patman Act of 1936: Prohibit price discrimination: Business cannot sell the same product to different people at different prices. Warranties and Product Liability: Warranties and Product Liability: Caveat emptor – let the buyer beware. Caveat emptor – let the buyer beware. Warranty of merchantability: This warranty is implied by law and assures the buyer that he or she is purchasing a product of at least average quality and fit for the purpose for which it is intended. Warranty of merchantability: This warranty is implied by law and assures the buyer that he or she is purchasing a product of at least average quality and fit for the purpose for which it is intended.

39 Laws that Affect Fair Trade Fair Packaging and Labeling Act: Fair Packaging and Labeling Act: Requires manufactures to list all ingredients and raw materials used in production. Requires manufactures to list all ingredients and raw materials used in production. Requires the size, weight, and contents of a product to be on the label. Requires the size, weight, and contents of a product to be on the label. Uniform Commercial Code: Uniform Commercial Code: Uniform Commercial Code (UCC): Group of laws that regulates commercial business transactions. Uniform Commercial Code (UCC): Group of laws that regulates commercial business transactions.

40 Laws that Affect Fair Trade Truth in Lending: Consumer Credit Protection Act, also known as the Truth in Lending Act, requires those who give credit to reveal all the terms and conditions of their credit agreements. Truth in Lending: Consumer Credit Protection Act, also known as the Truth in Lending Act, requires those who give credit to reveal all the terms and conditions of their credit agreements. Truth in Advertising: Federal Trade Commission sets rules with regard to advertising. Truth in Advertising: Federal Trade Commission sets rules with regard to advertising. Misleading Ads: Ads should not claim to do something it cannot. Misleading Ads: Ads should not claim to do something it cannot.

41 Laws that Affect Fair Trade Sale Price: You cannot offer a reduced price on your product unless it has been offered to the public at the regular price. Sale Price: You cannot offer a reduced price on your product unless it has been offered to the public at the regular price. Price Comparisons: Price Comparisons: Cannot use list price, manufacturer’s suggested retail price (MSRP), as your comparison-selling price unless the product is actually sold for that price. Cannot use list price, manufacturer’s suggested retail price (MSRP), as your comparison-selling price unless the product is actually sold for that price. Must have proof your price is lower than your competitors if you use this fact in advertising. Must have proof your price is lower than your competitors if you use this fact in advertising. Bait-and-Switch: Uses a bargain priced item to lure potential customers into a store then a salesperson tries to sell them higher priced merchandise. Bait-and-Switch: Uses a bargain priced item to lure potential customers into a store then a salesperson tries to sell them higher priced merchandise.

42 Unit 4 Essential Question 2 (MKT-EN-5) What are effects of government on business? What are effects of government on business?

43 Essential Question 2A (MKT-EN-5A) What governmental agencies affect business? What governmental agencies affect business?

44 Government Agencies that Affect Business Consumer Product Safety Commission (CPSC): Establishes product safety standards and recalls products Environmental Protection Agency (EPA): Creates and enforces standards for the environment, regulating air, water, and noise pollution as well as toxic waste Equal Employment Opportunity Commission (EEOC): Establishes rules relating to discrimination in the workplace

45 Government Agencies that Affect Business Federal Communications Commission (FCC): Regulates all forms of interstate and international communication Federal Trade Commission (FTC): Enforces anti-trust, truth-in-lending, and labeling laws Food and Drug Administration (FDA): Creates standards for foods and drugs and approves new drugs

46 Government Agencies that Affect Business Internal Revenue Service (IRS): Enforces tax statutes and resolves disputes Interstate Commerce Commission (ICC): Determines trade practices, rates, and routes for interstate railroads, bus companies, and pipelines Justice Department: Enforces laws to maintain free trade

47 Government Agencies that Affect Business National Labor Relations Board (NLRB): Monitors and governs the relationship between employees and unions Occupational Safety and Health Administration (OSHA): Establishes and regulates safety and health standards for employees Patent and Trademark Office (PTO): Issues patents and trademarks for new products

48 Essential Question 2B (MKT-EN-5B) What is the importance of copyright, trademark, patent, logo, license, permit, etc.? What is the importance of copyright, trademark, patent, logo, license, permit, etc.?

49 Protecting Your Ideas Patent: A grant given to an inventor that gives him or her the exclusive right to produce and sell an invention. Patent: A grant given to an inventor that gives him or her the exclusive right to produce and sell an invention. Lasts for a period of twenty-one years after application. Lasts for a period of twenty-one years after application. Must pass all of the following rules: Must pass all of the following rules:

50 Protecting Your Ideas The invention must not contain prior art. It shouldn’t be based on anything publicly available before the date of the invention. The invention must not contain prior art. It shouldn’t be based on anything publicly available before the date of the invention. The invention must fit into one of five classes: The invention must fit into one of five classes: » A machine » A process » Article of manufacture » A composition » A new use of one of the four categories The invention must be “unobvious.” It should be new and unexpected. The invention must be “unobvious.” It should be new and unexpected. The invention must have utility. Must be useful, not whimsical or silly. The invention must have utility. Must be useful, not whimsical or silly.

51 Protecting Your Ideas Copyrights: Protects original works of authors. Examples: books, movies, musical compositions, computer software, etc. Copyrights: Protects original works of authors. Examples: books, movies, musical compositions, computer software, etc. Lasts for the life of the author plus fifty years. Lasts for the life of the author plus fifty years. After the copyright period, the work becomes part of the public domain: Can be used by anyone free of charge. After the copyright period, the work becomes part of the public domain: Can be used by anyone free of charge.

52 Protecting Your Ideas Trademark: Word, symbol, design, or combination of these that a business uses to identify itself or something it sells. Trademark: Word, symbol, design, or combination of these that a business uses to identify itself or something it sells. Service mark: Design or symbol that describes a service business. Service mark: Design or symbol that describes a service business. Lasts indefinitely unless the trademark becomes a common part of the everyday language. Lasts indefinitely unless the trademark becomes a common part of the everyday language.

53 Essential Question 2C (MKT-EN-5C) What licenses are needed by small businesses? What licenses are needed by small businesses?

54 Laws That Affect Startup Permits and Licenses Permits and Licenses Permit: A legal document giving official permission to run a business. Permit: A legal document giving official permission to run a business. License: A certificate that shows you have the necessary education and training to do a job. License: A certificate that shows you have the necessary education and training to do a job.

55 Laws That Affect Startup Contracts: A binding legal agreement between two or more persons or parties. Contracts: A binding legal agreement between two or more persons or parties. To be legal a contract must contain: To be legal a contract must contain: Agreement: Where one party promises to do something and the other party accepts. Agreement: Where one party promises to do something and the other party accepts. Consideration: What is exchanged for the promise. Consideration: What is exchanged for the promise. Capacity: The parties are legally able to enter into a binding agreement. Capacity: The parties are legally able to enter into a binding agreement. Legality: No provisions that are illegal or result in illegal actions. Legality: No provisions that are illegal or result in illegal actions.

56 Laws That Affect Startup Location Location Zoning and building codes affect where a business can be located and what type of business can operate in that location. Zoning and building codes affect where a business can be located and what type of business can operate in that location.

57 Unit 4 Essential Question 3 (MKT-EN-4) What information is needed to compile a business plan worksheet? What information is needed to compile a business plan worksheet?

58 Essential Question 3A (MKT-EN-4A) What are the different types of business locations? What are the different types of business locations?

59 Types of Business Locations  Mall Space  Kiosks: Small carts or like furniture found in malls, airports, large sporting events or even other retail stores that provide temporary, or inexpensive, locations with high foot traffic. Kiosks  Anchor stores: Large chain stores that generate a high amount of customer traffic. Anchor stores Anchor stores  Retail shops

60 Types of Business Locations  Shopping Center  Strip malls and other attached, adjoining retail locations  Vary in size from as few as 3 units to as many as 20 stores  The types of retailers, and the goods or services they offerwill also vary

61 Types of Business Locations  Downtown Area  Communities that are working to revitalize their downtown areas can greatly benefit retailers from this effort  Lack of parking is generally a big issue for downtown retailers  Competitors are older, well-established specialty stores which seem to thrive in the downtown setting

62 Types of Business Locations  Free Standing Locations  Is basically any stand-alone building  Can be tucked away in a neighborhood location or right off a busy highway  Suffers from random traffic that other retail outlets receive in malls or shopping centers  Has to work at marketing to get the customer inside

63 Types of Business Locations  Office Building  Good for a retailers that cater to other businesses  Tenants share maintenance costs and the image of the building is usually upscale and professional.

64 Types of Business Locations  Home-based  Many retail businesses are getting a start at home  Some eventually move to a commercial store location  This type of location is an inexpensive option, but growth may be limited  Harder to separate business and personal life

65 Essential Question 3B (MKT-EN-4B) What steps are involved in conducting a location analysis? What steps are involved in conducting a location analysis?

66 Location Analysis  Is the Economic Base Favorable?  Economic Base: The major industries that provide jobs  Industry-oriented or service-oriented  Growing or shrinking (flow of money into or out of a community)

67 Location Analysis  Are there Financial Incentives?  Financial Incentive: Reward or advantage that helps business  Lower taxes  Cheaper land prices  Employee training programs  Enterprise zones

68 Location Analysis  What is the Make Up of the Population?  Is the community’s population aging as young people move away?  Is the community getting younger as new families with children move in?

69 Location Analysis  Does the Labor Supply Match Your Needs?  How many employees are needed?  Is there a sufficient labor pool to meet those needs?  Does the available pool have the necessary skills to help the business?

70 Essential Question 3C (MKT-EN-4C) What trends and other criteria need to be identified in determining a site location? What trends and other criteria need to be identified in determining a site location?

71 Site Selection  Determine trade area: region or section of the community from which you expect to draw customers  Select several potential sites  Draw a circle around each potential site showing the trade area

72 Site Selection  Within each trade area examine the following features:  Number and Size of Competitors:  Mark all potential competitors both directly and indirectly  Look for clusters of stores to determine where customers shop  Are there vacant business in the area? Why?

73 Site Selection  Nature of the Competition:  How does your business compare in size and merchandise to your competitors?  Do you want to be near your competitors to encourage comparison shopping and use your competitors to help draw traffic?  Do you want to be located away from your competitors and generate your own drawing power?

74 Site Selection  Character of the Area:  Is it attractive and inviting?  Does it have the appearance of success?  Is it a safe, thriving environment?  Mark out potential problem blocks or areas  Accessibility and Traffic  Mark the routes customers will take to reach your business  What is the traffic count per hour, per day (weekday/weekend), per week, and holidays?  Is there adequate parking?


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