Most Important Questions for Business – Viable Market?
Published January 20, 2011 | 
Does Your Product or Service Address a Viable Market?
Many would-be Entrepreneurs think like Seinfeld’s Kramer, who was convinced that the Mansierre (a bra for men) was his instant ticket to riches. Of course, everyone knows Kramer never did any research to confirm that there was a viable market “niche” for any of his ideas, let alone a market large enough to attract investment capital to his many innovations. The important lesson here is never assume you can create demand where it hasn’t already been expressed and identified or don’t hawk the next Mansierre!
Now another name for a market niche is market “segment” which have products or services that have similar characteristics. An example is the fruit juice “segment” which is part of the total beverage market.
Understand that to be successful in marketing your small business, recognizing and competing in a market “niche” is the only way an Entrepreneur should go. The main reasons are that it is much more cost effective, your marketing communication is a lot more targeted, and you can accomplish and reach superior results.
If you have recently started your business or if you would like to increase your product or service range of reach you might want to think about the following before you begin competing in a specific market niche.
Competitors
Unless you are planning to develop a brand new market niche which can be an expensive undertaking, then you ought to have a real good idea about how many competitors you will be competing for customers or clientele with. 
Now if there are limited numbers like only one or two well-known competitors then the niche might not be large enough for you to compete in. Or it may possibly mean that they “own” the segment and when that is the case, your competitors will profit from your marketing, almost certainly more than you will.
On the other hand, if there are numerous product or service offerings then this could suggest that the market is extremely competitive, price sensitive, as a result of everyone struggling to gain customers. You can expect and should plan to campaign hard just to be heard above all the market noise that your competitors are creating.
Customers
You need to determine whether the customers who purchase the products or services are either brand loyal or choose a number of brands inside the specific market niche. 
If the customers are brand loyal then understand again that it can be a difficult and costly undertaking for you to break down this loyalty. You should also look at how many times the customers purchase over a year. Understand that if it is only once or twice, then this will mean you will constantly be looking for new customers, unless the average price per purchase is excessively high.
It is also an excellent idea to develop an estimate of the number of customers who purchase in the niche. Fortunately there are a number of reports, papers, and news stories with information published to provide you an idea as to whether there are sufficient customers to attract and hold on to for your brand.
Trends
Finally, one important subject you have to keep awareness of is the trends that are taking place in your market niche. The strategy is to identify trendy and fad segments versus those that have long term promise.
You should always keep up with the industry news and be attentive to warning signs as you do not want to struggle in a market niche that is going to be viable for no more than a few years.
Global Entrepreneurial Strategies and the Market
Published July 24, 2009 | 
One important entrepreneurial strategy aims straight at market leadership if not dominance, and is an aggressive strategy right from the very start, planning to have a permanent leadership position, but before an Entrepreneur undertakes this bold strategy they must first realize it is the strategy that represents the greatest gamble, as there is very little room for mistakes, absolutely no room for second chances, and everything has to work out correctly for this strategy to succeed, and it requires significant amount of time for thought, careful analysis and preparation of the business plan. In addition, the strategy demands quite substantial and continuing efforts to retain a leadership position, or all of the Entrepreneur’s hard work simply creates a market for a competitor to take the position as the leader.
Indeed, so many Entrepreneurs over the years have felt like the risk of this strategy is so great that other strategies have been developed, as a result of the notion that the leadership strategy will fail more often than it can possibly succeed, which leads us to another important entrepreneurial strategy that takes what has been developed by somebody else, making improvements that create a better product or service than the original innovative entrepreneurs that first developed the idea.
Basically, this important concept is to let someone else innovate, and then run with their idea, improve on it, and give the consumers of what they really want and most importantly, are willing to pay for. A perfect example of this is IBM creating the PC after Apple created the market with its difficult 
leadership strategy, and within two years it had taken over from Apple leadership in the personal computer field, becoming the fastest-selling brand and the standard in the market.
The main point to focus on here being that IBM chose a far much less risky entrepreneurial strategy, and succeeded at it, and although Apple Computer has been a great success since, as the original innovator it might have failed to fully understand the scope of its success in the beginning, and what was needed to maintain the strategic position as the market leader.
This type of strategy starts with markets, is both market-focused and market-driven, requires a rapidly growing market, satisfies a demand that already exists rather than having to create one, and is likely to 
work most effectively in high-tech industries for the very simple reason that high-tech entrepreneurs and innovators are least likely to be market-focused and naturally concentrate on the technology and product.
The strategy of imitation requires a high degree of innovation that can’t be overlooked, as it is not good enough to offer the same product or services at a lower cost, to the consumer who is always looking for greater innovation in addition to competitive pricing.
Openings and associated opportunities in the market are created by habits and mistakes of market leaders, including arrogance of believing that something cannot be any good unless they thought of it first, focusing entirely upon one segment of the market such as the high profit segment, and ignoring the significant volume of the larger market, and the mistake of misunderstanding of quality, which is not what the innovator puts in, but what the consumer is ultimately willing to pay for. A market leader also tends at times to price products and services too high, creating openings for competition, while failing to adapt to different segments of the market.
Estimating Market Size
Published May 3, 2009 | 
When launching a business into the marketplace is not a good idea to assume that just because you show up the market gets bigger, since most of your business will come at the expense or loss of market share from the competition, or from their slice of the pie, and the real question is, of course, just how big is the pie? Remember, and market segmentation, any market niche worth considering must be measurable and substantial enough to be profitable, and to test this criteria you must estimate the size of your chosen market segment, also, most formal business plans require you to provide some estimation of the size of market you are targeting as most investors will want some answer to this important question.
Another reason to estimate the size of your market is to test for market saturation and market saturation occurs when there are too many competitors competing for the same market segment, and one way to measure this is to do a peer comparison of like markets and see how many establishments per how many customers there are and to make a correlation to your market.
A good place to begin is with the economic census produced by the US Census Bureau, but before you start, however, you will need to determine the geographic scope of your market including your market’s geographic boundary, and next you would need to know your business NAICS code, and with that information in hand, you are ready to go to the economic census online.
Another way you can estimate the size of your market is to use population figures of your targeted market multiplied by the average expenditure or amounts for the market, and this information is also available at the US Census Bureau’s website.
Another important factor that should be considered when developing your market size and share analysis is the underlying population required to support your business and generally this calculation is also based upon statewide data, and you can approximate this by dividing the population by the number of establishments which will equal the average number of people per business. When you compare the number of potential customers per establishment in your local area to the state average you will be able to tell if there are enough consumers to support your business.
Another method of evaluating your potential and the market is to calculate a breakeven analysis to determine what percentage of the market’s population you would have to capture in order to succeed.
Calculating the size of a business or industrial marketplace is a little trickier, and the best way to approach this problem is by using the Business Expenditure Survey report from the Census Bureau to find what you’re customer spend on your kind of product and services, and using this survey you need to find the business market your business is targeting and the closest respective expenses.
It is important to realize that there is a significant amount of information you can find on the Internet specific to your industry and location that can give you a very close approximation for the size of their market and the average revenue of the industry in your specific state, along with average expenses that you can use to determine benchmark information for comparison purposes when projecting your target market size and its potential revenue.
This information can help you determine whether it is feasible or not to pursue the business project based on both assumptions and market information and all of this information should be included in detail as part of your business plan.
Market Segmentation and Targeting
Published April 30, 2009 | 
The division of the market into different homogenous groups of consumers is not as market segmentation and rather than offer the same marketing mix (product, price, place, and promotion) two vastly different customers, market segmentation makes it possible for firms to tailor the marketing mix for specific target markets, the specter satisfying customer needs. Not all elements of the marketing mix are necessarily changed from one segment to the next, for example, in some cases only the promotional campaigns for different.
Most small businesses cannot afford to market to the general, mass-market customer as resources are just too limited, instead, it must focus its efforts, communications, and resources on those segments of the market that offer the most promise for the business and that have been neglected by larger competitors. The niche strategy aims at making its successful practitioners immune to competition and unlikely to be challenged, as successful practitioners of market segment can take the cash and let the credit go, and they wallow in figure anonymity.
A market segment should be measurable, accessible by communication and distribution channels, different in its response to a marketing mix, durable and not changing too quickly, and substantial enough to be profitable. A market can be segmented by various bases, and industrial markets are segmented somewhat differently from consumer markets.
There are four primary bases on which to segment a consumer market including geographic segmentation, demographic segmentation, psychographic segmentation, and behavioral segmentation.
Geographic segmentation is based on regional variables such as region (international, national, regional, state, county, city), climate, population density (rural, urban, suburban), and population growth rates.
Demographic segmentation is based on variables such as age, gender, ethnicity, occupation, income, and family status.
Psychographic segmentation is based on variables such as values, attitudes, and lifestyles.
Behavioral segmentation is based on variables such as usage rate, price sensitivity, brand loyalty, and benefits sought.
While many of the consumer market segmentation basis can be applied to businesses and organizations, the difference nature of business markets often leads to segmentation based on geographic segmentation, based on regional variables such as customer concentration, regional industrial growth rate, and international microeconomic factors, customer type, based on factors such as the size of the organization, it’s industry, position in the value chain, etc., and buyer behavior, based on factors such as loyalty to suppliers, usage patterns, and order size.
The segmentation approach you choose usually comes from deep insight into your customer needs and wants and simply choosing an approach not used to buy the competition may open up new doors of opportunity or uncover new potential markets or needs that are currently not being met, and once you select your segmentation approach you should give a descriptive name to each segment you identify and then ask yourself is it measurable, accessible by communication and distribution channels, different in its response to a marketing mix, durable and not changing too quickly, and substantial enough to be profitable?
Selecting Your Target Markets
Published March 22, 2009 |
The division of a market into different homogenous groups of consumers is known as market segmentation, and rather than offer the same marketing mix (product, price, place, and promotion) to vastly different customers, market segmentation makes it possible for firms to tailor the marketing mix for specific target markets, thus better satisfying customer needs, while not all elements of the marketing mix are necessarily changed from one segment to the next. For example, in some cases only the promotional campaigns would differ.
Most small businesses cannot afford to market to the general mass-market customer, as resources are just too limited. Instead, it must focus its efforts, communications, and resources on those segments of the market that offer the most promise for the business and that have been neglected by larger competitors, and then niche strategy aims at making its successful practitioners immune to competition and unlikely to be challenged. Successful practitioners of market segmenting take the cash and let the credit go, as they wallow in their anonymity.
A market segment should be measurable, accessible by communication and distribution channels, and these methods can be done by mailings, telephone calls, and personal interactions to name a few.
Data is gathered in the observational approach by watching people in either a natural or artificial setting, and the survey approach is best suited for those who are looking to gather descriptive information, and the experimental approach involves selecting two groups, giving them different treatments, and then measuring the effects.
With mail questionnaires you can collect a fairly large amount of information at a low cost, and telephone interviewing cost more than mail questionnaires that can provide more information quickly. Individual interviewing is another way of gathering information, and this type of interviewing may require an incentive to get people to participate, and gathering a group of people together to discuss certain topics with a trained interviewer is known as group interviewing.
When developing a questionnaire you must keep in mind to take your time to make sure that it is carefully developed and tested, carefully choose your wording of each question, the sequence of the questions is always important, and make sure that all the questions included in the survey are necessary.
Interpreting data can easily become overwhelming if you are not careful, so make sure that you report only major findings, and do not use too many statistical analyses just for the sake of using a. Put your findings into simple terms so that even someone not familiar with the survey will be able to understand.