Ampleforth vle

Marketing for your new business venture

Business Planning Lecture 5

1

Today’s Session

Understand principles underlying marketing for small firms/start ups

What market will your business be in? Evaluating market size

Finding customers

“A small business is as different to a large business as a caterpillar is to a butterfly.” (Edith Penrose, 1959)

Resource constrained

No power in the market place

Face greater certainty internally

Face less certainty externally

So need to be creative!

No single definition

Marketing is about the creation of value

Traditionally was considered to be about businesses creating profit and customers deriving utility/usefulness

Changing context: “the activity, set of institutions and processes for creating, communicating, delivering and exchanging offerings that have value for customers, clients, partners and society at large” (AMA 2013)

The Marketing Concept

Quick check

Who has studied marketing before? Eg A-level, BTEC, 2nd year Principles and Practice of Marketing, BSc in Marketing?

If you haven’t, or you’re a bit rusty, check out the additional material that I’ll be putting onto the VLE to support your learning

What follows is adapted to the context of a start up business!

Defining and Sizing the Market

6

Market sizing

Market sizing – Ampleforth Abbey Cider

Level of model How defined (2014 figs) Number
Total market Total value of all cider sales in UK £911.2m
Available market Craft cider market £75m
Total achievable sales Actual sales £0.12m
Turning that into volume sales Assumed average price of £2.85 42,105 units
Market share Total value/actual sales 0.16
Note: in this case, sales and achievable market are the same – the cider makers are working at full capacity.

Sources: http://www.ons.gov.uk/ons/rel/prodcom/prodcom-provisional-results/popular-summer-products-sold-by-uk-manufactures/sty-prod-summer.html; http://www.harpers.co.uk/sectors/retailers/craft-cider-boom-sees-brits-spend-extra-10m-on-pricy-ciders/370032.article; http://www.insidermedia.com/yorkshire/entrepreneur/father-wulstan-peterburs-ampleforth-abbey

Ampleforth abbey cider is produced by the Benedictine monks at Ampleforth – it’s basically a micro-brewery for cider.

Total market is defined as total cider market

You might find this 3-scale version is enough to give you the clarity you need on market size and the level of market share you’re going for. Note too how it uses 3 different data sources to compile the picture

Alex- the article this is based on talks about the cider “bringing in £120k” – that could be profit, in which case unit sales will be higher! But for the purposes of the exercise this will do! Could point out that this a danger of using 3rd party data…so 42k units is the minimum we think they’re selling – esay to do of course when you’re inside the business – message here is that students need to common sense their data, think hard about what it’s saying, how robust it is, scope the risk around it

8

KEY MESSAGE

What we’re doing at each stage is a ‘reasonableness’ check

Does market really exist for the product we’re trying to sell?

Is it big enough, is it free enough of competition for us to make the profit we need to?

What is the scale of the opportunity?

9

No such thing as risk free business – what we want to see is that you’ve thought about, scoped and mitigated the risk – if your break even point requires you take 100% of a highly competed market you’ve got a problem! But if you’ve only got to take 0.2% AND your competitor analysis shows you can differentiate yourself in the market, then the risk looks like it might be worth taking.

9

Many businesses face peaks and troughs - seasonality e.g. Christmas; students; tourists

Consider counterbalancing seasonal peaks and troughs:

varying products or services

targeting different segments

Seasonality

Who are your customers and how will you attract their attention?

Direct and indirect customers

Direct customer is someone dealing directly with the supplier

Indirect customer is someone who deals with the supplier through an intermediary (agent, etc.)

In this simple example, the milk farmer’s direct customer is the supermarket…

….and the milk farmer’s indirect customer is the consumer or household shopper

Work out who your direct customers and consumers will be

What market do you want to serve?

Who will your customer(s) be on Day 1 of your business?

This Photo by Unknown Author is licensed under CC BY-NC

Eg:

Is your business idea related to sustainable clothing?

Or clothing for women aged 50-70?

14

What is your marketing philosophy?

Will you sell your product/service once to lots of customers? (transactional marketing)

Or do you aim to build long-term relationships and repeat business? (relationship marketing)

Will you customise your product for each customer (personalisation?) or mass produce it?

Can you build some form of experience into the product/service (experiential marketing)?

Identifying your market

Segmentation and targeting