The marketThe first step in any marketing plan should be evaluating the entire potential market for each product category.
Ask
* How large is the potential market?
* How many people or businesses are currently using the product of any firm competing in this category?
* How many prospects have potential use for the product?
* Is the market growing, flattening, or shrinking?
Generally, a growing market is more desirable. Not only is there great sales potential, but it is usually easier to enter and build sales in a growing marketplace than it is to supplant competition in flattening or shrinking marketplaces.
For a very small firms, however, a large market can be a double-edged sword. On the positive side, of course, there is the potential for huge sales. Negatively, though, larger firms with established access to marketing channels and better financing may be tempted to enter such an attractive marketplace. Firms already involved in the particular industry may devote considerable resources to defending or increasing their current market share.
Market segmentationAlmost all markets have some major and distinctive segments. Even if a market isn’t currently segmented, it probably carries that potential. And, in the case of large national markets, it would be almost impossible for a small firm to be competitive unless the market were segmented.
Segmentation can come about in many ways. Often several types of segmentation are evident. Almost all markets can be segmented by price and quality points. So price and quality issues may not form the most clear and precise definition of segmentation within a marketplace. Reasons for strong segmentation are most often found through an examination of product use and the benefits consumers derive from product use.
For example, the personal automotive car market may be thought of as being divided into station wagons, sedans, pickup trucks, mini-vans, and sports cars. Each of these segmented categories may be further divided by price and quality. With the luxury sedan segment, for instance, a change in the pricing or quality of pickup trucks would have no competitive impact because the potential consumer for a luxury sedan isn’t weighing a decision between purchasing a sedan or a pickup. However, if mid-price sedans are dramatically upgraded in quality, they may become competition for the luxury sedan market. This happened in the luxury car market in the early 1990s. Offerings from Infiniti and Lexus caught the attention of consumers who had previously only considered the more expensive cars manufactured by Mercedes, BMW, and Jaguar.
Consumer analysisYou need to closely evaluate typical consumers in the market segments you are targeting. There are countless possible behavior patterns to consider. Try to focus on the patterns that are most likely to determine the viability of your product in the marketplace. Ask
* What type of product features most appeal to these consumers?
* How are choices made between competing products?
* How much disposable income do the target consumers have to spend on this product?
* How do these consumers reach decisions to purchase a particular product?
* Are these consumers typically presold on a brand before they visit a store, or are they impulse buyers?
* Which promotional vehicles are most often viewed by the consumer?
* How are the consumers geographically situated?
* What activities do these consumers most like to engage in during their leisure time?
Product features and benefits
It is very important to make a clear distinction between the features of competing products and benefits to consumers of those features. Pay close attention to how strong the consumer benefit is from a particular feature.
A careful evaluation of the intended product benefits will help you and others ascertain the correctness of the product positioning. You should be able to determine whether or not individual features are worth the cost to manufacture and provide a foundation for building promotional and advertising programs.
SalesJust because you have an existing sales force or an established method of selling products, do not assume current sales channels are appropriate for a new product.
For example, the positioning of your product within its market segment may affect how the product should be sold. Let’s say you decided to position a new line of modular office systems as a premium product, complete with design consultation, targeted primarily to larger corporations. A highly trained, experienced, and knowledgeable sales staff, eager to visit customers’ offices for face-to-face presentations, would be crucial. On the other hand, if your strategy was to sell economy office partitions to very small businesses at a low mark-up, then you could not afford an outside sales staff. While your inside sales group should be friendly and helpful, there would be little benefit in hiring higher-paid, design-oriented sales personnel.
If your positioning plan for a new product suggests the need for a new means of selling, you may want to reconsider the positioning plan. Ask yourself if you can afford the extra cost and energy required to sell a premium or specialized product.
Advertising and promotions
Your product positioning statement, along with an analysis of its strongest competitive features and consumer benefits, are basic starting points in developing advertising and other promotional plans.
For example, if you are starting the only all-business radio station in town, you may simply turn your basic positioning statement into your main advertising message: “WBUS: the only all-business radio station in town!” If your consumer analysis reveals that your targeted listeners are often driving in their cars, the same simple message might work well on outdoor billboard advertising. If your consumer analysis indicated that your intended audience commutes to work by train, subway, or bus, a transit ad campaign might be an appropriate way to impart your message effectively.
Alternately, you may learn that business people really like the current stations they tune into to receive news. In this case you may need to emphasize more specific features inherent in your broadcasting. You might want to play up the frequency of stock reports, investment advice, or business interviews that are a part of your format. To relay detailed information, it may be more appropriate to place print ads in the business section of the local newspaper or regional editions of national business publications.
