Market Research and Development

Market Research and Development

• Market research involves gathering, analyzing, and interpreting data about markets, potential customers, competitors, and industry trends.
• Businesses use market research to determine product or service demand and to develop effective marketing strategies.

Types of Market Research

• Primary research involves direct data collection from consumers.
• Quantitative research employs numerical data and statistical methods.
• Customer surveys use online, in-person, phone, or email methods.
• Rating scale questionnaires include yes/no questions and Likert scales (1-5).
• Sampling selects a representative group of customers for study.
• Qualitative research explores consumer motivations and behaviors.
• Focus group discussions involve small groups discussing a product or service.
• Individual interviews involve one-on-one data collection.
• Ethnographic research involves observing consumers in natural settings.
• Case study research uses detailed analysis of real-world scenarios.
• Open-ended questionnaires pose questions requiring detailed written responses.
• Secondary research uses existing data from various sources.
• Public sources include government reports, research studies, and public databases.
• Commercial sources include newspapers, industry reports, and market research firms.
• Company websites provide business data.
• Other sources include customer feedback, recorded meetings, and published blogs.

Product and Service Development

• Product and service development designs, creates, tests, and refines a product or service based on customer needs and market trends.

Types of Customer Requirements

• Service requirements include customer expectations for service delivery, response time, customer support, and ease of transaction.
• Output requirements involve physical goods with specific features, durability, size, speed, and usability.

Product & Service Development Process

• Trend analysis & observations identify industry trends and gaps.
• Consumer & market research help in understanding customer preferences.
• Actionable insights are obtained through brainstorming and creative improvements.
• Concept development & refinement uses prototyping and testing.
• Implementation & launch releases the product/service to the market.
• Result assessment gathers feedback and improves the product/service.

Costing & Pricing Strategies

• Cost is the total amount of money spent by a business to produce goods or provide services
• Cost includes all expenses for manufacturing, operations,and service delivery

Costing

• The process of identifying, analyzing, and allocating costs to various business activities to determine the cost of production or service delivery to ensure pricing and profitability.

Types of Costs

• Fixed costs remain constant regardless of production volume, such as rent, insurance, and salaries.
• Variable costs change based on production levels, like raw materials, packaging, and direct labor.
• Semi-variable costs have both fixed and variable components, such as electricity (fixed base fee + usage-based charges) and commissions
• Direct costs can be directly traced to the production of goods or services, such as wood for furniture and wages of assembly line workers.
• Indirect costs cannot be directly linked to a single product or service, but support business operations, for example, office rent, administrative salaries, and marketing expenses.

Formulas for Cost Calculation

• Product Cost for Physical Goods
  • Product Cost = Direct Materials + Direct Labor + Overhead Costs
  • Product Cost per Unit = Total Product Cost ÷ Number of Units Produced
• Service Costing for Service-Based Businesses
  • Total Service Cost = Total Fixed Cost + Total Semi-Variable Cost + Total Variable Cost
  • Service Cost per Unit = Total Service Cost ÷ Total Service Unit

Pricing

• The key factor in consumer choice
• Effective pricing considers business nature, competition, brand positioning, and target market to maximize profitability.

Objectives of Pricing

• Competition-based objectives depend on industry competition.
• Cost-based objectives are based on production costs.
• Customer-value objectives reflect product benefits to customers.
• Market share objectives aim to grow market share and brand awareness.
• Sales orientation objectives are designed to increase sales and maximize profits.
• Customer-driven objectives are based on what customers are willing to pay. Combining Costing with Pricing (Cost-Plus Pricing)
  • Cost-plus pricing calculates all costs and adds a predetermined markup to set the selling price, ensuring profitability.

Formulas for Pricing

• Selling Price = Cost per unit × (1 + Predetermined markup percentage)

• Markup Percentage = (Desired profit / Total Cost of the product or service) × 100

• Desired Profit = Desired Revenue - Total Cost of the product or service

• Product Cost per Unit = Total Product Cost / Number of Units Produced

• Service Cost per Unit = Total Service Cost / Total Service Unit

• Total Service Unit = (Number of hours) × (Number of days) × (Number of customers)

Types of Pricing Strategies

• Premium pricing is a high price for exclusivity and perceived value.
• Economy pricing is low-cost pricing for affordability.
• Price skimming involves a high launch price, gradually lowered over time.
• Penetration pricing a low entry price to attract customers.
• Psychological pricing is pricing ending in ".99" to seem cheaper.
• Bundle pricing sells multiple products as a package deal.
• Dynamic pricing changes prices based on market demand.

Facility Management & Business Location

• Facility management coordinates people, places, and processes to maintain business structures, equipment, and assets.
• Effective facility management improves productivity through regular maintenance and prevents costly disruptions.
• Hard services include physical maintenance like fire safety, electrical systems.
• Soft services include workplace improvements like cleaning, landscaping.

Business Location

• Choosing a business location involves multiple factors.

Controllable Factors

Proximity to Market:

• Ensures prompt delivery of goods and services

Supply of Materials

• Access to quality raw materials in a timely manner is crucial, especially for perishable goods.

Transportation Facilities

• Reliable transportation (air, rail, water, roads, pipelines) ensures efficient delivery.

Infrastructure Available

• Essential for energy business to maintain a stable power supply.

Labor Wages & Laws:

• Businesses must consider labor laws, workers' rights, and tax regulations.

Non-Controllable Factors

Government Policies

• Necessary compliance with labor laws, building codes, and regulations

Climate & Environment

• Location-specific geological and environmental conditions affect business operations.

Supporting Industries

• Strong supplier partnerships ensure timely raw material delivery.

Workplace Structure

• A well-structured workplace enhances communication, collaboration, accountability, and resource management.
• Virtual offices conduct business operations online, enhancing efficiency and flexibility.
• Physical offices have structured layouts that promote collaboration and productivity.
• Open offices are collaborative spaces.
• Cellular offices are individual workspaces.
• Co-working spaces are shared workspaces.
• Combination offices have hybrid layouts.

Manufacturing Layouts

• Facilities where products are made using various layouts to optimize production efficiency.
  • Product layout uses an assembly line structure.
  • Process layout is organized by function.
  • Fixed position layout is used for large, stationary products.
  • Combination layout is a mixed layout.

Marketing Strategies for New Ventures

Primary Goals of Marketing

• Differentiate products is done by focusing on customer needs.
• Integrate all business activities so you can meet customer desires.
• Satisfy customers to achieve long-term goals.

Target Market

• A specific group of consumers a business aims to sell to, based on demographics, psychographics, behaviors, and needs

Marketing Segmentation Types

Demographic – Age, gender, income, education, marital status Geographic - Country, state, city, town Psychographic – Personality, values, attitude, interests. Technographic – Devices, apps, software usage. Behavioral - Habits, frequent actions, product use. Needs-based – Essential products/services for specific groups. Value-based – Economic value of a customer group. Firmographic – Shared characteristics of business customers.

The Marketing Mix (8Ps)

• Product - What the business sells (tangible or digital).
• Price – What customers are willing to pay.
• Place - Where and how the product is sold.
• Promotion – How the product is marketed.
• People - Those involved in the business process.
• Process – Steps taken to deliver products/services.
• Physical Evidence – Branding, packaging, store setup.
• Positioning - How the brand is perceived.

Marketing Mix

• Strategy businesses use to promote their brand or product, typically including Product, Price, Place, and Promotion
• Additional factors like packaging, people, and process are also considered
• Product - The item a business offers (physical or digital).
• Price – The amount customers are willing to pay
• Place - Where the product/service is sold.
• Promotion – Activities to make people aware of the product and encourage purchase.

Types of Promotions (Promotions Mix)

Advertising

• Method of mass communication to promote a product/service.
  • Print Advertising – Newspapers, magazines, catalogs
  • Broadcast Advertising – TV, radio, podcasts
  • Public/Outdoor Advertising – Billboards, transit ads, street ads.
  • Digital Advertising – Online ads, social media, search engine marketing.

Selling

• Face-to-face persuasion by a salesperson (e.g., retail sales, insurance agents).

Direct Marketing

• Direct communication with customers (e.g., email, SMS, social media).

Sales Promotion

• Short-term offers to boost sales (e.g., discounts, free trials, vouchers).

Public Relations (PR)

• Managing public perception (e.g., sponsorships, brand ambassadors, CSR).

Media Framework

• Paid Media – Marketing content a company pays for (e.g., ads, sponsorships).
  • Earned Media – Organic exposure from third parties (e.g., news articles, social media mentions).
• Owned Media – Company-controlled platforms (e.g., websites, blogs, social media).

Key People

• Everyone involved in executing the marketing strategy (e.g., employees, endorsers).

Physical Evidence

• Elements that reinforce brand trust (e.g., packaging, store ambiance, reviews).

Process

• The steps businesses take to deliver their products/services efficiently.

Positioning

• How a brand is perceived compared to competitors.

Value Proposition (VP)

• Explains why customers should choose a product, highlighting its unique benefits Ex: Spotify – "Music for Everyone".

Unique Selling Proposition (USP)

• A distinct feature that sets a product apart from competitors. Ex: Jollibee – "Langhap-Sarap."

Branding

• Creating a unique business identity through design, messaging, and customer perception. Ex: Coca-Cola's red-and-white logo.

Financial Aspect

• Financial Planning in Business
• Starting a business requires careful planning to anticipate and prevent financial challenges.
• Entrepreneurs must research, estimate expenses, and manage finances to ensure profitability.

Estimating Business Start-up Costs

• Start-up costs are expenses a business incurs before it starts operating. Businesses typically fall into ** brick-and-mortar, online, or service-based** categories.

Types of Start-up Costs

• Start-up Expenses - Costs are incurred before launch
  • Divided into:
    • One-time Expenses - Equipment, permits, down payments, initial inventory, office supplies
    • Ongoing Expenses - Rent, payroll, utilities, insurance, taxes, marketing, inventory. Start-up Assets – Long-term investments like inventory, equipment, office furniture, and vehicles. Cash represents the initial funds available to a business, essential for covering expenses and maintaining operations.

Capital Funding Strategies

Securing business capital can be done by these ways

• Personal Investment – Using personal savings or investments.
  • Love Money – Funds from family and friends.
  • Venture Capital – Investors provide funds in exchange for company shares.
  • Loans - Borrowing money from banks or financial institutions.
  • Angel Investors – Wealthy individuals who invest in small businesses.
  • Business Incubators – Shared workspaces and resources for startups.
  • Crowdfunding – Raising funds from multiple small investors.
• Grants & Subsidies – Government financial assistance that doesn't require repayment

Financial Statements

• Financial statements track business financial health and guide decision-making.

The Four Financial Statements

1. Income Statement – Shows a company's revenues, expenses, and net profit over time.
2. Statement of Owner's Equity – Tracks changes in owner investments and retained earnings.
3. Balance Sheet – Provides a snapshot of a company's assets, liabilities, and equity.
4. Statement of Cash Flow – Details cash movement from operating, investing, and financing activities.

Elements of Financial Statements

• Assets - Resources owned by the business.
  • Current Assets - Cash, accounts receivable, inventory.
  • Fixed Assets - Equipment, land, intellectual property.
• Liabilities - Debts and obligations.
  • Current Liabilities - Accounts payable, salaries, short-term loans.
  • Long-term Liabilities - Mortgages, pensions, lease obligations.
• Equity - Owner's investment and retained earnings.
• Revenue – Income from business activities (sales, services, rental income).
• Operating Revenue - Income from selling goods/services (e.g., sales, rental income, commission).
• Non-operating Revenue - Income from sources outside normal operations (e.g., dividends, investment gains).
• Expenses - Costs incurred (operating expenses, taxes, rent, advertising).
• Operating Expenses - Regular business costs (e.g., utilities, salaries, advertising). Discretionary Expenses - Non-essential spending (e.g., employee perks, travel, office improvements).

The Accounting Equation

• A fundamental principle in accounting: Assets = Liabilities + Owner's Equity
• This equation must always remain balanced, showing how assets are funded through debt (liabilities) or investment (equity).

The Conclusions of a Balanced Equation

• An increase in assets results in an increase in liabilities.
• An increase in assets results in an increase in capital.
• An increase in one asset results in a decrease in another asset.
• A decrease in assets results in a decrease in liabilities.
• A decrease in assets results in a decrease in capital.
• An increase in liabilities results in a decrease in capital.