Customer and Market: Entrepreneurial Mindset Term 2 AY2024 - 2025 PDF

ENTREPRENEURIAL MINDSET TERM 2 AY2024 - 2025 CUSTOMER AND MARKET Contents Customer & Consumer Types of Customer Consumer Behavior Value Proposition Marketing Mix Pricing Strategy Target Market Market Segmentation Market Size Estimation (TAMSAMSOM) Types o...

ENTREPRENEURIAL MINDSET TERM 2 AY2024 - 2025 CUSTOMER AND MARKET Contents Customer & Consumer Types of Customer Consumer Behavior Value Proposition Marketing Mix Pricing Strategy Target Market Market Segmentation Market Size Estimation (TAMSAMSOM) Types of Market Competitor Analysis Customer & Consumer Customer – person or group of people that buy certain products and services in a business; an important factor in a business because without them, there are no sales and business may turn into a failure Consumer – is someone who purchases the product for his/her own need and consumes it; any person, other than the buyer who buys the product or services, consumes the product by taking his/her permission; the end-user of the goods or services Different types of Customers Innovators – buyers who love to have innovative products; they are seeking this all the time and it is part of their lifestyle. Early Adopters – appreciate innovations and are ready to adopt new products (not yet developed/perfect from a technical point of view) Early Majority & Late Majority – driven by analysis of different standard factors such as price, quality, needs, etc. Laggards – show little to no opinion leadership; they are the last to adopt an innovation; they have an aversion to change- agents Consumer Behavior Consumer behavior is a decision process and physical activity individuals engage in when evaluating, acquiring, using or disposing of goods and services. There are basically 4 types of buying decision behavior 1. Dissonance Reducing Buying Behavior 2. Complex Buying Behavior 3. Variety Seeking Buying Behavior 4. Habitual Buying Behavior VALUE PROPOSITION CANVAS The Value Proposition Canvas helps you understand the customer and how your products and services create value. 8 Value Proposition Canvas. I would LOVE it if: →What do you offer that makes the customers happy? → What would make the customer happy? → What do the clients want when facing the problem? This refers to the feeling/action of customers before he gets in contact with your solution. What is the product or service that you are offering? I would WANT: GAIN CREATORS GAINS →What do the clients do (actions) when facing the FIT problem? PRODUCT/ This refers to the feeling/action of customers SERVICE JOBS before he gets in contact with your solution. PAIN KILLERS PAINS I would HATE it if: →Which features of your offering relieve the customer's pains? →What are the pains of the clients when facing the problem? This refers to the feeling/action of customers before he gets in contact with your solution. Demonstrate the fit between what you are offering and why people buy it. You must build on solution (products & service) that matches their need ( pains & gains). Market "A MARKET CONSISTS OF ALL THE POSSIBLE CONSUMERS SHARING A CERTAIN NEED OR WANT WHO WOULD BE READY AND ABLE TO PARTICIPATE IN TRADE TO FULFILL THAT NEED OR DESIRE." - PHILIP KOTLER Marketing Marketing refers to the activities a company undertakes to promote the buying or selling of its products or services. Marketing includes advertising and allows businesses to sell products and services to consumers, other businesses, and organizations. - Investopedia Marketing Mix A marketing mix includes multiple areas of focus as part of a comprehensive marketing plan. The term often refers to a common classification that began as the four Ps: Product, Place, Promotion and Price. In addition to the 4 Ps, three approaches can also be integrated that include People (staff member), Process, and Physical evidence or environment to reinforce a consumer-centric type of marketing strategy. Marketing Mix Product - any physical good, service, or idea that is created by entrepreneur or an innovator in serving the needs of the customers and addressing their existing problems Place - refers to a location or the medium of transaction (Physical Location); covers the product distribution (Channel of distribution) and the whole business logistics Promotion - involves presenting the products or services to the public and how these can address the public’s needs, wants, problems, or desires; activities might include advertising, sales promotion, personal selling, and public relations. Price - the peso value that the entrepreneur assigns to a certain product or service after considering its costs, competition, objectives, positioning, and target market Pricing Strategy Skim Pricing or Skimming – is designed to capture superior margins, even at the expense of large sales volume; skim prices are high in relation to what most buyers in segment can be convinced to pay; this strategy optimizes immediate profitability only when the profit from selling to relatively price-insensitive customers exceeds that from selling to a larger market at a lower prices Penetration Pricing – involves setting a price low enough to attract and hold a large base of customers; not necessarily cheap but they are low relative to perceived value in the target segment Neutral Pricing – involves a strategic decision not to use price to gain market share while not allowing price alone to restrict it; minimizes the role of price as a marketing tool in favor of other tactics that management believes are more powerful or cost effective for a product’s market Pricing Strategy Promotional Pricing - is the reduction of the price for a certain time period. It is done either to increase the accessibility of a product to price sensitive groups or to clear out a certain stock of a product. This strategy is practiced in the form of sale extravaganzas, discount coupons, and money-off vouchers. Discriminatory pricing - is the strategy of charging different prices for different customer segments a product has. This strategy can be effective in increasing the profits earned from a product, especially when the various customer groups can be identified and separated. Psychological pricing - a pricing strategy that is aimed to have a positive psychological impact on the minds of customers. For example, charging 99Php instead of 100Php–although a difference of one peso can increase the sales by a considerably larger amount since the two-figure cost instead of a three figure one makes the perception of it being much cheaper. The Most Common Pricing Strategies: 1. Bundling – refers to two or more products or services in one reduced price 2. Penetration pricing – setting low prices to increase market share, but eventually increase the price once the desired market share is achieved 3. Skimming – the opposite of penetration where prices are initially high and then lowered to offer the product or service to a wider market 4. Competitive pricing – refers to benchmarking prices with the competitors 5. Product line pricing – pricing different products or services within a parallel product array using varying price points 6. Psychological pricing – this considers psychology and positioning of price in the market 7. Premium pricing – refers to setting a very high price to reflect elitism and superiority 8. Optional pricing – adding an extra product or service on top of the original to generate more revenue 9. Cost-based pricing – the basis of markup is the cost of sales 10. Cost plus pricing – the markup is based on a certain percentage of cost Target Market A target market is a group of customers within a business’s serviceable available market at which a business aims its marketing efforts and resources; a group of people that have been identified as the most likely potential customers for a product because of their shared characteristics, such as age, income, and lifestyle. A target market is the market a company wants to sell its products and services to. These are customers for whom it directs its business marketing efforts. Also, target market can be separated from markets as a whole using Market Segmentation. Market Segmentation It is the practice of dividing your target market into approachable groups. Market Segmentation The 4 basic types of Market segmentations are: 1. Demographic segmentation - sorts a market by elements such as age, education, household income, marital status, family size, race, gender, occupation, and nationality 2. Geographic segmentation - creates different target customer groups based on geographical boundaries; can help determine where to sell and advertise, as well as where to expand your business. 3. Psychographic segmentation considers the psychological aspects of consumer behavior by dividing markets according to lifestyle, personality traits, values, opinions, and interests of consumers 4. Behavioral segmentation divides markets by behaviors and decision-making patterns such as purchase, consumption, lifestyle, and usage. Market Size Estimation (TAM) Total Addressable Market – refers to the total market demand for a product or service. It’s the maximum amount of revenue a business can possibly generate by selling their product or service in a specific market. (SAM) Serviceable Addressable Market – estimates the portion of the TAM, that you can acquire given your limitations – geographic, demographic, marketing and advertising spend, logistics, etc.; specialized or limited market demand for a product or service (SOM) Serviceable Obtainable Market – determines how many customers from the SAM would realistically purchase your product; represents estimated audience potential and place in competitive landscape; helps estimate short- term growth TAMSAMSOM These metrics are key components of a business plan, particularly as you craft your marketing and sales strategy, set realistic revenue goals, and choose to enter the markets that are worth your time and resources. TAM, SAM, and SOM are essential to business strategy and growth planning. This is because these metrics show how much opportunity a particular market holds at every stage of business growth. TAM SAM SOM is also useful because it’s a simple and succinct way to present the value of an idea. This data gives teams an idea of the target audience and income opportunities for a market or niche. These metrics can also help businesses share key insights with investors if they are seeking funding. The process makes it easier to make decisions that impact growth. Types of Market Existing Market – in this type of market, competitors exist, customers want and need better performance, and technology is usually the driving factor New Market – customers and their preferences are unknown, direct competitors are non-existent Re-segmented/Niche Market – hybrid between a new market and an existing market; it is a new market created from a small segment from an existing market Clone Market – customers are known because you copied an existing market; adapts a foreign business model to a local condition Competitor Analysis A competitor analysis, also called competitive analysis and competition analysis, is the process of examining similar brands in your industry to gain insight into their offerings, branding, sales, and marketing approaches. Knowing your competitors in business analysis is important if you’re a business owner, marketer, start-up founder, or product developer. It is the process of identifying competitors in your industry and researching their different marketing strategies. It is the process of gathering data about the products, sales, and marketing strategies of your competitors (i.e., other businesses in the same industry). Businesses use that data to identify their strengths and weaknesses and discover potential opportunities. Competition Analysis Benefits Competitor 1 Competitor 2 Competitor 3 Competitor 4 Your Venture Product Price Branding Channels Packaging Market Reviews (UVP) Unique Value Proposition Add more as required Identify your competitors and examine the list of their offerings/benefits vs your product & service. 24 Based on what the customers say as well as your research, you need to tabulate your findings. Competition Analysis Competitor – person or a company which is a rival against another The different types of Competitors are: Direct Competitor – offers the same products within the same category as you (e.g. McDonald’s and Jollibee) Indirect Competitor – business that sells a product or service in the same category as you but it’s different enough to act as a substitute for your product or service (e.g. McDonald’s and Subway) Replacement Competitor – business that sells a product or service that’s both different in category and type than you, but one which your customers could choose to spend their money instead (e.g. McDonald’s and ready to eat or frozen dinner meal) SUMMARY Customer is a person or group of people that buy certain products and services in a business while Consumer is someone who purchases the product for his/her own need and consumes it or the end-user of the goods or services. The different types of customers are: Innovators, Early Adopters, Early Majority & Late Majority, and Laggards Consumer behavior is a decision process and physical activity individuals engage in when evaluating, acquiring, using or disposing of goods and services. There are basically 4 types of buying decision behavior such as: Dissonance Reducing Buying Behavior, Complex Buying Behavior, Variety Seeking Buying Behavior, and Habitual Buying Behavior The Value Proposition Canvas helps you understand the customer and how your products and services create value. A marketing mix includes multiple areas of focus as part of a comprehensive marketing plan. The term often refers to a common classification that began as the four Ps: Product, Place, Promotion and Price. SUMMARY A target market is a group of customers within a business’s serviceable available market at which a business aims its marketing efforts and resources. Market Segmentation is the practice of dividing your target market into approachable groups. The 4 basic types of Market segmentations are: Demographic segmentation, Geographic segmentation, Psychographic segmentation and Behavioral segmentation TAM, SAM, and SOM are essential to business strategy and growth planning. This is because these metrics show how much opportunity a particular market holds at every stage of business growth. The different types of Market are: Existing Market, New Market, Re-segmented/Niche Market and Clone Market A competitor analysis, also called competitive analysis and competition analysis, is the process of examining similar brands in your industry to gain insight into their offerings, branding, sales, and marketing approaches. Competitor is a person or a company which is a rival against another. The different types of Competitors are: Direct Competitor, Indirect Competitor and Replacement Competitor THANK YOU