Business plan Essay
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Selective marketing strategy
Most of the small business or businesses seeking to enter into new venture like creative technology seeking to enter the American headphone market will employ select marketing with the main objective being to get higher returns on their marketing investments. To achieve this objective, creative technology should strive hard in knowing their customers in the basis of their origination, who they are and where do their products do well (Homburg, etaal, 2009). Once they have that in mind, then they will try to maximize the best performing market segment, to realize these high returns on investment (ROI).
The other vital objective of creative technology is to eliminate the guess works and the wastes involved in new venture and replace them with specific targeted efforts. This will ensure that they reduce on the operating cost and maximize their returns on investment. Also, owing to the luxury nature of the product that Creative Technology is to introduce in the United States market, they should gravitate towards these selective marketing as their product target a very limited population segment.
Creative Technology employs this type of marketing to achieve their objectives as this product which they want to engage in is not for everyone and so they want to ensure that the message meets the right consumers and so reflecting in increased sales. Mostly, Creative Technology might include a glossy ad in the magazine and televisions. This is so because most of the population would be uninterested with luxury goods adverts.
Moreover, Creative technology should employ tactics to differentiate the product from other brands in their category of products. This entails at classifying a brand as being more superior to other competing brands. This will involve stressing the quality of brand and design on their historical relevance and the longevity of the brand. In this approach, they will strive to paint the other competing products as unreliable, generic as and of a lesser quality than their own headphones (Homburg, etaal, 2009).
This will ensure that Creative Technology meets its objectives of high returns on investments. This is so because it will reduce the extra cash and time spent on advertising messages directed towards consumers who may otherwise not be interested in the product. Also in addition to making this product stand out, specialized focus on specific market areas can help in building product’s reputation and ensure that this product has a long term fostered loyalty.
Creative technology will then employ the tactics of target market selection in order to engage in the market which they are sure that their product will sell. There are two important factors which they should consider in doing this. These include; the attractiveness of the market segment and also how the segment will fit their objectives and resource capabilities (Shaw, E. 2012)..
When they are selecting the target market, they should consider the following aspects. The size of the segment; this basically entails to the number of their customers that are in that population. When they ascertain that the segment has a considerable number of people then they can choose to invest in it and the vise versa.
The other aspect which they should also consider is the growth rate of the segment. This will help them to determine their future prospect in the market. Also, they should be at a position of determining the level of competition in the population that they want to invest in. this will enable them decide their product in a manner that they will be more appealing than that of their competitors. In doing so, they will also know the loyalty of the customers in the competing brands and hence know the strategy of invading this market segment. In addition they will be at a position of determining the attainable markets share if they got the knowledge of the competitor’s expenditure in promoting their brands. Given the size of the population, they should also ascertain the required market share so as to break even and the profits they expect from the sales in the said segment (Aaker and David, 2008).
To obtain this information, market research and analysis is vital for Creative Technology. For instance, buyer intentions, test marketing, sales estimation and analysis in demand is very useful in determination of sales potential. The micro and macro environmental variables on the segment should also be put into consideration (Shaw, E., 2012).
It is very important for the Creative Technology to note that larger segments are not advisable for targeting as they will already have more competition. It could be more profitable to invest in two or more small segments with little or no competition. However, if the firm is sure of developing a competitive advantage like patent protection, they can engage in larger market segments.
Target Market Strategies
There are different marketing strategies that should be employed by Creative technology in their endeavors of choosing a market strategy. These strategies include;
Single segment strategy: this strategy is also referred to as concentrated market strategy.Here one market segment is served as opposed to the entire market. It is a strategy which should be employed by smaller firms with little resources.
Selective specialization: it is a multiple- segment strategy and is also referred to as differentiated strategy. Different market segment are served with different marketing strategies. Only the promotional message varies with the product not being the same in these markets.
Product specialization: In this strategy, the company specializes in particular products that tailored to different market segments
Market specialization: here the company will specialize in a single market and serve it with varied products. Creative Technology cannot employ market specialization as it is planning to employ only one product, the headphones.
Full market coverage: Here the organization tries to cover the whole market. It is mostly achieved either through mass marketing where a single undifferentiated market mix is employed to the entire market or by a differentiated strategy in whicha different mix is offered to every segment.
Individual marketing strategy: this is a strategy which has been employed recently owing to the technology where market mix is tailored in accordance to the individual consumer (Brian Solis,2011).
For the Creative Technology to remain competitive in the market and realize high returns, it should always target a market that matches its capabilities. Once it has gained momentum, then it can expand by embarking on specialization strategy, tailor the product for different markets.
After selecting the target market, the firm will now embark on deciding on how it will position itself in the chosen market segment. Positioning refers to how the firm wants their customers to view their product. It is about effective conveyance of messages to the target market about the firm’s product or service.
Position strategy development
The first step is to do a market research. The main aim of this is to feel the features of your product that the consumer wants to feel their presence in the target market of your choice. You research the general features and not the features offered by a particular brand for example headphone features by Creative Technology Company.
Once you have identified the features which are preferred by your potential customers and their ranking according to your target customers, the then compile a list of product in that target market offering these features. Then draw a map showing not only the features of the product but also the competitors that offer those products with the same features. It is also advisable to place your product in this map too, for comparison purposes. After this you will have a clear picture on where competitors products are positioned in your map in the chosen target market, you can the make an informed decision on where you would like your product to appear on the map.
Position strategy development mostly depends on how the firm will position itself. The firm can take a ‘me too’ strategy and position themselves adjacent to the competitor and allow the customers to directly compare the product features or they can choose a strategy positioning themselves away from their competitors. One way of doing this is by offering a feature absent from the competitors’ products that their market research revealed that the consumers in that market rank as vital.
This refers on how the firm, Creative Technology will distribute their headphones to their consumers. They should plan this strategy so as to distribute their products (headphones) to their consumers at the right time and place. Efficient distribution is imperative if the firm is to meet their objectives. If for any reason they underestimate or overestimate the demand, the firm’s profitability will be negatively affected (Borden, Neil,2013).
Choosing the Distribution channel
There are two available channels of distribution which include direct and indirect distribution channels. Indirect pertains to the distribution where one uses the intermediaries in distribution. For instance, they can sell to the wholesaler who sell to the retailer and then to the end user. Conversely, direct distribution is where the company will be distributing directly to the end users at the right time and place required. It is mostly preferred as it gives the manufacturers direct control over their products.
Choosing a distribution strategy
Different products are distributed differently and there are three different distribution strategies which can be employed. There is; intensive distribution strategy which is employed in distributing low priced products, exclusive distribution which involves limiting distribution to a single outlet. This strategy is mostly employed in the highly priced product like vehicles and also may require an intermediary (Borden, Neil,2013)..
Selective distribution; here a small number of outlet, especially retailers, are chosen for product distribution.
If Creative Technology adopts a selective or exclusive strategy, they should choose an intermediary who is well versed with handling these or similar product and is well know by the target consumers.
Projected cost and sales
Financial tracking is a very vital part of any given business plan. In this financial tracking, one should be careful to note that the programme cost not only refers to the cost of the project but also the cost involved in administering this programme itself. Any project, for instance the Creative Technology’s project of venturing into the US market should contain the expected cost and the return or the sales expected from the same. In addition it should show clearly where the project’s resources will be obtained to make sure that it will not fail on the way. The projected sales and cost is the culmination of all the previous section of the business plan as each section will always impact on the cost and sales hence affecting the whole project finance.
For it to create accountability, it should show clearly the firm organization structure so that it may indicate who is responsible for what, who will be making decisions regarding productions, legal compliance and financial management.
This is a tool which can be used by firms to examine their effects on the net income whe sales levels increase or decrease. These changes against which the sensitivity analysis is done are the unexpected event or the contingencies I outlined in the contingency planning. This analysis will usually centre its process on the ‘what if question’. Mostly these questions are as the following; what would be the firm’s income if it has a sales forecast of 12%, 16% or 34% higher? Also what can be my firm’s net income is the firms forecast a 12%, 16% or 34% lower than the expected (Helton etaal, 2009).
Contingencies are events which are not expected or not expected in the firm business plan. So the company must develop a contingency mitigating strategies or plans in order to be prepared for these unexpected outcomes. This is because these events do not arise from time to time and so they must be ready with these plans in case they occur. These plans entail preparing for crises and for unwelcome outcomes in case they occur (British Standards Institution, 2012). This will ensure that the firm will easily recover these unexpected events. It will also ensure that these impacts are minimized.
When drawing a contingency plan, the first step is recognizing its need, and then indentifying all the possible scenarios. After this they must know what the consequences of these crises will be. Then assess the degree which might be caused by these eventualities. After they have done all this then the final step is to choose a risk strategy to employ so that they can mitigate these crisis and lastly do a crisis simulation which is testing their plan.
(British Standards Institution, 2012) The firm management should also consider the ‘what if’ question where they prepare scenarios which could arise in the business operations. Some of these questions could include: what if the competitors produce a very powerful product with much favorable features in the eyes of the consumers of the target market? What if the firm does not meet its expectations? What if their competitors employ advanced advertisement strategies than the firm? Etc
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