Market

Identification
and Analysis

1
 Marketing
Process by which companies identify, create,
provide, capture, and sustain value for their
customers

Marketing is an umbrella term given to those activities that companies use to identify
consumers and convert them into buyers for the purposes of achieving a profit. It lays
the foundation for how a company reaches and serves its target customers despite the
business scale. Marketing is essentially a process that can identify, create, provide,
capture, and sustain value for the customers.

2
 Traditional
marketing
• Focuses on managing and growing
existing programs and brands
• Uses greater resources and large
numbers of marketing professionals
• Focuses on satisfying the customer
and building trust
• Provides innovative products and
services that disrupt or appeal to a
specific market

Entrepreneurial
marketing

Traditional marketing
• Example: Coca-Cola, Disney, and Apple
• Less flexible, agile, and creative than new companies

Entrepreneurial marketing
• Example: start-ups and younger firms
• A set of unconventional practices that creates an edge in competitive markets

3
 Marketing mix
Basic set of strategies and approaches that
marketers use to identify and reach their
target market

Target market: specific group of consumers for which a company seeks to provide a good
or service

4
 • Product: define value of good or service
• Promotion: communicate benefits to
customers
• Price: maximize competitiveness and
profits
• Place: reach target market at effective
cost
• People: link company to customers
• Physical evidence: convey value through
atmospherics
• Process: build trust through efficient
procedure

7P’s of the marketing mix

• Conceptually the same for all businesses but varies on how a company addresses
each “P” depending on the company’s needs and goals

5
 • Process of communicating value to
Product customers to encourage the purchase of a
good or service
• Must have a goal, budget, strategy, and an
outcome to measure
• Some typical forms: advertising, social
media, public relations, direct mail, sales
promotions, personal selling

• Refers to a good or service that creates value

by fulfilling a customer need or desire
• May be tangible (goods) and/ or intangible
(services)
• Defining the value of the products is
important in identifying the competitive
advantage within a marketplace Promotion

Product
• Tangible: can be touched, smelled, heard, and seen (example: pair of tennis shoes, bottle of
shampoo)
• Intangible products: usually involves paying an expert to do something for you (example: car
repair or house cleaning)
• Goods + services bundle to create extra customer value
• “If you don’t know what benefit your product provides or what need it fulfills, neither will
your customers”

Promotion
• A right mix of marketing communications is needed to reach customers.
• Varies depending on the start-up’s budget, goals, and strategies
• Some typical forms of promotion
1. Advertising: form of mass communication that allows companies to reach a broad
audience (example: TV, radio, newspaper, Internet, magazines)
2. Social media: connects with consumers, especially younger demographics
3. Public relations: efforts and tools used to connect and develop goodwill with the
other people such as customers, investors, employees, business partners,
government entities, and the community
• Uses newsletters, press conferences, community service, events,
sponsorships, press releases, articles, and stories to create and highlight a
positive image about the company and get its name out there
4. Direct mail: connects to consumers via email or through printed, mailed pieces

6
 • Used to keep in touch with customers, especially when creating long-term
relationships
1. Sales promotions: incentives that attract attention and push the customer to take
action (example: discounts, samples, rewards programs, gifts, premiums)
2. Personal selling: uses face-to-face interactions to communicate and influence a
customer to make a purchase
• Especially suited for luxury goods

6
 • Value that must be exchanged for a customer to
receive a product or service.
• Usually monetary and has a direct impact on sales
• Enables company to be competitive while
maximizing a product’s profit potential
Price • Consideration on pricing when:
• Adding a new product or service
• Demand shifts
• Entering a new market
• Competitors are making changes
• Costs are changing
• Adjusting products/services or strategies

7
 Methods to effectively price products:
• Cost-led pricing
• Premium pricing or perceived value pricing
• Penetration pricing or pricing below competitors
Price •
•
Customer-led pricing
Loss leader pricing
• Introductory offers
• Skimming
• Bundling
• Odd numbers strategy

1. Cost-led pricing: taking the cost of making the product and creating a profit margin
• Profit margin: how much profit a business stands to make after costs have been
deducted
2. Premium pricing/ perceived value pricing: considers the competition pricing and determine
whether to go above, below, or match the existing prices
3. Penetration pricing/ pricing below competitors: can give a competitive advantage
• May lead to “price wars” wherein competitors keep dropping prices in an attempt
to beat each other
4. Customer-led pricing: done by asking what the consumer is willing to pay and charge that
5. Loss leader pricing: uses a below-standard price to attract business in the hope that
customers will stay and shop for other, more profitable products
6. Introductory offers: use lower initial prices to attract new customers and build a customer
base before prices return to “normal”
7. Skimming: pricing strategy that makes use of the newness of a product to justify the highest
price possible but as time passes, the price is lowered to accommodate for more price-
sensitive customers
8. Bundling: discount price is set for a bundle of products to encourage customers to buy in
bulk
9. Odd numbers strategy: psychological pricing strategy to make a product’s price point more
attractive to consumers
• Example: buying a 149.99 php shirt than a 150.00php shirt since it gives a sense of
being closer to 149 than 150

8
 • Channels or locations where customers can purchase the
products
• Goal: choose channels that reaches the majority of the
target market at the most efficient cost
• Direct channels: allow directly selling to consumers
• Indirect channels: require intermediaries to sell the
products to the end customer or other physical or online
retail outlets

Place

• Sometimes called distribution

• Choosing the right distribution channels is one way to create a competitive advantage
and generate more success for your business
• Certain channels have specific capabilities such as reaching more customers,
providing promotions, and providing credit
• Direct channels: require no intermediaries (example: physical or online storefronts)
• Indirect channels require intermediaries (example: distributors or sales agents)
• Often have more than one intermediary
• The longer the distribution channels, the longer it takes for a product to reach the
end consumer, and the less control you have over the product and the price.
• Choose the best channels that fits the product and pricing requirements

9
 Process

Face of the company that

Where a service is
links the company and
provided that influences
customer directly
the company’s image

All of the activities that take place

between the service provider and the
customer, from beginning to end

People Physical
evidence

People
• Company’s human resources
• Employees can make or break the brand

Physical evidence
• It can influence the company’s image and convey a lot of information about the
quality of a product, service, company, or brand
• Tangible cues send an immediate message to customers about quality and
professionalism (example: decor, smell, music, temperature, colors)

Process
• Chain of procedures or activities required to provide a service to the customer.

10
 Market research
• Collection and analysis of data related to a business’s
target market through a detailed description of potential
customers
• Purpose: Gain an understanding of customer needs and
wants and business competitors

• Essential during the planning phases of any start-up

• Includes collected information and data such as:
• Demographics
• Size of your potential market
• Customer lifestyles and buying behavior
• Specifically who the customer is
• Determine demand for your product or service
• Clearer picture of what the target market is and what it wants= more effective design
for the marketing mix to engage that demographic
• Helps understand possible competitors and how they serve the target market= easier
to determine and differentiate offerings

11
Primary
market Accessible and less expensive
method that uses existing data
research or published research that has
been collected by another entity

Gathering firsthand data to

answer questions specific to
the business and products Secondary
market
research

Primary
• Collecting new data for the purpose of answering a specific question or set of
questions
• Best way to get answers specific to a business and products, especially if when
penetrating niche markets that have not been studied
• Provides the business owner with the opportunity to hear customer feedback and act
accordingly
• Can be time consuming and possibly expensive

Secondary
• Uses existing data that has been collected by another entity
• Answers more general questions (example: population information, average
purchases, trends)
• Primary research fills the gaps of unanswered specific questions from secondary
research

12
Primary • Business directories
research •
•
Industry reports
Newspapers
methods •
•
Business magazines
Trade publications
• Market analysis

• Surveys
• In-depth interviews
• Competitor analysis
• Questionnaires
• Focus groups Secondary
• Tracking customer response to
advertising and promotion research
• Website and social media metrics
methods

13
Market opportunity
Gaps or unmet needs within a marketplace
that might be fulfilled by an existing or new
product

14
 Market analysis
Comprehensive review of the overall
interest in the business by its target market
to determine the viability and profit potential

• Done to better understand a market’s opportunities

• Includes a thorough analysis of the industry, customer demographics and buying
patterns, competitors, and the general business and economic climate, including a
review of regulations and barriers to entry.
• Helps the business owner identify SWOTS (strengths, weaknesses, opportunities, and
threats) and determine whether the business or industry provides an attractive
opportunity

15
 • Customer needs: What needs does the
business seek to satisfy?
• Company skills: What special competence
does your company have to meet customer
needs?
• Competition: Who competes with your
The Five C’s company in meeting those needs?
• Collaborators: Who should your company
enlist to assist and how do you motivate
them?
• Context: Are there cultural, technical, and/or
legal factors that limit your firm’s options?

• Customer Needs
• To have an effective marketing:
• Know specific market need that a product or service satisfies
• Conduct in-depth analysis of the customer usage patterns and buying
decisions
• Understand the customers’ decision making process (example:
purchasing manner, criteria for alternatives)
• Company Skills
• Honest assessment of a business’ strengths and weaknesses such as financial
footing, production capability, and other assets
• Competition
• Includes current and future competitors in the market
• Assessment of the strengths and weaknesses of the competitors
• Address the motivations and strategies of the competitors
• Collaborators
• Includes upstream suppliers and downstream distributors
• Context (AKA climate)
• Understand the environment in which a business will operate
• Includes macroeconomic factors such as political, regulatory, economic,
social, cultural and technological environment

16
 • Current situation of the industry such as:
• Number and trend of organizations already
offering the same product or service
• Compare and contrast available similar or

Research substitute products and services

• Legal issues, lawsuits, recalls, etc.
• Strengths and weaknesses of the competitor
on… • Develop a plan to confront competitors
• General market conditions and demand for the
products and services within the chosen market
area and industry

17
• Acronyms that represent the different subsets of
a market
• Used in assessing an investment opportunity
• Focuses on getting the most accurate numbers
rather than the biggest possible numbers

TAM
SAM
SOM

18
TAM Total available market
How big is the largest possible market?

SAM
Serviceable available market
What portion of the market fits you?

SOM Serviceable obtainable market

What portion of the market can you
reach?

19
 SAM
Process
Serviceable Available Market

Total perceived market

demand for a product or Short- term target that can
service capture a portion of the
SAM

Portion of the market that a business

can serve based on the products,
services, and location
TAM
Total Available Market SOM
Serviceable Obtainable Market

TAM
• Potential at scale
• Enables to assess the upside potential

SAM
• Target market share
• Segment of the TAM targeted by the products and services which is within the geographical
reach
• Helps de-risking the investment
• Acts as a good sanity check to assess the likelihood of achieving the market share implied by
the SOM
• Serves as a proxy for the short term upside potential of your business

SOM
• Helps de-risking the investment
• Failure on a fraction of the local market chances = failure on a large part of the global market
• Factors to consider:
• Product
• Marketing plan and the identified distribution channels
• Reasonable fraction of the SAM
• Success in delivery= capable and credible business
• Outcome may be used as basis to increase the market share and reach a more important
penetration of the SAM

20
 1. Business Start-up & Resource Guide by
The North Carolina Small Business and
Technology Development Center
References 2. Entrepreneurship by Laverty and Littel
3. The Start-up Handbook by the University
of Illinois

21