Business development Introduction

Business development means different things to different people. That's why it is appropiate to define the term beforehand. For some it simply means prospection, to others it can mean developing a new product or technology, while to others it can mean investing or divesting corporate assets. All have their own right to claim that their activity is business development, that's why it is necessary to dissect the term.

Definition
Business development is about bringing discontinuity into the normal operations of an organization. It's about bringing, doing or developing new things the organization didn't do before.

Levels of Business Development

So, business development has different levels. Those levels being product, commercial and corporate. In the next sections these levels will be explained.

Product level
At the product level business development means developing a new product or technology. Although the level of development can differ from firm to firm. The level of development can be divided into two categories: disruptive and incremental. Incremental developments are developments which increases the functionality of an existing platform or technology, while disruptive or discontinuous developments are

completely new things developed from scratch. E.g. of an incremental continuous development are extension to already existing products like a new odour for shampoo, a digital camera with 5MIO pixels for your mobile phone, ... In both cases the platform, shampoo and mobile phone remains the same. Discontinue developments are e.g. public key infrastructure (PKI). PKI is discontinue because it will change the way people do business and authenticate themselves in the future. The technology doesn't have a form yet, nor does it have mature value chains. PKI currently is still at the beginning of the TALC curve. It will take years before it will have a fixed recognizable form. Today PKI is mainly used in ID cards (e.g. Belgium, Malaysia), although its application is certainly not limited to it.

Commercial level
In its simpliest form business development at the commercial level means prospection pure et dr. It means hunting new customers in new segments or markets by, mostly, cold contact. The work requires a highly driven psychologically strong individual capable of handling lots of turn downs. It's certainly not suited for the faint of heart. The next level of commercial business development is channel or sales organization setup. The channel or sales organization can consist of partners, like agents, distributors, licensees, franchisees, ..., or your own national or international branches. Agent is the legal term used in Belgium law to denote somebody who is respresenting a principal in exchange for a commission on forwarded customers. In most cases these agents are called resellers, value added resellers, dealers, ...

The latter being the functional position in your channel network. And last we have commercial business development at the value chain level. At the value chain level business development is about developing the whole product offering. You'll find this type of business development in technology firms that have developed a platform that has to be integrated or combined with other technologies or platforms to form a whole product. A whole product is generally composed of multiple technologies in order to make it come alive. Those technologies are generally not developed by one firm but sourced from others to save time a.o.

Corporate level
When organizations have to decide whether to make or to buy certain organizational competencies we enter the realm of corporate business development. The focus is not at the product nor the commercial level but the business, financial and legal level. This level of business development is about mergers & acquisitions (M&A), joint ventures (JV), direct equity investment (DEI) and strategic alliances. It deals with business portfolio analysis, corporate finance, contract law, fiscal law, social law , antitrust law, change management, culture management... Organizations can have multiple motives to buy organizational competencies. Examples are: time to market market entry barriers, patent protection, legal constraints, business or proposal complementation, cash flow and profit diversification, ...

Conclusion
From the descriptions above it becomes very obvious that there is not one single meaning of business

development. Each level has its own focus and requires different competencies, skills and backgrounds.
Market segmentation Define
The purpose for segmenting a market is to allow your marketing/sales program to focus on the subset of prospects that are "most likely" to purchase your offering. If done properly this will help to insure the highest return for your marketing/sales expenditures. Depending on whether you are selling your offering to individual consumers or a business, there are definite differences in what you will consider when defining market segments.

Need

For businesses:

Strategic - your offering is in some way important to the enterprise mission, objectives and operational oversight. For example, a service that helped evaluate capital investment opportunities would fall into this domain of influence. The purchase decision for this category of offering will be made by the prospect's top level executive management. Operations - your offering affects the general operating policies and procedures. Examples might be, an employee insurance plan or a corporate wide communications system. This purchase decision will be made by the prospect's top level operations management. Functional - your offering deals with a specific function within the enterprise such as data processing, accounting, human resources, plant maintenance, engineering design, manufacturing, inventory control, etc. This is the most likely domain for a product or service, but you must recognize that the other domains may also get involved if the purchase of the product or service becomes a high profile decision. This purchase decision will be made by the prospect's functional management.

For the individual consumer:

Social Esteem or Pleasure - your offering satisfies a purely emotional need in the consumer. Examples are a mink coat or a diamond ring. There are some products that are on the boundary between this category and the Functional category such as a Rolex watch (a Timex would satisfy the functional requirement and probably keep time just as well). Functional - your offering meets a functional requirement of the consumer such as a broom, breakfast cereal or lawnmower.

Segmentation of Needs
Then you should establish what the need is and who is most likely to experience that need. Your segmentation will be determined by a match between the benefits offered by your offering and the need of the prospect. Some "need" categories for segmentation include: Reduction in expenses Prospects might be businesses that are downsizing (right sizing), businesses that have products in the mature stage of their life cycle or individuals with credit rating problems. Improved cash flow Prospects might be businesses that have traditionally low profit margins, businesses that have traditionally high inventory costs or individuals that live in expensive urban areas.

Improved productivity Prospects might be businesses that have traditionally low profit margins, businesses that have recently experienced depressed earnings or individuals with large families. Improved manufacturing quality Prospects might be businesses with complex, multi-discipline manufacturing processes. Improved service delivery Prospects might be service businesses in highly competitive markets, product businesses requiring considerable post-sale support or individuals in remote or rural areas. Improved employee working conditions/benefits Prospects might be businesses where potential employees are in short supply. Improvement in market share/competitive position Prospects might be new entrants to a competitive market. Need for education Prospects might be businesses or individuals looking for books on business planning, or seminars on Total Quality Management. Involvement with social trends Prospects might be businesses concerned with environmental protection, employee security, etc. or individuals who believe in say 'no' to drugs, anti-crime, etc. Specific - relating to product/service characteristics Prospects might be businesses or individuals interested in safety, security,

Factors/ need that segment prospects

Having determined the more general segmentation characteristics you can proceed to a more detailed analysis of the market. There are literally thousands of ways to segment a market, but the following are some of the more typical segmentation categories. For businesses: Industry by SIC code This is especially beneficial for vertical market offerings. Size - revenues, # employees, # locations In general if your offering is highly sophisticated, requires significant resources or provides greater value based on volume, then the target should be the larger enterprises. Job position/responsibility Examples of offerings might be planning software for managers or cleaning agents for maintenance managers. Climate Examples of offerings might be dehumidifiers in areas near the ocean or snow plows in northern areas. Time related factors Some services in this category are vacation related industries in summer and tax planners in the spring. Language An example of a language specific service is a Spanish TV channel. Status in the industry You might want to target businesses that are the technology leader or revenue leader or employee satisfaction leader, etc. Accessibility To minimize promotion and sales expense you may want to target urban rather than rural or local rather than national prospects. Future potential A good example is how Apple Computer supplied products to schools at all levels to condition students graduating into the marketplace. Ability to make a quick purchase decision Targeting individual purchasers versus business committees can significantly reduce marketing expense and increase the probability of a quick close.

Access (or lack of access) to competitive offerings Cable TV business's significant investment in their service delivery system has allowed a near monopoly for some time. IBM's service reputation insured minimal competition during the mainframe days. Need for customization Offerings such as police cars, busses for municipalities and specialized computer systems fall into this category. Product or service application to a business function Examples are data processing, accounting, human resources and plant maintenance. For Individual Consumers: Physical Size Offerings might be big men's clothing, golf clubs for shorter players, etc. Creation of or response to a fad Examples are hula hoops, Jurassic Park T-shirts, pet rock, physical fitness, etc. Geographic location Marketers take advantage of location by selling suntan lotion in Hawaii, fur coats in Alaska, etc. Time related factors You may be able to target vacationers in summer, impulse buyers during the holidays or commuters at 7AM. Demographics/culture/religion Ethnic products would fall into this category. Gender Product examples are scarves for women, ties for men, etc. Age Product examples are toys for children, jewelry for women, etc. Social status This could include country club memberships, philanthropic contributions, etc. Education Product and service examples are encyclopedias, scientific calculators, learning to read tools and financial counseling. Avocation This could include products for hunting, fishing, golf, art work, knitting, etc. Special Interests You could target cat lovers, science fiction readers, jazz music collectors, etc. Accessibility Because the individual is more difficult to reach you may want to segment by urban versus rural, train commuters, people who read Wall Street Journal, etc. Access (or lack of access) to competitive offerings Due to high investment capital requirements or timing of market entry you may be able to capture a significant market share in a specific geographical area. Examples might be a trash service, emergency medical support, etc. Need for specific information Based on features or content of your offering you can target a market segment. A product might be books on how to start a business or a service might be seminars on how to quit smoking. Need for customization Product/service examples are home decoration, fashion wear, personal portraits, etc. Need for quality, durability, etc. Product examples are mountain climbing gear, carpenter's tools, etc. Degree of a product/service ingredient Segmentation based on prospect preferences is common. An example is dark chocolate for some tastes, light chocolate for others.

Define potential market A set of consumers who profess some level of interest in a designed market offer. Meaning

When the list of target markets is made, a company might want to start on deciding on a good marketing mix directly. But an important step before developing the marketing mix is deciding on how to create an identity or image of the product in the mind of the customer. Every segment is different from the others, so different customers with different ideas of what they expect from the product. In the process of positioning the company: 1. identifies the differential advantages in each segment 2. decides on a different positioning concept for each of these segments. This process is described at the topic positioning, here different concepts of positioning are given. The process-data model shows the concepts resulting from the different activities before and within positioning. The model shows how the predefined concepts are the basis for the positioning statement. The analyses done of the market, competitors and abilities of the company are necessary to create a good positioning statement. When the positioning statement is created, one can start on creating the marketing mix.

Three Steps to Defining Your Niche Market

First off, its too expensive and usually a very difficult task to try and develop your own niche. Its better to identify and plan on addressing an existing niche that has good potential for using your unique product or services. For example, lets assume youve invented a fantastic sports drink and want to develop the market for your product. Here are the first three steps you must take to find your niche: 1. Assess yourself and determine what areas of life you are most interested in and how it will interface with your product.

2.

3.

Assess your potential market to determine if there is an area that could use your services. An easy way to make this determination is just talk to the people in your targeted community. Another is to join groups of people who have similar interests such as health clubs, little league boosters, soccer clubs or at car racing activities. Once you find a promising niche, then determine if you can be comfortable with the anticipated income from it.

For example, if you decide to target sporting events, consider aligning yourself with local gyms or sports teams. Try to sponsor a series of community sporting events. Of course, an ample amount of samples should be available for your products promotion. Since my area of interest is car racing, I started out by being an associate sponsor for one then finally three different venues of car racing. Later, when I started driving my own racecar, my services were prominently displayed on the car. To avoid putting all your hopes into one basket, I recommend developing several niches rather than having to depend on one. Aside from the racing connection, I focused on several departments of our citys government such as police department, city management and public works personnel. I just didnt randomly choose those departments; I assessed my interests (See step one) and that was on the list. I was a reserve cop for 6 years and had an understanding of the problems encountered by cops in the field. Picture this...You're wearing a belt full of equipment such as a gun, radio, cuffs, extra ammo, speedy loaders, mace, etc. While youre lugging all that weight around your middle, get in and out of a police car many times during the day. If youre not entering and exiting the car, youre sitting on seats that are broken down from the overuse of multiple shifts. The above doesnt even address the injuries from jumping over fences, short races to nab an uncooperative detainee plus occasional wrestling matches with uncooperative citizens. The people in our city management worked long hours at the computers plus were under many timeline stresses. Further, at night, they were required to sit for long periods of time at council or committee meetings. The chairs were not always cushy and usually were made of the hardest wood possible. In my opinion, I believe medieval inquisitors designed them.Therefore, along with my services, I was able to discuss ergonomic and stress-related considerations with those city employees. The same type of thinking would apply to your sports drink. You should not only be able to offer a fantastic drink, in addition, you should be able to offer your expert advice on how its use relates to their performance, health or comfort levels. Your expert advice will differentiate you from the other drink manufacturers who are just selling drinksPeriod!

MARKET SHARE

http://www.quickmba.com/markeshating/market-re/

market size
Definition
The number of buyers and sellers in a particular market. This is especially important for companies that wish to launch a new product or service, since small markets are

less likely to be able to support a high volume of goods. Large markets could bring in more competition.

Market size can be given in terms of the number of buyers and sellers in a particular market or in terms of the total exchange of money in the market, generally annually (per year). When given in terms of money, market size is often termed market value, but in a distinguished sense than the market value of individual products. For one and the same goods, there may be different (and generally increasing) market values at the production level, the wholesale level and the retail level. For example, the value of the global illicit drug market for the year 2003 was estimated by the United Nations to be US$13 billion at the production level, $94 billion at the wholesale level (taking seizures into account), and US$322 billion at the retail level (based on retail prices and taking seizures and other losses into account).

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TARGET MARKET

A target market is a group of customers that the business has decided to aim its marketing efforts and ultimately its merchandise.
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A well-defined target market is the first element to a marketing strategy. The

target market and the marketing mix variables of product, place(distribution), promotion and price are the four elements of a marketing mix strategy that determine the success of a product in the marketplace. Once these distinct customers have been defined, a marketing mix strategy of product, distribution, promotion and price can be built by the business to satisfy the target market.

Your target customers are those who are most likely to buy from you. Resist the temptation to be too general in the hopes of getting a larger slice of the market. That's like firing 10 bullets in random directions instead of aiming just one dead center of the mark--expensive and dangerous. Try to describe them with as much detail as you can, based on your knowledge of your product or service. Rope family and friends into visualization exercises ("Describe the typical person who'll hire me to paint the kitchen floor to look like marble...") to get different perspectives-the more, the better. Here are some questions to get you started:

Are your target customers male or female? How old are they? Where do they live? Is geography a limiting factor for any reason? What do they do for a living? How much money do they make? This is most significant if you're selling relatively expensive or luxury items. Most people can afford a carob bar. You can't say the same of custom murals.

What other aspects of their lives matter? If you're launching a roof-tiling service, your target customers probably own their homes.

LINK OF TARGET MARKET SELECTION

http://www.netmba.com/marketing/market/target/