Module 8: Industry and Markets Flashcards
What are the 7Ps of the marketing mix?
Product Price- prepared to pay Place- access Promotion- comms Physical Evidence- confidence People Process
What is marketing defined as?
The management process responsible for identifying, anticipating and satisfying customer requirements profitability
What are the stages of the product life cycle?
Start up Growth Shakeout Maturity Decline
Understanding the life cycle stage of an industry helps entrepreneur assess commercial opportunity by?
Assess likely viability of entering into industry in question
Develop strategy for competing with existing businesses in that industry
Why may industries not display cyclical behaviours?
Technological substitution
Changing customer tastes and preferences
May be shorter term cycles as subject to continual improvements
Characteristics of the start up stage?
High unit costs High overhead costs Low sales volume Few businesses, low competition Low price sensitivity High prices Low profit
What is the start up stage?
Industry is new, products/services will be innovative with few consumers aware of their benefits
What is the growth stage?
Industry becomes more established with returning customers and growth in new customers
Characteristics of the growth stage may include?
Decreasing costs due to economies of scale
Significant increases in sales volume
Increasing levels of competition
Competition often based around differentiation
Falling prices
Growing profit
What is the shakeout stage?
Transitional stage- still sales growth but has slowed
Several businesses will have entered at the growth stage but at the shakeout stage it becomes clear some have lost the race
Characteristics of the shakeout stage for market leaders?
Strong market share, significant economies of scale
Strong brand
Falling prices
Growing profits
May seek to protect or further extend market share and economies of scale
Characteristics of shakeout stage for other businesses?
Weak market share, difficult to achieve EoS
Weaker brand
Falling prices
Falling profits
May exit market through sale of business or insolvency
What is the maturity stage?
Where industry has been long established or ‘mainstream’ and its taken for granted
Demand is satisfied and customer preferences are established, difficult to improve market share
Characteristics of the maturity stage?
Costs low due to economies of scale and low development costs
Max sales volume and so variations and discounts may be required
Customers primary focus is cost so cost cutting measures sought
High profits for market leaders
Continuing consolidation through M and As
What is decline stage?
Decline stage where product/service is experiencing falling demand.
Sales often fall as a result of substitute products or services with superior performance or lower price
Characteristics of the decline stage?
Decreasing costs
Decreasing sales volumes
Market saturation
Intense pressure on prices due to market saturation and perception of product/service as inferior
Falling profits
Continuing market exit due to falling profits and strategic refocusing on market sub
What are some barriers to entry?
Capital- set up costs Differentiation Advertising Switching costs Distribution channels- dominated Supply channels- beneficial agreements Intellectual property- own patents Taxes- adept at planning Laws and regulations- cost of compliance Retaliation- force to exit
Costs related to the laws and regulation barrier are?
Admin costs
Legal and professional fees
Fines and penalties
Potential loss of business licenses
Legal considerations for a small start-up business?
Employment Company formation Taxes Trading Advertising
What is a market segment?
Subset of a market- group of customers whose characteristics or needs differ from those of other customers
What market segments will start up businesses target?
Narrower range of segments reflecting their limited resources
Under served by existing market participants
What are the possible bases of segmentation?
Demographic Socio-economic Geographic Personality and lifestyle Circumstances of purchase Customer priorities
What are the two key considerations for any start-up business?
Likely costs of launching a business
How and when to seek to generate income
Launch costs that may arise for a small business?
Equipment Property Raw materials Company formation Employment Promotion
What is monetising?
When and how to make money, need to find a revenue model which will allow them to turn a user base into an income stream
What models can be adopted for internet businesses?
Free without ads Free with ads Free basic service with charge for premium Up-front charge In-app purchases
Advantages/disadvantages of free and without ads?
Maximise market share
Build goodwill
No money made
Advantages/disadvantages of free and with ads?
Maximise market share Generates income May impact adversely Annoying Intrude on privacy
Advantages/disadvantages of free basic service with charge for premium?
Lack of cost to basic user promotes growth in market share
Monetises enthusiasts
Limited demand for premium services if basic is adequate
Advantages/disadvantages of upfront charge?
Reliable monetisation
Limits demand
Advantages/disadvantages of in app purchases?
Promotes growth with lack of upfront
Steady income
Low pricing may make upgrades trivial
Exploitative
Entrepreneur should go through what two processes?
Screening
Go/no go decision
Screening involves?
Gathering info
Analysing info
Deciding on the approach to take
Go/no go decision involves?
Meet skills and characteristics of an entrepreneur?
Overcome barriers?
Detailed, specific info
Support of others
