Excercise 2

Market plan

To be presented 30.01

The business plan

According to ”Fra idé til ny virksomhet” the business plan should consist of: – Summary– The business idea– The management– The market plan– The business model and organization– The plan to carry it through– Financing and profitability– Risks

The market plan

• The market, competition, and context

• Choice of target market

• Market strategy– Product– Price– Place– Promotion

The market plan

• The market, competition and context– Market size

• E.g. # of customers, produced units, and total turnover

– Market growth (~the coming 5 years) • Real numbers, trends

– The competitive situation• Industry• What other companies are there that make the same or

similar products that you do. • How many competitors are there, what are their size, market

share, strategies, …

– Context (e.g. regulations)

Industry cycle

• Emergence – artificial organ, nanotechnology, genomics

• Growth – medicine technology, software, electronics

• Maturity - electrical appliances, automobiles, cinemas

• Decline - Steel, bowling alleys

The market plan

• Market and competition– Sources:

• Business organizations / international organizations

• Special magazines• Statistiske sentralbyrå• EU• Companies yearly reports / homepages• www.google.com

The market plan

• Choice of target market– Customer segmentation

• What characterizes your customers, e.g. ”early adopters”, geographical factors, demographical factors

– Positioning relative competitors

• Your market share

Adoption curves

Innovators

Early adopters

Early majority

Late majority

Laggards

Often a difficult gap to cross

Crossing the chasm

”There is nothing more difficult to carry out, nor more doubtful of success, nor more dangerous to handle then to initiate a new order of things. For the reformer has enemies in all who profit by the old order, and only luke warm defenders in all those who profit by the new order. This luke warmness arises partly from the incredulity of mankind, who do not truly believe in anything new until they are actual experience of it.”

Machiavelli, The Prince, 1513.

The market plan

• Market strategy– Product

• Specify a little bit more; e.g. 1 for all segments or many products

– Price• Price strategy (e.g. cost-, value-, market based; penetrating

vs skimming; pusher (first for free – once addicted they need to pay)

– Place (distribution channels)• The way to the customer (by yourselves or via retailers?)

– Promotion (how to get to the customer)

Ex. Price

Price

High

Low

Perceived qualityLow High

Contradiction Premium / Upscale

Avoid this quadrant

Those who want the best and are willing to pay for it

Those who value a low price more than quality

Those looking for ”best value for the buck”

Bargain Value