Accounting homework help. To Do List:
A description of the product or services you’ll be offering
The product description statement should be complete enough to give the reader a clear idea of your intentions. You may want to emphasize any unique features or variations from concepts that can typically be found in the industry.
Be specific in showing how you will give your product has a competitive edge. For example, your product will be better because you will supply a full line; competitor A doesn’t have a full line. You’re going to provide service after the sale; competitor B doesn’t support anything he sells. Your merchandise will be of higher quality. You’ll give a money-back guarantee. Competitor C has the reputation for selling the best French fries in town; you’re going to sell the best Thousand Island dressing.
Stress Your Products Uniqueness
This information sets your product or service apart from your competition.
What would your uniqueness be? For a food product, it could be a proprietary recipe (like Kentucky Fried Chicken’s secret recipe) or a special way the food is served (like Boston Market’s hand-carved turkey). OXO Good Grips, a maker of kitchen gadgets, set itself apart by using ergonomically designed grips and handles on all its products.
- Focus on your success factors. In other words, think about how you are going to turn a profit. Why will your products or services be successful in the marketplace? There are any number of reasons you can use – it’s a well-organized business, we use state-of-the-art equipment, our location is exceptional, the market is ready for our product, it’s a great product at a fair price, etc.
- If you are selling a product, you may want to include full specifications.
- Be specific in describing your competitive edge. Don’t just say something like “I intend to provide better service.” Explain how you will do so, and why that sets you apart from your competitors. Be sure to answer the following:
- What you are selling?
- How will your product/service benefit the customer?
- What is different about the product/service your business is offering
Determine your products Position.
Position is your identity in the marketplace: how you want the market and your competitors to perceive your product or service. Your positioning is based on your customers and competition. Federal Express positioned itself as a reliable and dependable overnight delivery service for businesses. MTV and VH1 play many of the same music videos, but MTV is positioned as the choice for young, hip viewers, while VH1 is considered the station for more mature viewers.
If you run a dry-cleaning business you can be the fastest, the most dependable, the cheapest, or the business providing the best service. A mail-order gift business can emphasize price, convenience, a flexible returns policy, unique products, or some combination of these. A hairdresser may be positioned as hip, traditional, pampering, inexpensive, or convenient. You may think that positioning is based on image. Develop your position by answering the following questions with brief, direct statements:
- What is unique about your product or service?
- What customer needs does your product fulfill?
- How do you want people to view your products or services?
- How do your competitors position themselves?
Research your competitors by shopping, checking out websites, or calling them to see what they offer and what they charge for it. Look at areas such as distribution, pricing, value, service, and timeliness. A dry cleaner would look at reputation, pricing, location, services such as delivery, hours of operation, quality of their cleaning, whether or not they are computerized and if they provide services such as tailoring and mending.
Determine your product’s Pricing Strategy.
Discuss what you will charge for your product or service and how you derived the price. For example, a luxury gift importing business sets prices not only to cover costs and make a profit but to position products as luxury items. A printing shop with a good location charges slightly more than its competition because it has a convenient location and it has determined that the market will bear the higher price.
Once you have briefly explained your pricing and rationale, discuss where this pricing strategy places you in the spectrum of the other providers of this product or service. Next, explain how your price will: get the product or service accepted, maintain and hopefully increase your market share in the face of competition, and produce profits.
- Be realistic – don’t automatically say you plan to offer a superior product than a competitor at, say, half the price. Price increases in the future can be difficult to implement so you want to be accurate up front.
- Remember to consider your costs (just like in choosing a location). Costs tend to be underestimated.
- If you charge more than competitive existing products, you will need to justify the higher price on the basis of newness, quality, warranty, and/or service. You may also discuss how your higher price point may lead to reduced sales, but overall higher profit.
- If a price will be lower than that of an existing, competing, product or service, explain how you will maintain profitability. This may happen through more efficient manufacturing and distribution, lower labor costs, lower overhead, or lower material costs.
Customers
It is important to be thorough and specific when creating a description of the target customer for your product or service. This description defines the characteristics of the people you want to sell to and should indicate, among other things, whether your customers are cost or quality conscious, under what circumstances they buy, and what types of concerns they have.
To create a customer definition, describe your target customers in terms of common identifiable characteristics. For example, a catering company could target professional couples in the metro Chicago area who need to hire caterers for their kids’ parties. A windshield wiper blade business can sell directly to automobile manufacturers, or to aftermarket parts distributors.
A common mistake is to describe customers in general terms, such as all “people who want to buy a bicycle,” or “anyone who needs a resume created.” To avoid this stumbling block, make a list of the characteristics of the people or companies that will buy your product or service. To develop an effective plan based on your customers’ needs and nature, you should be able to answer these questions:
- Who are they?
- Where are they?
- What do they need?
- How do they make their buying decisions?
- Where do they buy?
Knowing the answers to these questions is critical no matter who your potential customers may be. You may choose to have several ‘types’ of customers, or market segments. You should describe each individually as they relate to the questions above. For example, one group may be cost conscious, are influenced by a specific product benefit, buy online, need after-sale service, and so on. Whereas, a different group of people, whom you will also target may have a different profile. The best marketing always focuses on customer needs. Why do they need your product or service? What is going to make them buy?
Market Size/Trends
Understanding, rather than simply assuming the demographics and market size of your industry is important. Quick research of sites such as the US Census and SBA.gov, will give plenty of information regarding the total market size and demographics for your industry. Looking at the total number of households, businesses, or schools (all from the census), geography, preferences, lifestyle, sex, age, occupation, and other characteristics to describe the companies or consumers likely to buy your product or service.
When discussing any market size, be sure to talk about factors affecting market growth – industry trends, socioeconomic trends, government policy, population shifts, and the like. Show how these trends will have a positive or negative impact on your specific business.
EXAMPLE:
H-O Designs, who targets home-based workers in the Philadelphia area, looked at the size of the home-based office market (people who owned small businesses and ran them from their homes, or who telecommute through their employer). Here’s how it described its market size and trends in its business plan:
There are currently 40 million people who work full or part-time or after hours from their homes according to ABC Source. Fewer corporate opportunities, advances in communications technology, the desire to spend more time with one’s family, are some of the factors that may influence this number. Further, this is forecasted to increase to 60 million by the year 2020.
In the Philadelphia area, 145,000 home-based businesses were started last year alone, according to QS Business Journal. In addition, several large employers, such as XYZ Pharmaceuticals and ZZZ Computers, instituted telecommuting programs, giving 20,000 employees the chance to work from home.
Competition
The competition section indicates where your products or services fit in the competitive environment. Presenting your product in the landscape of its competitors proves that you understand your industry and may be prepared to cope with some of the barriers to your company’s success.
Present a short discussion of your primary competitors. Your assessment should include why these companies do or do not meet their customers’ needs. You should then explain why you think you can capture a share of their business. Strengths and weaknesses can fall into a number of different categories. Sales, quality, distribution, price, production capabilities, image, and breadth of products/services are all ways companies differentiate themselves.
Ask yourself: Who is the price leader? Who is the quality leader? Who has the largest market share? Why have certain companies recently entered or withdrawn from the market? These factors are critical to a successful competitive analysis.
- Never say, “We have no competition.” Even if your product or service is truly innovative, you need to look at what else your customers could buy instead. Remember, the first personal computer competed with calculators and typewriters; the first calculator competed with slide rules.
- Your competitors won’t always be immediately evident, since they don’t necessarily provide the exact same product or service as you do. If you sell gourmet salsas, you will be competing with other salsa makers, and you also might compete with makers of gourmet ketchup, mustards, and other condiments. List these as “indirect competitors.”
- Many business plans fail to give a realistic view of their true competitive universe by defining the competitive field too narrowly. Think as broadly as possible when devising a list of competitors by characterizing competitors as any business customers may patronize for similar products or services. A local florist obviously competes with other flower shops, but must also contend with delivery services such as 800-FLOWERS and supermarkets that carry flowers and plants.
- To determine your competitors’ strengths and weaknesses, evaluate why customers buy from them. Is it price? Value? Service? Convenience? Reputation? Very often, it’s “perceived” strengths rather than “actual” strengths that you will be evaluating.
Your strategy may be only a few sentences in length, or it can be a couple of paragraphs. Important elements for a sales and marketing strategy include who you are targeting with your initial push and what customers you have designated for follow-up phases. Other elements of a sales and marketing strategy are:
- How will you find your prospects, and once you find them, how you plan to educate them about your product. For instance, if you are using direct mail, you might want to talk about what kinds of mailing lists you plan to purchase.
- What features of your product or service you emphasize to get customers to notice your product.
- Any sort of innovative marketing or sales techniques you will employ. For example, you may sell your product by mail order when your competitors use only traditional retail channels. Or you may be the first in your industry to offer leasing.
- Will you focus your efforts locally, regionally, nationally or internationally? Do you plan to extend your efforts beyond your initial region? Why?
Method of Sales
Describe available distribution channels and how you plan to use them.
Many entrepreneurs fail to give adequate thought to method of sales. How you get the products to the end user – your method of distribution and sales – is one of the most important elements of your plan. In this section you demonstrate the ability and knowledge to get your products into the hands of your target customers.
You must also explain your plan for reaching your distribution channels. Will you be selling directly to your customers? Will you be using sales representatives, distributors, or brokers? Do you plan to have a direct sales force in place? Will you ship your product? If so, will you use a “ground service” like UPS? A trucking company? Don’t make the mistake of confusing sales with marketing. Sales focuses on how you get your products into the hands of your customers. Marketing is concerned with how you educate your potential customers about your product.
Advertising and Promotion
Your advertising and promotion campaign is how you communicate information about your product or service. This section should include a description of advertising mediums you plan to use newspapers, magazines, radio & TV, Yellow Pages, etc. – as well as your public relations program, sales/promotional materials (such as brochures and product sheets), package design, trade show efforts, and the like. Also, will you have a mascot/spokesperson? Logo or design? If so, explain.
Each business must select at least two advertising mediums. If you have someone in your group that is particularly creative, go ahead and create an advertisement or two to include in your paper (hint: this can only help your grade J) Include an appendix for any that you create.
Effective Advertising and Promotions Techniques
The first step in developing an effective advertising and promotional strategy is to understand the difference between the two concepts. Most people think that advertising and promotions are one in the same; there is, however, a distinction between the two. Promotions can entail coupons, samples, contests, or even community involvement. This could mean sponsoring a Boy or Girl Scout troop, allowing non-profit organizations to use your facility, such as, letting the high school drama club use your parking lot for a car wash fund raiser, sending an underprivileged child to day camp, an event for the elderly, volunteering, tutoring or internships, donating your product, or involvement in any type of positive community activity that will bring attention to your business.
While advertising is a way of keeping your business is the public’s eye, promotions are a way of garnering commitment of consumers to try or continue to purchase your product. This commitment may be one of the most effective techniques for building customer loyalty. Helpful hint: people tend to be more supportive of businesses and organizations that give something to the community rather than those that just take from the community, never giving anything in return.
The Key to a Successful Advertising and Promotional Plan
Advertising plays an important role in successful business ventures. It entails identifying and selecting the media that provide the greatest amount of exposure for your business and developing effective, yet appropriate materials for each medium. It is more than running an ad in a local newspaper, on a radio or television station or just simply hanging a sign outside your business and waiting for the customers to purchase your product or service. It requires that you know your product or service –that is, the selling points — and that you develop literature that can arouse the customers’ consciousness levels to the point that they are curious enough to investigate it, and then raises their need or desire levels to the point that they are willing to purchase it.
Advertising keeps your product or service in the public’s eye by creating a sense of awareness. Yet this awareness alone will not ensure the success of your business. Thus, advertising not only has to be effective, it also has to be a continuous process. Once you are satisfied with the advertising materials, select the media that will best market your business. Since advertising can be costly, try to use a medium that is cost effective, yet will effectively market your business. If this is not possible, then be prepared to spend what is necessary to promote your business effectively — the outcome will be worth the investment.
It may be a good idea to mix the different media formats that you use. For example, design a brochure that describes your product or service, emphasizing its selling points (special features). Place copies of the brochure in strategic locations of your business to use as customer handouts. Or, devise a customer survey. The survey should focus on whether customers like the product or service, the quality of the product/service, ways to improve it, the quality of service provided by staff—their friendliness and courtesy. Place the survey with a self-addressed, stamped envelope near the checkout counter and ask customers to mail in or return the survey when they come back. Review their comments with staff and implement those suggestions that are practical, cost efficient and can improve the overall quality of service your business provides.
Other media formats to use are:
- Newspaper, radio or television ads (newspaper advertising is the least expensive and television advertising is the most expensive of these formats).
- Business cards.
- Direct (face-to-face, social media) marketing.
- Telemarketing (this format can be expensive, also).
- Yellow Pages advertising.
- Sampling – mailing or distributing free samples of your product or a flyer about your service to the public.
- Advertising in community-based magazines or newspapers.
Whatever media format you use, be willing to invest the money needed to develop an effective ad campaign.
Other ways of promoting your business:
- Employee tee shirts, hats, aprons or jackets with the name of your business and logo.
- Ballpoint pens with the name, telephone number and logo of your business.
- Balloons with the name, telephone number and logo of your business
- Free samples
- A door prize for the 100th or 1,000th customer to enter your business.
