Post on 30-Jun-2015
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BSBMKG501BIDENTIFY AND EVALUATE MARKETING OPPORTUNITIES PRESENTATION 5
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PRESENTATION OUTLINE
At the end of this presentation you will know about:
• Analysing opportunities
• Analysis of information
• Assessing viability
• Return on investment
• Market opportunity viability
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ANALYSING OPPORTUNITIES
• Effective marketing is based on clearly defined marketing goals
and opportunities must be analysed in terms of their impact on
these goals and also on the organisation’s capabilities
• Some possible marketing goals for the immediate future may be:
• Increased revenue or unit sales
• Improved market share
• Greater profits
• Abandoning a current market
• Adopting a new technology or product line
• These goals however are too vague, and need to be made more
specific
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ANALYSING OPPORTUNITIES
• New opportunities need to be analysed in terms of their impact on
the organisation's capabilities
• An organisation’s lack of capability/capacity does not mean that it
cannot take on the opportunity. The opportunity simply presents
an impact that must be assessed and analysed
• New market opportunities must be evaluated to determine their
impact on the current business and customer base
• It is critical that all potential impacts are evaluated, because if it is
not done, unforeseen consequences of taking the new
opportunities could damage or even destroy the business
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ANALYSING OPPORTUNITIES
• Knock out factors must be evaluated
• Some factors would knock out the entire business whilst others
may knock out only one or two of its markets
• For example, a supermarket examined the opportunity to enter
the home delivery market
• It noted that the increase in overheads to purchase and maintain
suitable vehicles and the extra staff would reduce cash flow to an
unsustainable level
• Eventually, this would knock out the business, regardless of any
other factors in its favour
• New products as well as entering a new market could have
a knock out effect
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ANALYSING OPPORTUNITIES
• Before considering new opportunities, organisations often conduct
a present value analysis
• In the present value analysis they evaluate their current business
in terms of the criteria which will be used to evaluate the new
opportunity
• This gives a base on which to judge the new opportunity
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ANALYSIS OF INFORMATION
• Marketing activities are evaluated in terms of their return on
investment (ROI)
• Assessing new market opportunities and planning campaigns in
current markets should be evaluated in terms of their expected
costs and expected revenue
• The ROI is the difference between these and can be expressed in
dollar terms or as a percentage
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ANALYSIS OF INFORMATION
• When evaluating new opportunities, the same criteria as were
used for the present value analysis must be used
• The exact criteria will depend on the organisation, its markets and
its products
• The criteria can be evaluated according to their impact and their
importance
• Impact could be measured by a range of score where
• is an extremely negative impact, zero is no impact, and +10 is an
extremely positive impact
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ASSESSING VIABILITY
• Organisations are continually faced with three kinds of marketing
opportunities. They are the opportunities to:
• Increase market share or establish market leadership within
their current markets
• Enter new markets either with new products or with their
current products
• Introduce new products, either to their current markets or to
new markets ...
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ASSESSING VIABILITY
• External factors need to be assessed as they can significantly
influence market opportunities
• They include:
• Codes of practice
• Policies and guidelines
• Legislation and regulations
• Costs
• Benefits
• Risks
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ASSESSING VIABILITY
Codes of Practice
• Codes of practice set out specific standards of conduct for an
industry in relation to its customers. Mandatory codes of practice are
enforced by the law, while involuntary codes of practice are enforced
by the industry.
Policies and Guidelines
• From a marketing perspective, an organisation’s policies and
guidelines are external factors which influence the organisation’s
marketing behaviour.
Legislation and Regulations
• All commercial activity in Australia is governed by legislation.
Regulations can be made by local, state or federal government, and
can affect marketing activity.
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ASSESSING VIABILITYCosts
• All marketing has financial and non-financial costs. Entry into a new
market has initial, or start up, costs as well as ongoing costs.
Benefits
• If an opportunity does not offer the prospect of improved profitability, then
it is not worth pursuing, except in rare circumstances where other benefits
might outweigh the lack of profit
Risks
• The major risk of any new market opportunity is that of an illusion rather
than a real opportunity
• Thorough research, careful planning and test marketing should expose this
risk, so that whenever an organisation does target a new market it knows
that it is able to supply a real market with something it needs.
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RETURN ON INVESTMENT• Marketers need to know the return on investment (ROI) from all of their
campaigns
• The ROI is the best measure of the success or failure available, and usually
expresses the return (or gain) as a percentage of the costs, although it can
also be expressed as a dollar figure
• Organisations needs to take into account various factors in order to best
calculate their ROI. These factors could include:
• Increased staff
• Staff training
• Overheads associated directly with the marketing campaign
• Capital equipment
• Regulatory and legal costs
• Environmental levies
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RETURN ON INVESTMENT
• Organisations also need to analyse the effects of direct
competition
• For example, if a competitor sold the same product as your
organisation, you would have to analyse the reduction in sales
that could be expected
• An accurately calculate ROI is one of the most important
indicators of the potential viability of a marketing campaign
• If the ROI is not acceptable the campaign should either be revised
or abandoned, because it will adversely affect the profitability of
the organisation
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MARKET OPPORTUNITY VIABILITY
Organisations find marketing opportunities by:
• Offering new products to new or existing markets
• Developing new markets for existing products
• Promoting existing products to existing markets in new ways
• Normally, several opportunities would be compared to determine
the best for the organisation
• Each opportunity would be individually assessed to determine its
viability and potential contribution to the organisation
• Any which were not viable or did not offer a satisfactory
contribution would be discarded
• The remaining opportunities would then be compared
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MARKET OPPORTUNITY VIABILITY• Viability would be assessed on financial criteria and criteria related
to the organisation’s operations and customers
• Criteria could include:
• Profitability
• Return on investment
• Knock out factors
• Contribution to the organisation would be assessed on any criteria
which were important to the organisation in terms of its policies,
procedures and legal requirements.
• An organisation would not add a new product to its range if it felt
that the quality was so poor that there would be an unacceptably
high rate of warranty claims
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MARKET OPPORTUNITY VIABILITY
• Some of the criteria used would include:
• Customer base –potential for the new market to add valuable
customers to the customer base
• Profit – calculation of the net profit expected from the new
market over time
• Sales revenue – the increase or decrease in expected sales
revenue, and the contribution this will make to the
organisation
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MARKET OPPORTUNITY VIABILITY
• Market share – the increase in market share expected if the
opportunity is to expand an existing market, or the market
share which could be expected in a new market
• Brand awareness – how the new market would contribute to
awareness of the organisation’s brand
• Staff and infrastructure – staff and infrastructure required to
manage the new market
• New market opportunities – other market opportunities the
new market would open up
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PRESENTATION SUMMARY
Now that you have completed this presentation you will know about:
• Analysing opportunities
• Analysis of information
• Assessing viability
• Return on investment
• Market opportunity viability