1

BSBMKG501BIDENTIFY AND EVALUATE MARKETING OPPORTUNITIES PRESENTATION 5

2

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

3

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

4

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

5

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

6

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

7

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

8

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

9

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 ...

10

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

11

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.

12

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.

13

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

14

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

15

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

16

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

17

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

18

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

19

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