New Venture Creations L2 Topic 2 Summary Slide Show Future Managers Mrs Strydom

New Venture Creation: NCV Level 2 Downloaded from hlayiso.com New Venture Creation: Level 2 1

Module 2 Investigate markets & needs for a new venture Downloaded from hlayiso.com New Venture Creation: Level 2 2

In Module 2 we shall be covering: how to identify potential customers for a new venture why and how to conduct customer research into the need for the proposed products or services of the new venture how to use statistical information to determine the type of product or service valued by different communities Downloaded from hlayiso.com New Venture Creation: Level 2 3

Marketing is an on-going process Identify the target market Determine needs & wants Develop product range Promote product range Sell product range Distribute product range Provide after-sales service Downloaded from hlayiso.com New Venture Creation: Level 2 4

Identifying the target market for a new venture e.g. targeted by age & gender teenage females? businessmen? pensioners? e.g. targeted by profession sports professionals ? teachers? doctors? Downloaded from hlayiso.com New Venture Creation: Level 2 5

Criteria used to identify the target market Age Income Different things interest The lower the income the us at different stages of more important the price our lives of the product Gender Target market Education Certain product ranges People with a lower level might appeal more to of education are less likely females e.g. beauty salon to buy imported foods Location ‘Take away’ restaurants will do very well in areas where lots of students live Downloaded from hlayiso.com New Venture Creation: Level 2 6

Determining customer needs leads to business ideas Customer need Product Downloaded from hlayiso.com New Venture Creation: Level 2 7

and more ideas …… Customer need Service Downloaded from hlayiso.com New Venture Creation: Level 2 8

and even more ideas …… Customer need Products & services Downloaded from hlayiso.com New Venture Creation: Level 2 9

‘Wants’ are needs expressed in a specific product choice Customer need Product choice Downloaded from hlayiso.com New Venture Creation: Level 2 10

Why do customers choose a specific product or service? Taste Quality e.g. “it always tastes e.g. “it lasts a long time” the same” Status The Reliability e.g. “it is a really ‘cool’ Brand e.g. “their deliveries are product to wear” always on time” Cost e.g. “they are the cheapest place in town!” Downloaded from hlayiso.com New Venture Creation: Level 2 11

How important to a ‘Brand’ is its logo? Downloaded from hlayiso.com New Venture Creation: Level 2 12

Top ten coolest brands Levi's Coca-Cola Adidas Nokia BMW Billabong DStv Vodacom Nike iPod 0 5 10 15 20 25 30 Downloaded from hlayiso.com New Venture Creation: Level 2 13

Factors influencing the buying patterns of customers Product Price Promotion Place Downloaded from hlayiso.com New Venture Creation: Level 2 14

Products are the ‘why’ of the marketing effort Why do customers want to Features buy a specific product? • 24” ultra-wide screen • maximum resolution • quick response time • over 200 cd/m2 brightness • DVI connectivity Benefits • easy-to-read documents • no waiting • looks great on workstation • can be connected anywhere • makes games more realistic Downloaded from hlayiso.com New Venture Creation: Level 2 15

Pricing has a huge effect on customer buying patterns Do customers buy Do customers seek quality mainly and worry on price? less about price? OR Downloaded from hlayiso.com New Venture Creation: Level 2 16

Place is the ‘where’ of the marketing effort The success of a business often depends on where it is located – convenience is a very important consideration for many customers! For example; if you’re a gym member wouldn’t you like to get a healthy drink as soon as possible after your workout? Downloaded from hlayiso.com New Venture Creation: Level 2 17

The marketing checklist Does your marketing plan: yes ( ✓ ) no ( x ) • focus on the benefits you provide? • have a clear message? • focus on a specific group? • feature your unique selling proposition (USP) – the one thing that sets your product apart from others? • have 1 strong message? • offer methods for customers to respond? • have a specific objective that can be measured? Downloaded from hlayiso.com New Venture Creation: Level 2 18

Values in marketing (* option 1) Often sales people are viewed in a ‘bad light’ because of the actions of a few individuals who make promises they can’t keep or sell a product to a customer who really can’t afford to pay for it! Downloaded from hlayiso.com New Venture Creation: Level 2 19

Values in marketing (** option 2) Often sales people are viewed in a ‘bad light’ because of the actions of a few individuals who make promises they can’t keep or sell a product to a customer who really can’t afford to pay for it! Downloaded from hlayiso.com New Venture Creation: Level 2 20

Ubuntu values to guide us in marketing Always speak and act truthfully Treat others as you want them to treat you Recognise and respect diverse religious and spiritual cultures Act comprehensively to ensure fair compensation and humane working conditions Ensure that economic activities support and promote human development Downloaded from hlayiso.com New Venture Creation: Level 2 21

Factors that motivate or prevent people from buying a product Culture e.g. the impact of a common language and history Technological Forces To buy e.g. iPods that allow us to or play music when we want not to buy? where we want Natural environment e.g. is the food we buy natural “organic” produce or genetically modified? Downloaded from hlayiso.com New Venture Creation: Level 2 22

Surveying opinions for the new venture’s products Question : why should a new business do market research? Answer : because it will help the entrepreneur to ….. understand the various business environments anticipate any changes within these environments forecast the impact and direction of these changes make changes to the current business plan to fit in with these changes in the environment and, it will also help the entrepreneur to investigate … whether customers will buy a new product why existing products are not selling better methods of marketing existing products changes in customer needs whether there is a risk of new competitors coming into the same market Downloaded from hlayiso.com New Venture Creation: Level 2 23

Market research involves the following: identifying WHAT the marketing problem or opportunity is identifying WHERE to find the information needed understanding HOW to collect the information and interpret it making a decision based on the information e.g. • WHEN to introduce new products • WHERE to open or expand the business Downloaded from hlayiso.com New Venture Creation: Level 2 24

Planning a research project Identify the problem formulate an hypothesis ? ? decide on information choose information sources collect data with questionnaires analyse & interpret data report findings Downloaded from hlayiso.com New Venture Creation: Level 2 25

Collecting and analysing data Surveys Primary Data gathered specifically for the research being conducted Observation Experimentation Downloaded from hlayiso.com New Venture Creation: Level 2 26

Collecting and analysing data government publications/stats Secondary Data already gathered in previous libraries/resource centres research projects by other organisations university research papers media statistics e.g. AMPS (All Media & Products Survey) professional/business associations e.g. Chamber of Commerce Internet e.g. Google Downloaded from hlayiso.com New Venture Creation: Level 2 27

Format of a questionnaire Customer Satisfaction Survey Section A: demographics 1.Age 2. Income level 3. Cell phone number Section B: survey questions 1. Queuing time 2. Staff friendliness 3. Staff knowledge 4. Problems resolved Downloaded from hlayiso.com New Venture Creation: Level 2 28

Evaluating and analysing data Step # 1: edit the data • have all questions been answered? • can the answers be read? • are the answers accurate? • do the answers make sense? • how consistent are the answers? Step # 2: tabulate the data • count the number of answers in each category • enter the data into the system Downloaded from hlayiso.com New Venture Creation: Level 2 29

Interpreting and discussing data Interpreting Interpreting closed questions open-ended questions This is relatively easy because very Because these questions allow for specific answers have been requested opinions the researcher has to group e.g. “do you prefer ‘health food’ to similar answers together to develop ‘junk food’?” themes such as people believing that If 70% answer ‘yes’, it is very clear ‘junk food is bad for you’. that the majority of students prefer healthy foods X ✓ Downloaded from hlayiso.com New Venture Creation: Level 2 30

The research report 1 Title page Title & main theme of report 2 Table of contents Listing main sections & page nos. 3 Tables & figures 4 Proposal Research objectives and plan 5 Introduction Subject, purpose & research plan 6 Methodology Interview techniques, questions asked 7 Interpretation & findings 8 Conclusion 9 Recommendations What action to take based on findings Downloaded from hlayiso.com New Venture Creation: Level 2 31

Using statistical information to determine products/services Question # 1: why does a business need statistical information to determine which products and services are most valued? Answer : because it will help the entrepreneur to ….. understand the different needs & wants of different communities forecast sales more accurately based on statistical trends make changes to the proposed product/service range offered where needed focus more marketing efforts on the products shown to be in demand Question # 2: why should statistical information be presented in the form of graphs, charts and tables? Answer: because it will make the information clearer to ensure it is easy to understand and thus correctly interpreted more interesting to ensure that it is properly utilised a valuable tool to convince important stakeholders to support decisions Downloaded from hlayiso.com New Venture Creation: Level 2 32

Using Tables Example: Provincial demographics Province Size km² Population Pop. density Eastern Cape 169 600 6 436 790 37.95 Free State 129 480 2 726 840 21.06 Gauteng 18 810 6 869 100 365.18 Kwa-Zulu Natal 92 182 8 505 340 92.27 Limpopo 123 280 2 921 560 23.70 Mpumalanga 78 370 2 921 560 37.28 Northern Cape 361 800 737 310 2.04 North West 116 190 3 252 990 28.00 Western Cape 129 370 3 633 080 28.08 Totals 1 219 080 38 004 570 Downloaded from hlayiso.com New Venture Creation: Level 2 33

Observations about Tables In our example we see that: information is summarised, condensed and can be easily presented provinces are listed alphabetically we have to look very carefully to see which province is the biggest and which is the smallest it is very difficult to see which province is the 3rd biggest in Gauteng there are 365 people/km² compared to the Northern Cape where there are only 2 people/km² the total population is just over 38 million the total size of the country is 1 219 080 km² Downloaded from hlayiso.com New Venture Creation: Level 2 34

Using Pie Charts Province Sizes Eastern Cape Free State Gauteng KwaZulu Natal Limpopo Mpumalanga Northern Cape North West Western Cape Slice 10 Downloaded from hlayiso.com New Venture Creation: Level 2 35

Observations about Pie Charts In our example we see that: information is very visual Gauteng is really small compared to the other provinces the Northern Cape is huge compared to the other provinces it is difficult to rank most of the other provinces in terms of size when using a Pie Chart Downloaded from hlayiso.com New Venture Creation: Level 2 36

Using Bar Graphs Province Population 9000000 8000000 7000000 6000000 5000000 4000000 3000000 2000000 1000000 0 e at te at l po Nor ng a Cap e ng a m th er n St N po al C ap st Fr Gau lu a N or e ern ee aZ Li pu th W u m W es te est Ea K M rn Cap w e Downloaded from hlayiso.com New Venture Creation: Level 2 37

Observations about Bar Graphs In our example we see that: the names of provinces appear at the bottom (called the x – axis) the number of people/ appears on the left (called the y – axis) KwaZulu Natal is clearly the province with the biggest population although not as detailed as a table, a Bar Graph enables us to rank data very easily Downloaded from hlayiso.com New Venture Creation: Level 2 38

Using Line Graphs People per Square Km 400 350 300 250 200 150 100 50 0 e at te at po N ng a Cap e ng al orth er St N mpo al n C ap st Gau lu a N e er Free Li pu or th n aZ m W est Ea u M W es tern Kw Cap e Downloaded from hlayiso.com New Venture Creation: Level 2 39

Observations about Line Graphs In our example we see that: provincial names appear at the bottom (called the x – axis) the number of people/km² appears on the left (called the y – axis) most provinces seem to have a similar number of people/km² but the notable exceptions are Gauteng and KwaZulu Natal (high) and the Northern Cape (extremely low) Downloaded from hlayiso.com New Venture Creation: Level 2 40

Trends in different sectors of the economy A trend: gives an indication in which direction something is developing is about what we can expect in the future may not always be correct but at least gives an idea of possibilities is very helpful to the entrepreneur starting a new venture e.g. larger numbers living in urban areas within a smaller area (365 people/km² in Gauteng) help focus where the marketing effort should be concentrated Downloaded from hlayiso.com New Venture Creation: Level 2 41

Trends in taxes collected every year 400 350 300 250 200 150 100 50 0 1993- 1994- 1995- 1996- 1997- 1998- 1999- 2000- 2001- 2002- 2003- 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Downloaded from hlayiso.com New Venture Creation: Level 2 42