Objectives give the business a clearly defined target. Plans can then be made to achieve these targets. This can deviate the employees. It also enables the business to measure the progress towards to its stated aims. Four basic business goals provide guidelines for business objectives: Survival -? a short term objective, probably for small business just starting out, or when a new firm enters the market or at a time of crisis.
Profit mastication – try to make the most profit possible – most like to be the e aim of the owners and shareholders. Profit satisfaction (sufficient and satisfy)- try to make enough profit to keep the owners comfortable – probably the aim of smaller businesses whose owners do not want to work longer hour Sales growth – where the business tries to make as many sales as possible. The is may be because the managers believe that the survival of the business depends on being large. Large business sees can also benefit from economies of scale.
Process to identify a strategy Strategy must meet business objectives A strategy that is aligned with business objectives shows: deep understanding of the market place Needs-based segmentation and procrastination L]powerful differentiation, positioning and branding C]effective planning processes Market/customer-driven organization structures Denationalizations creativity and innovation. Each business is unique, therefore the strategy of the products and services need to be reflected in the objectives. Business objectives Business objectives are the stated measurable aims of how to achieve business aims.
The most effective business objectives meet the SMART criteria. Business strategy and objectives for new opportunities A business must identify its business approach once the environment has been analyses. Market Penetration Product Development Market Development Diversification into new business This will assist the business to identify whether the opportunity is worth pursuing. There are several says to undertake this process before a further detailed analysis commences. The business can identify a broad revenue objective to use as benchmark in evaluating opportunities.
Revenue objectives can be broadly identified with a scan of current products or services: If the product is a current product or service, a business can identify where the potential sales could be increased Identify the desired performance measured in unit numbers which will provide the ability to calculate the total revenue desired Fifth product is new, a business can also identify the desired performance and calculate desired venue New opportunity objectives Before identifying new products and services a business needs to know its business objectives and its current products and services.
The mission statement (the purpose of the organization) guides the organization but specific objectives focus the business. How to set objectives for new opportunities SMART objectives aligned with the marketing mix: Why evaluate? To evaluate an opportunity and develop a plan to pursue the opportunity, a b easiness must understand the industry in which it operates and the competitive forces within the industry. This will enable the business t identify an approach and the best way to proceed: A business must identify its business approach once the environment has bee n analyses. Market Penetration ; Product Development ; Market Development ; Diversification into new business This will assist the business to identify whether the opportunity is worth purrs nuking. There are several ways to undertake this process before a further detailed analysis commences. The business can identify a BRB ad revenue objective to use as benchmark in evaluating opportunities. Opportunities must be financially sound Clandestine thoroughly Souse expertise and assistance to guide decisions.
A sound understanding of the opportunity and tools and skills is necessary for marketing managers. External impacts can make attractive unattractive very quickly. External impacts Business approach The business can identify a broad revenue objective to use as a benchmark in evaluating opportunities. A business must identify its business approach once the environment has been analyses. Four strategies or approaches: C]Market penetration – break into a new market Liverpool development – develop new products Icemaker development – develop your current market Revenue objectives
Revenue objectives can be broadly identified with a scan of current products or services: ; Fifth product is a current product or service, a business can identify where the potential sales could be increased. ; Identify the desired performance measured in unit numbers which will provide the ability to calculate the total revenue desired. ; Fifth product is new, a business can also identify the desired performance and calculate desired revenue. If the strategy is market penetration or market development, identify desired performance. Gap/break-even analysis Estimating costs of products or services and profitability Identifying the following costs involved with each individual item will identify the profitability of each unit and where the business may be able to alter the variable costs (production and purchase costs) Investigating further, the business can identify the product or service costs and profitability.
L] Identifying the following costs involved with each individual item will identify the profitability of each unit and where the business may be able to alter the variable costs (production and purchase costs) production costs (e. G. Labor and material costs) purchase costs gross margin fixed costs profit before tax profit after tax. Competitor screening The process for idea screening to evaluate new concepts and products Every new opportunity or idea should be screened before the process of implementing it is finally undertaken.
Often there is already a substitute product available on the market. A simple process can be undertaken to identify these products or services and to identify competitors. The elements of competitor analysis comprise of: current strategy or positioning strengths weaknesses threats possible changes in strategy stakeholder reactions to changes in your businesses strategy. Segmentation A market segment is a subgroup of people r businesses with characteristics in common, resulting in similar product needs. 6. Develop marketing mix for each segment Market Positioning 5.
Develop positioning for each segment 4. Select the target segments 3. Develop measures of segment attractiveness 2. Develop the profiles of the segments 1 Identify the base for segmenting the Market Targeting Market Levels of segmentation: C]mass marketing – same product to all consumers (no segmentation) [Segment marketing – different products to one or more segments (some segmentation) Niche marketing – different products to subgroups within segments Micromanaging – products to suit the tastes f individuals or locations (complete segmentation).
Levels of segmentation Two forces that shape the marketing environment The direct market environment comprises customers, company and competitors. Market situations: ;pure competition ;Oligopoly – the market is controlled by a few companies or groups ;monopolistic competition – there are many producers but nobody has strong control ;Monopoly – The market is controlled by one company or group Most product markets aim for pure competition. This is not the observations strategy as this drives a price Direct war and profits shrink.
External environ meet ;economic technological ;political and legal ;cultural and social. Legislation Legislation guiding marketing activities and practice in Australia The business environment in Australia is one of the fairest in the world with laws and regulations that have been developed to protect the consumer and the business. Consideration of new products and services by a business should take into account the legislation that has been designed to protect consumers and business.
The following is a list of relevant legislation, codes of practice and national standards that will impact business decision making. ;fair trading – Trade Practices Act competition – Australian Consumer Competition Commission ;Do-Not-Call Register – Australian Communications and Media Authority ;spamming – Australian Communications and Media Authority ;privacy law ;intellectual property law ;copyright law ;industry codes of practice. Other analysis affected by external ; fixed and variable costs ; cost-volume-price analysis ; ‘make’ or ‘buy’ decisions.
Understand all the cost factors involved in any opportunity C]Cost factors affecting financial viability of new opportunities must be investigated before taking on the new opportunity. It is important that the business identify all sots associated with the product. In the development of any business opportunity there are two types of costs: Fixed costs- these are business expenses that are not dependent in the activities of the business and includes items such as salaries and rents. C]Variable costs – are related to the volume of the product and can be altered.
Variable costs of new products or opportunities relate directly to the product and can include aspects such as: C]The cost of purchasing materials to manufacture goods Cite cost of goods to resell C]eliminative businesses will indemnify how to alter the variable costs to increase profit. DAD method for determining the financial viability of a new opportunity is to use the costume-profit analysis. Cost-volume-profit (COP) analysis involves investigation of how : Octal costs Total revenues Total profits are related to sales volume. It is concerned with predicting the effects of changes in costs and sales volume on profit.
COP commences with a breakable analysis to identify the starting point for number of units to be sold. Elements of a decision A measurable decision has 6 parts: ; A measurable objective – your goal is tangible egg. “l want to be successful” is NOT a measurable goal. What does SUcceSS mean? If it means money… How much money? ” I want to earn $1 million dollars by the time am 30″ is measurable. ; Constraints – What stops you from achieving your goal? Decisions take these constraints into account. ; A range of alternative courses of action – Things don’t always go to plan. Good decisions have alternate paths to success. Forecasting – Predicting outcomes ; Application -? Putting plans into action ; Choice Risk analysis Risk or danger is bad for business. So identifying risks helps you make better decisions. Types of risks: ; Operational – risks of running and managing your business ; Regulatory and gal – laws and regulations that may affections business ; Reputation – How the market perceives your business or product / service. ; Market and product risk – Changes in the market or problems with manufacturing ; Financing – Risks connected to the companies money Identify strategies to mitigate and minimize risk.
Return On Investment (ROI) Return On Investment (ROI) is the ratio of money of an investment relative to the amount of money invested. E. G. You invest $1 0, and get back $1000 6 months later is a high ROI. You invest $10 and 16 years later getaway $1 octopi measure is a low ROI Different ROI ;average rate of return – on average how much money do you get back from an investment over a period of time ;payback period – how long does it take to get back your initial investment ;net present value – a comparison of your current cash flow with predicted future payments http://en. Kipped. Org/wick/Net_present_Aviva ;profitability index – Present value of future cash flows divided by present value of initial investment http://en. Wisped. Org/wick/Profitability_index ;internal rate of return for the project. Http://en. Wisped. Org/wick/ Investment appraisal of new opportunities Important long-term decisions for a business relates to the purchase or creation of assets for future gains.
This may mean investment in: ;financial resources ;The purchase Of equipment or machines ;buildings ;other asset for the development of new products. Strategic long-term decisions will yield returns to an organization over a period of time. Key investment considerations Scale of the investment Can the business afford the investment? Length of time before investment yields returns Time value Length of time to pay back the Payback period investment Expected profits from the Profits Could the money that is being invested be better used elsewhere?