WHAT IS A MARKET?
The marketplace, as it’s commonly called, was the place people (customers) gathered together to view what somebody in the community had produced, the latest innovation or product. They would then barter with something that they had of value, if both agreed, they would then swap the goods, in whats called a trade.
The marketplace used to be mostly local, a community, town, city or country. But now we are at a turning point in history with a global marketplace at our finger-tips! We can choose to open up shop in our local community, in a marketplace of thousands, or from our kitchen table we can focus on a marketplace of billions. The latter sounds more attractive but doesn't necessarily mean that we will have a larger customer-base than the community based business. However the internet gives us access to a huge array of different kinds of markets around the globe, of which we may only need a small percentage in order to make a good living.
Simply put, a market is a cluster of customers with a common need or dream that they want help with, from the need to be fed to the goal of climbing a mountain.
The marketplace is one of many ways people engage in exchange. Wikipedia points out that, in mainstream economics a market is the exchange of any type of good, service or information . The exchange of goods or services for money is a transaction. While parties may exchange goods and services by barter, most markets rely on sellers offering their products or services, including labor, in exchange for money from their customers.
The market is also the place that determines value, the place where the prices of goods and services are established. Market participants consist of all the buyers and sellers of a good or service who influence its price. This influence is a major study of economics and has given rise to several theories and models concerning the basic market forces of supply and demand. There are two roles in markets, buyers and sellers. For a market to be competitive, there must be more than a single buyer or seller. It has been suggested that two people may trade, but it takes at least three persons to have a market, so that there is competition in at least one of its two sides. However, competitive markets, as understood in formal economic theory, rely on much larger numbers of both buyers and sellers. A market with a single seller and multiple buyers is a monopoly. A market with a single buyer and multiple sellers is a monopsony.
Markets vary in form, scale (volume and geographic reach), location, and types of participants, as well as the types of goods and services traded. Examples include:
Physical retail markets, such as local farmers markets (which are usually held in town squares or parking lots on an ongoing or occasional basis), shopping centers and shopping malls.
(Non-physical) internet markets
Ad hoc auction markets
Markets for intermediate goods used in production of other goods and services
International currency and commodity markets
Stock markets, for the exchange of shares in corporations
Artificial markets created by regulation to exchange rights for derivatives that have been designed to ameliorate externalities, such as pollution permits (carbon trading)
Illegal markets such as the market for illicit drugs, arms or pirated products.
WHAT IS MARKETING?
Marketing in the ultimate sense is simple: find out what customers want and give it to them.
Marketing, in practical terms, is the process of communicating the value of a product or service to new or existing customers. Another definition of marketing is: the action or business of promoting and selling products or services, including market research and advertising. It is clearly defining who we are targeting, the market size and all the relevant information that relates to that market and it’s environment. This means the ideas, the brand, how you communicate, the design, print process, measuring of effectiveness, market research and the psychology of consumer behavior, all count as part of the bigger picture of ‘marketing’. Marketing involves the art of listening to customers and then the identification and creation of new products and/or services.
Businessdictionary.com describes marketing as: The management process through which goods and services move from concept to the customer. It includes the coordination of fourelements called the four P’s of marketing:
(1) identification, selection and development of a product or service,
(2) determination of its price,
(3) selection of a distribution channel to reach the customers place, and
development and implementation of a promotional strategy.
HOW DO I WRITE A MARKETING PLAN?
If you fail to plan you plan to fail. So the development of a marketing plan is about defining and refining what your customer really wants and how you are going to deliver.
1. What are you selling and why are you so special?
2. Who are you Targeting?
3. Who are my competitors?
4. How am I going to bring this great idea to market?
5. What do I need to Sell or Secure to be Profitable?
6. How do I set sales targets and develop sales strategies?
7 . Whats my communication and or branding strategy?
1. WHAT ARE YOU SELLING AND WHY ARE YOU SO SPECIAL?
Daniel Priestley in his book, Entrepreneur Revolution, say’s that when he looks at a Rolex he dose not see the product as being a watch, but as a conspicuous device that communicates status and high achievement. A person who buys a rolex dose not want to buy a device that tells the time. They could buy a cheaper $20 watch to do that. The desired outcome the customer wants to achieve has more to do with what a rolex says about the wearer.
So when it comes to identifying what it is that you are selling, try to see beyond your goals and dreams and check again to see what it is that your customer is really wanting to buy. This may have to do with how or where your product or service is delivered as much as anything. Thinking about what channels you are going to use to deliver your product or service to your customer is also an import part of your marketing plan. This may even become a part of your business model as you expand and multiply.
StarBucks for example is not only in the business of selling coffee, but also in the business of making it accessible locally and in a friendly environment. In other words the delivery system for great coffee is as important as the coffee. Information used to be most delivered through soft or hard backed books, now it can be found using any number of search engines. Same information, different delivery system.
Apple are challenged on a number of key issues in creating something special in the world of technology. Simply put: the look and feel, design flow or usability, value for money, the buying and user experience and above all that it is something you love and respect, and are proud to own.
I googled the Starbucks to see what they think makes them so special and this is whatthey had to say:
It happens millions of times each week – a customer receives a drink from a Starbucks barista – but each interaction is unique.
It’s a connection.
We make sure everything we do honors that connection – from our commitment to the highest quality coffee in the world, to the way we engage with our customers and communities to do business responsibly.
From our beginnings as a single store nearly forty years ago, in every place that we’ve been, and every place that we touch, we've tried to make it a little better than we found it.
THE STARBUCKS STORY
Every day, we go to work hoping to do two things: share great coffee with our friends and help make the world a little better. It was true when the first Starbucks opened in 1971, and it’s just as true today.
Back then, the company was a single store in Seattle’s historic Pike Place Market. From just a narrow storefront, Starbucks offered some of the world’s finest fresh-roasted whole bean coffees. The name, inspired by Moby Dick, evoked the romance of the high seas and the seafaring tradition of the early coffee traders.
In 1981, Howard Schultz (Starbucks chairman, president and chief executive officer) had first walked into a Starbucks store. From his first cup of Sumatra, Howard was drawn into Starbucks and joined a year later.
A year later, in 1983, Howard traveled to Italy and became captivated with Italian coffee bars and the romance of the coffee experience. He had a vision to bring the Italian coffeehouse tradition back to the United States. A place for conversation and a sense of community. A third place between work and home. He left Starbucks for a short period of time to start his own Il Giornale coffeehouses and returned in August 1987 to purchase Starbucks with the help of local investors.
From the beginning, Starbucks set out to be a different kind of company. One that not only celebrated coffee and the rich tradition, but that also brought a feeling of connection.
Our mission to inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time.
Today, with more than 15,000 stores in 50 countries, Starbucks is the premier roaster and retailer of specialty coffee in the world. And with every cup, we strive we bring both our heritage and an exceptional experience to life.
Ask yourself the hard questions
Why is your idea so special? and what is it that you are really selling at every level?
Why is your product or service so cool?
Why is the way you deliver it so great?
What is the feedback from those who experienced your idea?
Looking back in 50 years time what do you hope people will say?
What business are you really in, and what are you really selling?
Are you selling watches or status? Are you selling iPhones or communication and connection? Are you selling milk or good health? Are you selling travel or lifelong memories?
Are you advertising cars or safety, eco friendly, engineering and design? Are you selling coffee or intimacy and friendship. Are you advertising clothing or coolness?
2. WHO AM I TARGETING?
What is the age, shape and size of my target market?
Whether you come up with an idea and then go in search of a market, or start by identifying a human need; you need to identify and understand who your customer is and what it is they really want. This study will save a lot of time and money wasted in a shot gun approach to reaching your customer.
When I started Global Tribe Extreme Cafe, I asked a friend heading up a leading advertising company at the time, if they had any research on the youth market? The results of focus groups and the research Saatchi & Saatchi had commissioned gave a real insight into the mind of my customer, and ignited lots of great ideas. It also sparked the name, Global Tribe, when in a section of the research it said that this group where like a global tribe searching for the same old stuff - friends, intimacy and a great time!
Understanding a target group takes time, and even if you think you know them, time spent researching them farther will generally pay off, refining your product or service or if nothing else the way you communicate to this group.
I spent account-less hours talking to young people or anyone that I thought knew anything about this emerging group.
This was a new generation of intelligent customers, who spent more time on the internet than in front of television.
How do these high-tech, high-touch, in-touch customers think and operate? How do you reach a customer that is endlessly on-the-move like some kind of modern-day global nomad.
This group of highly mobile youth referred to as the global tribe where on the one hand, for the first time history, truly global and on the other hand, extremely tribal. They thoughtglobally, but where looking for strong local identity and expression. They where living in an environment of global instability because of the rapid process of globalization.
Ever since Tim Berners-Lee came up the the world wide web in 1989, and the internet was born, technology has been building like a giant wave. This globalization phenomenon has accelerated the pace of change and forced the world together politically, economically, technologically, and socially, faster than any other time in history.
This revolution has empowered the individual and radically changed our global landscape overnight. It is forcing governments to open their markets, and generally become integrated into a new global society. Globalization is an interwoven global marketplace, justice system, economy, and communication network, with a new emerging global culture, especially true of Generation XYZ.
CHARACTERISTICS OF THE GLOBAL TRIBE
A combination of research from leading advertising agencies, Saatchi and Saatchi and Mojo, painted a picture for me of some of the attitudes and expectations of this new and exciting global tribe; and now some years later, many of the characteristics still hold true:
These global tribes think like nomads - they cruise along, taking each day as it comes, they don’t hope for too much, they take pleasure where they can, and simply go with the flow. They don’t overly believe in anything.
In an age of moral ignorance and a high level of hypocrisy, realism usually equals having no ideals. The only possible stance for many young people is to be cynical, distant and irreverent.
In the boredom of mass culture they seek out real adventure, enjoying individual adrenaline pumping, risky adventure sports, team sports, and more social and non-competitive sports.
These technology nomads integrate technology and nature. Mass communication technology has become a natural part of life, giving access to the world. The Internet has granted a greater sense of personal power.
In a world of fake images and surface values, they expect others to be authentic, be real, be themselves. In a materialistic world, they value the attitude more than the actual thing. Despite living in a world that seems determined to crush self-esteem, they are proud of themselves.
They have the ‘lost child’ attitude. They live for the moment because tomorrow may never come. This generation believe they should keep their distance, stay detached, stay as individuals even within a group or a relationship. They do not merge completely with anyone because they believe they will probably get hurt.
This generation genuinely desire role models of long-term relationships but these are rare due to parental divorce and family break-ups. They know “sex is dangerous, but often it’s still safer than love.”
They find it is not that easy to rebel against parents who have ‘been there and done that’. Make no mistake, the digital generation rebel, but their style is subversive rather than confrontational. They love complicating things and pushing the boundaries, infiltrating society rather than invading it.
Driving forces include the need for identity, self-esteem, self-respect, confidence, empowerment and skill, a feeling of being in control, the freedom to choose, knowledge as power, wisdom, uniqueness, intelligence in humor, and the interactive.
Within what is sometimes called the global tribe there are a myriad of sub-tribes.
They believe the key to musical creativity is remixing the old and new - recycling fashion. They don’t tend to invent new items of clothing or music styles, but they do specialize in refining and remixing existing or past fashion.
They think alternative, black humor is what’s funny. To command a following from this group, any brand big or small, has to have attitude. Consumption of a certain brand or non-brand is a bit like atribal membership.
Despite grunge-type appearances, they are quite materialistic. They regard promotion, communication, and advertising as art-forms. They are a special effects generation where surreal is real. Both sexes will often list shopping as a favorite recreation.
They especially like advertising, which ridicules advertising norms, and “takes the crap” out of conventional baby boomer aspirations, the ‘beautiful people’, or stereotypical male or female ideals.
This generation wants to be entertained, not sold to. They make the following comments: “I like it ‘cos it’s not threatening to me”; “it’s not pushing the product on you”; “I hate obvious humor”; “it needs to be subtle and entertaining”; “slice of life humor is appreciated”; “don’t be funny and stupid, be clever”.
THERE ARE A DIFFERENT TYPES OF CUSTOMERS YOU WILL EXPERIENCE:
Discount Customers: They shop our stores frequently, but make their decisions based on the size of our markdowns.
Impulse Customers: They do not have buying a particular item at the top of their “To Do” list, but come into the store on a whim. They will purchase what seems good at the time.
Need-Based Customers: They have a specific intention to buy a particular type of item.
Wandering Customers: They have no specific need or desire in mind when they come into the store. Rather, they want a sense of experience and/or community.
If we are serious about growing our business, we need to focus our effort on the loyal customers, and merchandise our store to leverage the impulse shoppers. The other three types of customers do represent a segment of our business, but they can also cause us to misdirect our resources if we put too much emphasis on them.
Loyal Customers: They represent no more than 20 percent of our customer base, but make up more than 50 percent of our sales.
3. WHO ARE MY COMPETITORS?
After being told at school that everyone’s a winner, it’s a bit of a shock entering the dog eat dog, highly competitive marketplace. Your competitors don’t get to send you to the principles office for bullying. Understanding the companies that have a similar idea or concept to yours is the only sensible thing to do. You can learn from their mistakes and improve on what they do. Studying those in a similar field of business will spark valuable ideas, not only relating to your product or service but your business model as well. To be a good player in this often hostile environment dose not always mean becoming a viking.
Edward de Bono in his book Sur-petition talks about finding a higher road as opposed to simply entering the competition. Finding your unique proposition and creating your own new world of possibilities. However, I find that to generate creative ideas you need to create movement, so to simulate lateral thinking I study my competitors. Simulating progress, but preserving your core concept.
4. HOW AM I GOING TO BRING THIS GREAT IDEA TO MARKET?
We now understand the target customer, so what paths are available to deliver this product or service to them. What will I commit to and what backup plans can I create? An extension and sometimes as important as a great idea itself is whats called the business model, defining and describing how and where you bring your product or service to market. For example, Star Bucks not only sells coffee but a cool spaces to connect you with friends, to snack and do business. If you are not a global brand such as Star Bucks, you may still do the same, sell the experience as a part of your product or service.
When it comes to selling homes, my business model starts with customers who want cool, beautiful, small spaces that don’t cost the earth. Mostly people find it hard to communicate what they really want, but like purchasing a work of art, they know it when they see it. So White Cloud Innovations is passionate about serving our customers with modern day eco-caves. Spaces with the beauty of nature, the design and craftsmanship of Leonardo da Vinci, and the science and engineering of Einstein.
How do I bring my idea to Market? Many housing companies advise themselves as house builders and then work with their customers to construct a home to fit their section. In my case, I am more of a developer, I purchase the land and build the home with the customer in mind. Each home is in effect my work of art, something that to me is more important than making money. Some companies are driven by extensive market research and this can be very valuable, however is not the whole story. When it comes to new technology for example, customers have no idea what the next big thing is. They don’t know what they don’t know! Henry Ford once said, If I’d asked my customers what they wanted, they would have told me ‘a faster horse’. Jobs adopted the same philosophy when developing Apple products by asking the question, what would I want?
Taking your idea to market requires as much creativity and innovative as the product or service you have created.
What are the existing channels that could carry your idea to the customer?
What could our path to the customer look like?
Where do our customers go when they want something similar?
How can we make the connection to our idea a positive experience?
How can we make our relationship with the customer high-tech as well as high-touch?
How are we going to approach people in a relational way?
Are we going to be an online business or do we need to be both?
5. WHAT DO I NEED TO SELL OR SECURE IN ORDER TO BE PROFITABLE?
This is where we need to earth our big idea and get down to specific’s. How much of the product or service do I need to sell or secure in order to pay the over heads; the wages, tax, rent, materials and advertising for example. To answer this question we need a realistic handle on the cost of bring this product or service to market.
You need to have a clear view of your gross margin, which is fully explored in the chapters on The Money.
The gross margin is what remains after you divide your gross profit by your net sales (your gross sales minus sold items later returned by customers). The gross margin is a measure of how the selling price of your product compares to its cost. Gross margin = gross profit / net sales
What are the production or service costs?
To deliver this service, what will it realistically cost me?
What employees will I need in the first year of operation?
What price are customers willing to pay?
What price do my competitors charge?
What price would they/you pay?
This is whats called the million dollar question or star-gassing! Getting our head around this question is all important, as it means success or failure. It requires honesty in tension with faith or optimism. Many a great idea has been killed by an over dose of pessimism or died a little while later as a result of poor but optimistic financial planning.
It is only after you fully understand your costs that you can even begin to ask this question. This is where you also need to understand your competition and why they have priced their products or services the way they have. This is a critical discussion, set the price to low and you may not cover your production, operating and delivery costs. Set the price to high and you could price yourself off the market. Rush this process and it may come back to bite you.
6. HOW DO I SET SALES TARGETS AND DEVELOP SALES STRATEGIES?
This will be different from one business to the other, but these are some of the kinds of questions you may need to address:
How do I set realistic sales targets?
How am I going to review results?
How am I going listen to customers?
Who’s going to do it and when?
What are you doing for loyal customers?
What role can network marketing or social media play?
7. WHATS MY COMMUNICATION, FEEDBACK AND OR BRANDING STRATEGY?
Who do I need to talk to and when? Including suppliers, customers, media, your network and most importantly those working with you. Business is about relationship and communication is the most important aspect of any relationship. This also goes beyond the obvious to include the kind of messages you want out there in order to begin shaping your brand. Messages that create a foot-hold in customers thinking, messages that are sent by your actions as well as your words.
HOW ARE WE LISTENING TO CUSTOMERS?
How we gain and process feedback is taking what the customer thinks about you seriously.
We need to ask the big questions:
Are we treating our customers with respect?
Are our customers happy?
What do they really want?