UNIT- 03 IDEA TO START UP

Target Market
A target market is a group of potential customers who might purchase a specific product
or service. In order to successfully market to this target audience, organizations need to
analyze and understand their target market in terms of demographics, buying habits,
interests, and other characteristics. This analysis can help businesses decide the best way to
allocate marketing resources such as advertising dollars and personnel.

Target Market Analysis

A target market analysis is a systematic process that helps businesses better understand
their potential customers. By analyzing demographic, behavioral, and other relevant data
about these customers, organizations can gain important insights into things like their
purchasing habits, interests, values, and opinions.

What is a competitive analysis?

A competitive analysis is an assessment of your competitors’ products, services and
sales tactics, evaluating their strengths and weaknesses relative to your own. It’s
good business practice to conduct a full competitive analysis at least once a year.

What is the purpose of a competitive analysis?

A competitive analysis will help you see your own unique advantages as well as any
potential barriers to growth so you can strengthen your marketing and business
strategies. It also keeps your business proactive instead of reactive. Many
entrepreneurs operate based on preconceived ideas about their competitors and
market landscape, but those ideas may not be accurate or may be out of date.
How to conduct a competitive analysis in  5 steps
A competitive analysis involves four key steps:

1. Identify your competitors

This sounds straightforward, but in fact there are different kinds of competitors to
consider. They include:

 Direct competitors: These are the businesses that offer similar products and
services and target the same customers in the geographic area that your business
serves.
 Secondary/indirect competitors: These are the businesses that offer different
products and services and target a different clientele, but are in your same general
category (e.g., a winery and a brewery are secondary competitors because they both
sell alcohol).
 Substitute competitors: These are businesses that offer different products and
services but target the same customers in your geographic area.

“For an in-person business like a nail salon, home nail kits are an example of
substitute competition,” Kazim explains. “During the pandemic, people got used to
doing their nails at home. That likely encroached on a lot of salons’ business.”
Sometimes it’s not obvious who your competitors are. In those cases, Kazim
recommends using the North American Industry Classification System (NAICS).
With NAICS, every kind of business in Canada is given a six-digit code—from toy
stores (NAICS 451120) to tax preparation services (NAICS 541213). You can search
the NAICS website by keyword to find the code for your business type. Then you can
search for Statistics Canada data tables related to your NAICS code to find
information such as average company size, operating expenses and employee
wages for your industry. That helps paint a picture of how your business stacks up
relative to the rest of your field.

“Those benchmarks can give you some interesting insights,” says Kazim. “You might
realize you’re not investing as much in marketing as others in your industry, for
example, or your wage costs are way above average.”

2. Gather information about your competitors

Once you’ve identified your competitors, evaluate them in terms of the “four Ps” of
the marketing mix:

 Product: Compare their products to your own, ideally by purchasing and trying them
out yourself. How is the quality? What features do you like or dislike?
  Pricing: How are their products and services priced? Do their prices vary for channel
partners and customers? What is their discount policy? Can you estimate their cost
structure?
 Place: What is their geographic reach or service area compared to your business?
 Promotion: What marketing tactics are they using to interact and engage with their
customers? What is their presence on social media?

The concept of the “four Ps” has evolved since its invention, so be sure to look at
other factors as well, including:

 Positioning: Review their websites, social media, product documents, brochures

and catalogues. Who are their target markets? What is their unique selling
proposition?
 Reputation: What are people saying about your competitors’ products and services
online and on social media? How do the reviews compare to those for your
business?
 People: How big is their organization? What is the general profile of the people they
employ?
 Partnerships: Who are their suppliers? How long have they been working together?

If you’ve never done this exercise before, Kazim recommends spending a couple of
weeks with your sales, marketing and customer service teams to collect the data and
do the research. Then, sit down with your team for a focused two-hour session to
walk through what you’ve found and map out the results.

In addition to the thorough annual analysis, Kazim says it’s useful to set aside some
time every couple of months to do a quick refresh of the data—to ensure you’re
always staying proactive instead of reactive.

3. Analyze your competitors’ strengths and weaknesses

During the two-hour session with your team, it’s important that you can easily
compare the performance of your competitors with your own. Start by ranking your
competitors in the criteria listed above on a scale from 1 to 10, suggests Kazim,
using a simple grid/table like the one below:
Example of a competitive analysis table

Enlarge the image

Next, prepare a written evaluation of each competitor’s respective strengths and

weaknesses. For example, are they popular because of their location? Visibility?
Quality of their staff? Are their prices too high? Does their product lack a key feature
demanded by customers?

Summarize everything that would make a consumer choose (or not choose) each
competitor.

4. Determine your competitive advantage

With all the information at your fingertips, it’s time to figure out what the results mean
for your business strategy.

“Ask yourself: what are we good at relative to the competition and where do we want
to focus?” says Kazim. “It’s a little bit of a ‘who do you want to be when you grow
up?’ kind of question.”

What is Strategy Evaluation

Strategic evaluation constitutes the final stage of strategic management
and is considered one of the most vital steps in the process.
Strategy Management Process

Strategy evaluation is the process by which the management assesses

how well a chosen strategy has been implemented and how successful or
otherwise the strategy is. To simply put, strategy evaluation entails
reviewing and appraising the strategy implementation process and
measuring organizational performance. 

Strategy evaluation operates at two levels; strategic and operational. At the

strategic level, the focus is given to the consistency of the strategy with the
environment, and at the operational level, how well the organization is
pursuing the strategy is assessed.
Participants of the Strategy Evaluation 

The stage of strategy evaluation requires the contribution of several

participants who will be playing different roles throughout the process.

The board of directors: takes on the formal role of reviewing and

screening the executive decisions in light of their environmental, business,
and organizational implications. Although they are not directly involved in
the evaluation and control of the strategy implementation process, they
periodically take part in reviewing the organization’s performance and
results. 

Chief executives: are responsible for all the administrative tasks of

strategy evaluation and control. 

The SBU or profit-center heads: monitor strategy implementation at the

business unit level and give feedback to the corporate parent who can
intervene as necessary.  

Financial controller, company secretaries, and external and internal

auditors: responsible for operational control based on financial analysis,
budgeting, and reporting. 

Middle-level managers: carry out tasks assigned to them by SBU heads

or the strategic planning group, and provide them with feedback and
information. They will also be participating in the corrective actions, in the
case of mid-term revisions in the implementation process.
Strategic Evaluation Technique 

1. Gap analysis

2. SWOT analysis

Gap analysis

A gap analysis is performed to identify and measure the gap between your
current state of organizational performance and the desired state. It can be
utilized to evaluate various aspects of the business from production to
marketing. 

SWOT analysis

A SWOT analysis is another helpful tool that strategists use to assess the
current situation -both internal and external environments – of an
organization. It helps you gain insight into your internal landscape by
analyzing strengths and weaknesses, and insight into your external
landscape by scanning opportunities and threats.
Formal Definition of marketing
"Marketing is the activity, set of institutions, and processes for creating,
communicating, delivering, and exchanging offerings that have value for
customers, clients, partners, and society at large. "

What Are the 4 P's of Marketing?

Product, price, place, and promotion are the Four Ps of marketing. The
Four Ps collectively make up the essential mix a company needs to market
a product or service.

Product
Product refers to an item or items the business plans to offer to customers.
The product should seek to fulfill an absence in the market, or fulfill
consumer demand for a greater amount of a product already available.

Price
Price refers to how much the company will sell the product for. When
establishing a price, companies must consider the unit cost price,
marketing costs, and distribution expenses. Companies must also consider
the price of competing products in the marketplace and whether their
proposed price point is sufficient to represent a reasonable alternative for
consumers.

Place
Place refers to the distribution of the product. Key considerations include
whether the company will sell the product through a physical storefront,
online, or through both distribution channels. When it's sold in a storefront,
what kind of physical product placement does it get? When it's sold online,
what kind of digital product placement does it get?

Promotion
Promotion, the fourth P, is the integrated marketing communications
campaign. Promotion includes a variety of activities such as advertising,
selling, sales promotions, public relations, direct marketing, sponsorship,
and guerrilla marketing.
What Is Startup Accounting?
Accounting is how your business records, organizes, and understands its
financial information. Accounting processes include reporting, summarizing,
analyzing, and projecting business transactions using financial statements. 

Financial statements provide a concise summary of your financial

transactions over a specified accounting period and illustrate your startup's
cash flow and operations status, providing an accurate picture of your
startup's level of success and financial health.

Types Of Accounting
There are many accounting systems available for startups. We’ll look at some
below to help you decipher which type would work best for your business.

 Financial accounting: Summarizes the financial transactions from a

business’s accounting period into financial statements, such as P&L
statements, cash flow statements, and balance sheets. At larger
businesses, these documents are typically audited by an external
regulator and act as a measure of your company's economic
performance. At startups, these statements are available to key external
stakeholders such as investors and board of directors.
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 Managerial accounting: Managerial or management accounting uses

the same processes as financial accounting and records financial
information intended solely for internal stakeholders. They use this
information to make informed decisions about your business.
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 Tax accounting: Tracks incoming and outgoing funds associated with

your startup's operations concerning their effect on your tax burden.
The Internal Revenue Service (IRS) regulates tax accounting.
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  Cost accounting: Records financial information related to the costs for
producing your service(s) or product(s). Startups use this information to
budget, make predictions, and analyze business performance.

What Is Risk Analysis?

The term risk analysis refers to the assessment process that identifies the
potential for any adverse events that may negatively affect organizations
and the environment. 

 Risk analysis is commonly performed by corporations (banks,

construction groups, health care, etc.), governments, and nonprofits.
 Conducting a risk analysis can help organizations determine whether
they should undertake a project or approve a financial application,
and what actions they may need to take to protect their interests.
 Risk analysts often work in with forecasting professionals to
minimize future negative unforeseen effects.
How to Perform a Risk Analysis
Though there are different types of risk analysis, many have overlapping
steps and objectives. Each company may also choose to add or change
the steps below, but these six steps outline the most common process of
performing a risk analysis.

Step #1: Identify Risks

The first step in many types of risk analysis to is to make a list of potential
risks you may encounter. These may be internal threats that arise from
within a company, though most risks will be external that occur from
outside forces. It is important to incorporate many different members of a
company for this brainstorming session as different departments may have
different perspectives and inputs.

A company may have already addressed the major risks of the company
through a SWOT analysis. Although a SWOT analysis may prove to be a
launching point for further discussion, risk analysis often addresses a
specific question while SWOT analysis are often broader. Some risks may
be listed on both, but a risk analysis should be more specific when trying to
address a specific problem.

Step #2: Identify Uncertainty

The primary concern of risk analysis is to identify troublesome areas for a
company. Most often, the riskiest aspects may be the areas that are
undefined. Therefore, a critical aspect of risk analysis is to understand how
each potential risk has uncertainty and to quantify the range of risk that
uncertainty may hold.

Consider the example of a product recall of defective products after they

have been shipped. A company may not know how many units were
defective, so it may project different scenarios where either a partial or full
product recall is performed. The company may also run various scenarios
on how to resolve the issue with customers (i.e. a low, medium, or high
engagement solution.
Step #3: Estimate Impact
Most often, the goal of a risk analysis is to better understand how risk will
financially impact a company. This is usually calculated as the risk value,
which is the probability of an event happening multiplied by the cost of the
event.

For example, in the example above, the company may assess that there is
a 1% chance a product defection occurs. If the event were to occur, it
would cost the company $100 million. In this example, the risk value of the
defective product would be assigned $1 million.

The important piece to remember here is management's ability to prioritize

avoiding potentially devastating results. For example, if the company
above only yielded $40 million of sales each year, a single defect product
that could ruin brand image and customer trust may put the company out
of business. Even though this example led to a risk value of only $1
million, the company may choose to prioritize addressing this due to the
higher stakes nature of the risk.

Step #4: Build Analysis Model(s)

The inputs from above are often fed into an analysis model. The analysis
model will take all available pieces of data and information, and the model
will attempt to yield different outcomes, probabilities, and financial
projections of what may occur. In more advanced situations, scenario
analysis or simulations can determine an average outcome value that can
be used to quantify the average instance of an event occurring.

Step #5: Analyze Results

With the model run and the data available to be reviewed, it's time to
analyze the results. Management often takes the information and
determines the best course of action by comparing the likelihood of risk,
projected financial impact, and model simulations. Management may also
request to see different scenarios run for different risks based on different
variables or inputs.
Step #6: Implement Solutions
After management has digested the information, it is time to put a plan in
action. Sometimes, the plan is to do nothing; in risk acceptance strategies,
a company has decided it will not change course as it makes most
financial sense to simply live with the risk of something happening and
dealing with it after it occurs. In other cases, management may want to
reduce or eliminate the risk.