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Step 3.1. We describe the target market, segment it, and find a promising market niche

3.1.0. Videos with examples of independently calculating a business plan (from the series “Transforming the city of Vasyuki into the capital of the Russian Federation and the MFC”)

• How to fill out text forms when creating a business plan in the E-planificator Online Designer?
• How to enter text information into the Constructor?

Series 5. Constructing market distribution diagrams(1.37 min.)

• When creating a business plan in the E-planificator Online Constructor, how do you fill out the market distribution, order portfolio distribution, or budget distribution form?
• How to build diagrams in the “Marketing plan of a business plan” section of the Designer?

3.1.1. Theory

Description of the target market

The designer invites you to start preparing a marketing plan with target market descriptions, i.e. the market you are targeting with your products or services. If you have several products and they are aimed at different markets, then you will have to at least briefly describe all these markets.

When describing the market, be sure to note the following characteristics:

• who the market consists of (for example, enterprises in such and such an industry, pensioners, dog breeders, etc.);
• whether it is in the nature of an oligopsony (monopsony, duopoly) - only for B2B markets - or an oligopoly (monopoly, duopoly);
• unmet needs of this market (which you will “fill” with your products);
• conditions (legal, political, etc.) of doing business in the market;
• is the market growing and at what speed, what is the potential for this growth;
• main trends “moving” the market in one direction or another;
• and most importantly - the volume or capacity of the market (if you can, both in natural units of measurement and in monetary units).

In working with this and several subsequent sections, a report on marketing research of your market prepared by professionals (sold on the RuNet at a price of 20-50 thousand rubles) can greatly help you. You can try conducting market research by conducting an online survey using an online service, the best known of which is SurveyMonkey. can be included in the business plan (step 3.8).

Interesting method calculating the total target market (TAM) outlined in an article by Karl Fritjofson on the IIDF website.

Market segmentation

Upon further analysis of the market, it subjected to segmentation, i.e. divided into segments, whose representatives (consumers) have certain common properties (age group, solvency, residence in a particular region, number of employees, etc.) and for which various properties of goods or services may have the same value.

Each of these segments, identified according to one characteristic (for example, geographical), can be divided into smaller segments or subsegments, “cut” according to another characteristic (for example, demographic).

You may find it appropriate do not target the entire market at first, but to choose for yourself one or several segments that are most attractive in terms of certain parameters (for example, intensity of competition, growth rates, etc.). It makes sense to rank segments by degree of attractiveness.

Description of the target segment

At description of the target segment indicate why you chose this particular segment, as well as its size (as a percentage of the size of the entire market), the number of consumers (if possible), the need or advisability of a special pricing policy.

Identifying a market niche

Perhaps you were able to go even deeper in your market research and found promising market niche. A niche is a clearly limited gap within a market segment or between segments, almost free from competitors (not yet interesting to them or unnoticed by them), which you, at least initially, intend to cover with your products or services and in which your company can make the most of your strengths. Having such a niche that you have identified in advance (if, of course, there is demand for it that does not require costly incentives) can dramatically increase the company’s chances of survival. If you have discovered such a niche and are going to occupy it, describe it in the appropriate form, also indicating how and for how long this niche will be protected from the invasion of competitors, the expected rate of its growth and its “ceiling”.

3.1.2. Target market description (form)

3.1.3. Example of filling out the "Description of target market" form

Description of the target market (from Columbus Business Plan)

One of the most important performance indicators of a modern enterprise is, of course, market share. This is an indicator of its competition with other companies, and the attachment of a stable category of consumers to it.

What is market share in marketing

Market share is a characteristic of the position of an individual company in the market relative to its competitors. This indicator is expressed as a percentage of the sales volume of the company's goods to the total sales volume on the market of goods of the same category. It happens that the sales volume of a particular category of goods in the market as a whole may be unknown, then it is expressed as a percentage relative to:

• relative to sales of closest competitors;
• relative to the leading competitor, leader.

Market share is determined by two methods:

• in units of goods;
• in monetary terms.

How to calculate

The indicator can be calculated using a fairly simple formula. To do this, divide the volume of goods or services sold by the enterprise by the total sales volume of competitors and multiply by 100%. Both volumes can be indicated both in monetary terms and in units of production. The higher the score obtained, the higher the . To calculate this indicator, you need to know the following information:

• who exactly are your competitors;
• the range of products offered by competitors;
• what is the pricing policy of competitors;
• what segment each competitor occupies;
• in what quantity and where they place their advertising and so on.

As a result of the work done, the company will not only calculate its share in the industry as correctly as possible, but as a result of data processing, it can not only identify the peculiarities of the work of competitors (their advantages and weaknesses), and use this information to the maximum for the benefit of its company.

Market segmentation

Marketers say that the main competitive struggle begins with competent segmentation. Market segmentation involves dividing customers with many of their needs into groups that are homogeneous in terms of their requirements. This means that a sector is a group of consumers with similar characteristics. The main purpose of dividing the industry into segments is to identify groups of buyers with relatively homogeneous product needs. Having identified such groups, the company can correctly determine the range of products produced and competently organize its pricing and sales activities. To determine the segments in which activities will be carried out, the following criteria are important:

• number of potential buyers of products;
• availability of sales channels;
• conditions of transportation of goods;
• product storage conditions;
• the ability to work effectively in the segment, and so on.

Market segmentation has a number of undoubted advantages:

• assessment of competition in the industry;
• production of new goods that meet consumer needs;
• using effective sales strategies;
• the ability to effectively evaluate the company’s marketing strategy to consolidate the stability of the product’s market share position.

How to estimate market share

Market share assessment carried out by comparing the marketing actions of competitors with the marketing actions of the company. Market share assessment is important for developing a company's competitive strategy that will be most effective for it. For a company's competitiveness, it is important that it has competitive advantages that allow it to stand out among its competitors. An important point in assessing market share is the sales forecast - the most important point in business planning. To do this, you need to conduct a number of studies:

• survey of potential consumers to study their intentions in purchasing the offered product;
• studying the demand and consumption of the offered product in different regions;
• examining the physical limit of demand (e.g., a person typically does not require more than one cell phone number);
• For durable goods, it is necessary to study the rate of deterioration of the product.

For a company's market share to be sustainable, its marketing strategy must be flexible, taking into account options such as the emergence of new competitors or rising costs of raw materials.

Market share analysis

A company's sales volumes are indicators of the market's consumer reaction to its products. However, in addition to sales analysis, a market share analysis must be carried out. It is always necessary to know how competing companies producing the same products and operating in the same market are doing, because the assessment of the share of a product always depends on the underlying market. It is necessary to ensure that this base is the same for all competing brands. At the same time, it is important to take into account the risks that when new brands are introduced to the market, the share of each competitor may fall. Sometimes market share may be affected by an exceptional factor, such as a large order. Regardless of the method used to define the underlying market, market share can be calculated in several ways:

• by volume (the ratio of the number of products sold to the total sales volume in units in the base market);
• in value terms (calculated based on revenue);
• calculation of market share not relative to the base market, but relative to sales in the segment where the company operates;
• Comparing the company's relative market share with competitors' sales.

When measuring market shares under different options, it may be difficult to find relevant competitive data. However, in consumer goods markets, such data can be accessed through dealers and consumer unions. Moreover, their accuracy is becoming increasingly higher thanks to devices for reading product codes.

The importance of market share

Market share is a prerequisite for a business to make a profit, as well as an important tool for assessing its effectiveness. The market share of a start-up enterprise must be periodically calculated to determine its dynamics. Moreover, it is advisable to do this at regular intervals. The presence of its constant stable share in a certain market segment gives the company the opportunity to look for additional markets, thereby increasing its market share, which will lead to an increase in the company's profits and respect among competitors and among consumers for its creditworthiness.

Conclusion

Market share is an important factor for the development and growth of any company. However, when conquering another segment for their products, any manufacturer must first of all think with respect for its consumer, offering him a quality product, without skimping on good raw materials, and at the same time offering an affordable price. Only the consumer, having convinced himself of the high quality of the product offered to him, can ensure the company has a stable position among its competitors.

Market share characterizes the company's position in the market relative to its competitors. The quantitative indicator of market share is determined by the percentage of sales volume indicators to the total sales volume of goods of the same category on the market.

Although market share is the most important indicator of a company's marketing performance, there is no generally accepted perfect method for measuring it. The company's share can be calculated both in the market as a whole and within a specific segment served. Served segment - part of the total market volume for which competition is being conducted. In a situation where the sales volume in the market as a whole is unknown, the share is determined relative to:

• relative to sales of a number of closest competitors;
• relative to the market leader, leading competitor.

Market share can be determined in two ways:

• in kind;
• in value terms.

Market share in volume terms (in unit terms) - the number of units of a product sold by a particular company as a percentage of total sales in the market, expressed in the same units.

Unit sales = Market share by unit sales (%) * Unit sales volume for the entire market

Market share in value terms (in sales volumes). Market share by volume differs from unit market share in that it reflects the prices at which products are sold. In fact, a relatively simple way to calculate relative price is to divide the market share by volume by the market share by unit sales.

Market share by volume =Sales volume (RUB)
sales (%) Total market sales

Market share through brand consumption intensity known as Parfitt and Collins technique (R&S technique). For the calculation, data from panel surveys are used (i.e., research conducted on a permanent sample of consumers). The following formula is used for calculations (in %):

Brand Market Share = Brand Penetration * Brand Repurchase * Brand Consumption Intensity.

Brand penetration to the market is defined as the percentage of buyers of a given brand (who made a purchase at least once) of the total number of buyers purchasing goods to which this brand belongs over a certain period. Repeated purchase of a brand characterizes consumer commitment to this brand. It is defined as the percentage I of repeat purchases made by customers over a certain period from among those who have already purchased this brand at least once. Brand consumption intensity is calculated as the ratio of the average amount of consumption of a given brand by repeat buyers to the average amount of consumption by all groups in a given product category.

Market share is a traditional tool with which you can evaluate the performance of any enterprise, as well as predict future development prospects. This indicator shows what place the company occupies in the corresponding market segment relative to its competitors.

It is worth noting that a quantitative display of market share can be obtained by calculating the percentage of sales volume to the total sales volumes of products that belong to the same group.

Market share reflects how effective the company's marketing activities are. It should be noted that at the moment there is no universal method unanimously accepted in the world economy that allows us to perfectly measure this indicator. A company's share can be calculated not only in the market, but also for a separate service segment, that is, that part of the market volume for which many companies are actively competing.

If the total sales volume in the relevant market segment cannot be calculated, then the share can be determined relative to such parameters as:

• Sales of nearby competing companies.
• Market segment leader or leading competitor.

What methods are there to calculate market share?

There are several effective ways to correctly determine the share, namely:

In kind

The indicator is the number of product units that are sold by a certain enterprise as a percentage of total market sales, which are expressed in identical units. In this case, you should use the following formula:

Market share=Unit sales as a percentage/Volume of the same sales made in the market.

In value terms

The sales volume indicator differs from the first method by reflecting the cost at which products are sold. In this case, the calculation formula will look like this:

Market share = Sales volume in currency / Overall sales volumes in the market segment.

Through brand consumption intensity

This method is also known as the R&S technique. To use the Parfitt and Collins methodology, it is necessary to use information from panel surveys, which are conducted on the basis of a regular sample of actual buyers. It is worth noting that calculations are carried out as percentages, and the formula looks like this:

Brand market share= Brand Penetration * Brand Repeat Purchase * Brand Consumption Intensity.

Brand penetration is the percentage of consumers who have purchased a brand at least once out of all consumers who have purchased the company's products.

Repeat purchase reflects how committed consumers are to a brand. This indicator is calculated as a percentage of brand purchases that consumers have purchased more than once over a specified period of time.

Brand consumption intensity means the ratio of the average rates of purchase of the company's products by those consumers who make repeated purchases to the average rates of consumption of all groups of products presented in a particular category.

What are the purposes of conducting a market share analysis?

Share analysis is carried out to determine two purposes, in particular:

1. Effectiveness of struggle in a competitive environment.
2. Advantages in a competitive environment.

It is worth noting that small market segmentation is most often used to determine the first goal. In this case, it is necessary to analyze each segment, including territory, group, product category. In turn, to determine competitive advantages, segments that are more aggregated should be used. This will allow you to best understand the competitive capabilities of the company as a whole in the market.

How can you collect information about a specific market?

To correctly calculate market share, it is necessary to collect relevant data. It is worth considering that collecting detailed information on a market segment is a rather complex task. There are a number of sources from which data can be obtained, in particular:

• Government statisticians.
• Manufacturers' associations.
• Retail trade networks.
• Independent research and analytical agencies.

It is recommended not to stop at one of them, but rather to collect available information from several sources. Then you should compare it, since only in this way can you correctly assess the state of the market.

In marketing, the market is understood as the totality of all potential consumers who have a need for goods in a certain industry and have the opportunity to satisfy it.

Classification of markets depending on the type of consumers:

The consumer market (or market for consumer goods) is defined by individuals who purchase goods and services for personal consumption;

The producer market (the market for industrial goods) consists of organizations and enterprises that purchase goods and services for their further use in the production process;

The intermediary market is enterprises, organizations and individuals purchasing goods and services for their further resale in order to obtain a certain profit;

The government market consists of government organizations that purchase goods and services to carry out their functions;

The international market consists of all buyers of goods and services located outside a given state, including individuals, manufacturers, intermediate sellers and government agencies.

Classification of markets depending on market dominance:

A seller's market, characterized by a stronger position of the seller compared to the buyer (for example, the cement or gasoline market);

A buyer's market, characterized by a stronger position of the buyer compared to the seller (for example, markets for everyday goods - dairy products, chocolate, etc.).

Classification of markets depending on the degree of consumer participation in the sales process:

Potential market – consumers who are interested in a certain product;

Accessible market - consumers who have interest and access to a particular product;

Qualified market – a set of consumers who have interest and access to the market;

Target market - the company concentrates its efforts on consumers who have common needs;

A developed market is a set of consumers who have already purchased a product.

1. Marketing information systems (MS) of the enterprise.

Marketing information systems (MIS) consist of people, equipment and procedures for collecting, evaluating and distributing timely and accurate information needed to make marketing decisions.

The functional model of MIS includes systems:

Internal and external information;

Marketing research;

Analysis of marketing information;

Planning of marketing activities;

Main marketing categories;

Interactive information circuit.

The MIS internal information system is a set of constantly functioning techniques and resources that allow you to obtain current information about events occurring within the enterprise.

An external information system is a set of constantly functioning techniques and resources that allow one to obtain current information about events occurring in the external environment of an enterprise.

The marketing research system is a set of constantly functioning techniques and resources that allow you to obtain additional information necessary for making responsible management decisions.

Analytical marketing system is a set of constantly functioning techniques and resources (models and algorithms) necessary for analyzing various types of marketing information and making management decisions.

A marketing planning system is a set of constantly functioning techniques and resources used to determine goals, strategies, and tactical activities in the field of marketing.

The system of marketing categories includes consumer ratings, indicators of customer loyalty and commitment, competitiveness and product quality.

The interactive information circuit consists of three interconnected elements:

Marketing mix;

Information site;

Target market.

MIS information processes can be presented in the following logical sequence:

Receiving and processing internal information;

Receiving and processing external information;

Conducting marketing research;

Analysis of marketing information;

Planning of marketing activities;

Information support of marketing mix variables using the enterprise website on the Internet;

Determining the meanings of the main marketing categories.

Marketing information is understood as a set of information characterizing the market and its individual elements: product supply, demand and prices, their relationships, assessed in time and space.

All sources of marketing information are divided into:

Secondary;

Primary.

Secondary information is information that already exists, collected previously for other purposes. Happens:

Internal – profit and loss statements, balance sheets;

External – publications of government agencies, books.

Advantages of secondary information:

Relative cheapness;

Speed ​​of obtaining information;

There are often multiple sources of information available, allowing data to be compared;

The information is generally reliable because it is collected from independent sources;

Helps in situations where preliminary analysis is required;

Some data (for example, the state of the country's economy as a whole) the company is not able to obtain on its own.

Disadvantages of secondary information:

May not be suitable for the purposes of the study due to its incompleteness, too general nature;

Information may be out of date;

The methodology underlying data collection may be unknown;

Not all research results may be published, due to reluctance to give information to competitors;

Data may be conflicting;

The reliability of information is not always known.

Primary information is data collected for the first time for a specific purpose.

Advantages of primary information:

Data is collected in accordance with the stated purposes;

The information is the most current;

The data collection methodology is known;

The results are available to the enterprise and are not available to competitors;

There are no conflicting data from different sources;

Reliability of information;

The only way to obtain the necessary information is if secondary information does not answer all the questions.

Disadvantages of primary information:

Large time costs;

Expensive;

Complexity;

It is necessary to have competent specialists.