Product Mix – Designing Products and Services for the Consumer

Strategy Plan One

May 17, 2012 

Product Mix

Determining what your business will offer for products and service to your markets is definitely a business and marketing art form.  Detailed business plans and marketing plans must be completed before entrepreneurs and companies launch their products and services.  An entrepreneur must design their suite of products and service with the overall goal of meeting the needs of the consumer base, and obviously to generate revenue for a successful, sustainable business.

Some of the questions you will need to answer include what products and services you will offer consumers, whether those products and services meet their needs, and at what price point is the customer comfortable with (buy-in).  How does one determine what is needed, the value of product or service, competition, price point, sales avenue, etc.?  Detailed marketing plans will help drawn out and plan the products and services mix.  Prior to the marketing plan development, you will need to develop some marketing research methods to extrapolate some information and data from your potential target markets.

Surveying your Markets to Determine Product Mix

Conducting your own due diligence in planning processes is critical to successful developing and implementing plans.  Surveying is one way to gauge the level of interest, the level of need, and economics and business aspects of your proposed products and services.  Whether you conduct the survey or engage with a professional marketing firm to complete those tasks, surveyed information can inform the decisions you need to make around your mix of products and services.

Product Mix – Marketing Plan

Armed with fresh, relevant data from your surveying efforts, you should be able to draft up a solid marketing plan that reflects your potential product mix, price points, competition concerns, and placement of products.  Your marketing plan should go into the depth required to explain revenue generated from such product and service mixes, and the Return on Investment in marketing activities to promote those products and service.  It will be extremely important to implement your marketing plan and to measure the results.  Reviewing the results will give you an opportunity to analyze whether your plan was working or not, and if you achieved the projected return and benefits from you marketing activities mix.  This also gives you the ability to revise and implement a better plan in the future.

Marketing Budget

Great marketing plans must be funded.  Ensure that as you plan, you also plan a marketing budget to cover marketing expenditures.  Only a few activities can be achieved at very low-cost, but some marketing activities are going to require you to plan and to provide part of your budget towards marketing.  As you fund marketing activities, you also need to determine your return on investment in those marketing activities.  For example, social media marketing is only one of many avenues that may generate a return.  Measure results and revise your marketing plan accordingly.  You may be surprised on the differential in returns between marketing activities and that may change your focus towards more support in one marketing activity category.

Designing Your Product Mix – Tips

• Always start with the why – why are we conducting these business activities, why do we think these product and services meet the needs of consumers
• Obtain solid, objective, external information from your markets, customers
• Undertake surveying to obtain market data
• Analyze your market data
• Form business plans and marketing plans based on solid outside information
• Call upon a marketing professional to strengthen your product and marketing mix (ask the professional)
• Remember that a high level of due diligence is required and that effort will be reflected in the actual results achieved. 

You may find that hitting the right markets with the right mix of products and services, timed accurately may be achieved through trial and error.  Very few successful companies and marketing strategies hit the nail on the head from the start.  Through conducting due diligence, and your readiness to adapt to the changing environment, will provide you with much better results.

Strategy Plan One

http://strategyplanone.com

Business information, resources and tips for the entrepreneur

© 2012 Strategy Plan One

Social Media Statistics and Impacts on Business [Infographic]

Strategy Plan One

May 16, 2012

Social Media Statistics

An interesting infographic from Pagemodo has just been released, illustrating the statistics and impacts of social media on businesses.  Here are some highlights of their survey:

• 53% use Social Media for business / 47% do not
• 19% use Facebook, 15% use LinkedIn, 4% use Twitter
• 12% of respondents say social media is a must in business marketing
• 33% of businesses use metrics to measure Return on Investment from social media activities

What is the biggest benefits:

• 88% of Brands indicate exposure as one of the biggest benefits
• 72% claim increased traffic from social media marketing is the biggest 
• 62% of marketers state improved search rank is the best benefit 
• Dell claims a 300% traffic improvement with social media 

Strategy Plan One

http://strategyplanone.com

Business information, resources and tips for the entrepreneur

Social Media Sites – Valuation Out of Control?

Strategy Plan One

April 16, 2012 

Social Media Sites

Social Media sites seem to pop up out of nowhere, gain popularity, and before anyone knows it, the company behind the site is worth millions or billions of dollars.  What is driving business valuation of a current wave of social media sites?

This pattern is very similar to what was seen in the early internet years of internet sites popping up and soon valued at millions of dollars.  There are certain valuation factors that go into valuing web sites and the new wave of social media sites.  Although heavy financial analysis has much weight in valuation, factors such as the number of users, market potential, innovator factors, revenue potential, goodwill and speculation are all considered into the valuation models.

Social Media Sites – Revenue

The biggest revenue driver behind social media sites is advertising revenue.  In approximately 77% of social media sites, ad revenue dominates the revenue streams.  In 2011, Facebook alone was estimated to bring in $2 Billion from ad revenues.  Based on financial analysis formulas and calculations, analysts can determine advertising revenue potential by the number of users, visitors and page views.  Valuation models can involve calculations on potential revenue and future value of earnings or revenue.  Models can factor in complex valuation, with estimates of total revenue potential of social media sites which would include ad, user fees, subscription, licensing and other sources.

Social Media Sites – Number of Users & Market Potential

Even if the social media website has not generated one dime, but has millions of users and potential to earn revenue, speculative valuation can be determined.  An investor will be interested in a business acquisition if there is a projected return on investment.  A website that contains an existing, massive base of subscribed members, paid or unpaid membership base, would be appealing to an investor.

Most investors are looking at the revenue potential and would be interested if the valuation of that same asset has been projected to increase.  Obviously the investor may be looking for a return based on an asset turnover a few years down the road when selling off the acquired business.

Information, Mechanics and Proprietary Features of Social Media Sites

Valuation factors may also include value based on the mechanics and functionality of the website.  Through some analysis of backlinks and SEO, some automated valuation models can determine valuation of a website based on the standards created by other existing websites.  The value of the content is also important, along with any proprietary and/or patented features, widgets and coding, original to that website.

Speculation of Social Media Sites

Those in the technology field may fuel speculators by stating the what the next greatest social media sites will be, citing the next greatest thing on the internet.  When that buzz occurs, so does the buzz around the speculation on value.  Once again like other valuation factors, speculation may be driven by revenue potential.  Speculators may estimate the market potential, number of future users, future revenue, future return for investors.

Social Media Site – Valuation of Assets and Goodwill

In most acquisition projects, business valuation is undertaken to determine the valuation of assets and the valuation of goodwill.  Goodwill is the valuation of the intangibles (non-assets of the company) such as the name of the company, the Brand of products and services, and the value of relationships with the audience.  Goodwill in the name will be carried forward with the new owner or investor, as long as names or Brands, or customer appeal do not change that much.  Speculation sometimes drives up the valuation of goodwill, and sometimes investors must gamble with investing on an acquisition that has a high goodwill valuation attached to it.

Strategy Plan One

http://strategyplanone.com

Business information, resources and tips for the entrepreneur

© 2012 Strategy Plan One