Basic elements of marketing strategy, Relative Market Potential, and Competitive Parity Analysis

 Relative Market Potential

 

Estimating the market potential for a business is critical in evaluating its viability

and provides an estimate of the maximum total sales potential for a given market.

Once the estimated market potential has been calculated, it is possible to determine

if the market is large enough to sustain your proposed business or sustain an

addition competitor in the marketplace. It is important to remember that the

estimated market potential sets an upper boundary on the market size and can be

expressed in either units and/or sales. Unless there are no direct or indirect

competitors, a business will capture a share of the total estimated market potential

not all of it.

Key Steps in Estimating Market Potential:

1. Define your target market and market segments.

2. Define the geographic boundaries of your market.

3. Derive an average selling price.

 

Competitive Parity Analysis

 

Competitive-based approach used to determine an advertising budget wherein an

advertiser decides advertising dollars to be spent on the basis of competitors'

spending. A problem with this method is that not only does it assume that all

competitors' marketing objectives are the same but also that it leaves an advertiser

subject to the same mistakes the competitor may make. Additionally, information

concerning competitive-advertising expenditures is only available after the money

has actually been spent; thus the advertiser who uses this method is always

functioning on other companies' past results.

 

Basic elements of marketing strategy

 

Segmentation

Every market has submarkets constituted by customers with same characteristics. Each market segment represent a different opportunity. There are four conditions to fill so that a segment is attractive: the existence of dissatisfied or badly satisfied needs, a sufficient size, a potential of significant development, a weak competition.

 

Positioning

According to the adopted strategic behaviour, a different row in the network, representing the held market shares: leader, follower, challenger or nicher (specialist). With this organisation, if the position of a firm changes, the position of the competitors changes too.

 

Market entrance

There are three possibilities: firm creation, partnership or buy an existing firm or product. We can again precise for this point that is not the same in all economies. The market and the laws are different.

 

Time

The moment to pass to the action, that is to say neither too early nor too late. It will be necessary to establish a timetable, which holds account of the two principal parameters: time to cover the market and the lifespan of a product