Understanding Markets

A market can be anywhere physical or non-physical where buyers and sellers come together to exchange goods and services.

The markets can be:

• Physical --> real
• Virtual  --> online
• Local --> only supply to a local town / region
• National --> supply all across the UK
• International --> supply to various countries

Businesses may decide to operate either as B2B (Business to Business) or B2C (Business to Consumer).

Let's get to the mathsy stuff...

Markets can be measured in two ways;

 Volume

Value

C'mon... this is all for the good of learning!!!

One of our first calculations looks at how the market is due to grow. This is where our good ol' friend Homer Simpson comes to the rescue.

Market Growth

Difference in market sizes (units or value)
---------------------------------------------------         x100
Original size








Market Share

This calculation allows us to see how well we are doing in comparison to the rest of the market.

Sales of a business (units or value)

               -----------------------------------------------        x100

Total sales (units or value) in the market

These are all very well but we are nothing without a little thing called DEMAND!

Demand is the amount of goods / services customers are willing and able to spend over a period of time.

This can be affected by things like income, price of a product, what the competitors are offering. Demand is very vulnerable to change.

Market Segmentation

The market is broken into four segments:

• Geographic --> where do you live, where are you from
• Demographic --> your profile; age, gender, socio-economic background
• Psychographic --> our values, beliefs
• Behavioural --> why do we buy the products that we do, are there any patterns?

This segmentation allows for businesses to tailor their marketing and really find ways to develop their products into new market segments.

However there may be a concern that we become so focused on specific market segments that we miss out on entire audiences.

Niche Marketing

I'm a video!!!

Niche marketing is all about finding that gap in the market and then exploiting it. Niche marketing is good for a start-up because it is likely that we will have fewer competitors BUT is there a large enough market for our product or service to make it viable?!

Tune in next time for Transforming Resources... ooooooh....

Business Plans

Business plans - what are they and do we need 'em??

A business plan is a document that sets out exactly how an entrepreneur proposes to start a new business venture.

The plan allows us to:

• set clearly defined objectives
• identify steps we have to take to start trading...

Example time...

http://www.buzzfeed.com/mariasherm/music-festival-hacks-that-will-make-your-experience-way-more#yvopde

When it comes to the joys of you attending festivals, you want to make sure you are fully prepared otherwise you end up like this crazy bunch who didn't even bring a coat!!! 

Without creating a list of the necessities - we wouldn't know where to begin. By clearly identifying what actions need to be undertaken, we relieve some of the stress.

• The plan also helps give our business direction. We can very easily get caught up in the excitement of our new business, but sometimes we need to remind ourselves of our final aim.
• And of course, our plans should support us when trying to raise finance.

Several people are going to be interested in your business plan. The main ones are your banks and potential investors. Our suppliers however may also want to know more about our business to see if they support your idea and want to be involved. The plan may also help you gain trade credit (take the products today but pay later).

Ultimately - YOU should be regularly looking at your plan. You need to know where you're going and how you are getting there.

Benefits of a business plan

• Encourages a logical and detailed breakdown of the business
• Forces an entrepreneur to stop and think
• May identify a weakness or gap in the entrepreneur’s knowledge
• Helps secure funding
• Provides a framework
• Progress can be reviewed against plans

Limitations of a business plan

• Can be difficult to make accurate forecasts
• Difficult to turn paper plans into reality
• Opportunity cost of time spent planning - causes a delay to trading
• Can cost money if help is needed
• Can restrict creativity

Sources of information

As a new start-up, we may be a little unsure of certain areas of our business plan, but where on earth can we go for help? Below is just a few suggestions as to where we can gather the necessary info...

• Small business advisor
• Bank managers / Accountants
• Government agencies
• Library (they have books and stuff here!!!!)
• Internet
• Other businesses

Generating and Protecting Ideas

We can put the maths to one side for now and focus on actually building a business. Where on earth do we get ideas from???

Personal experience and expertise --> 

• Jamie Oliver turned his education into his Business
• Simon Cowell may have little fashion sense but he certainly knows the music business - One Direction exist because of him

Brainstorming -->

• When your legal guardian decides you deserve a treat and spoils you with some Shloer, it would seem that we can come up with the most genius of inventions... this is how some businesses are born
• Suggest anything and everything until something is mentioned that has potential

The post-it was born because one 3M worker needed to mark a book without damaging it. 

Another had designed an adhesive that formed a sphere rather than a film.

BOOM!!! Post-it!

Stealing ideas from other countries --> USA adopted the coffee bar culture by introducing Starbucks

Inventing new original ideas --> Dyson did not invent the vacuum cleaner but they made it what it is today

Spotting trends --> Friendship bracelets became loom bands

We all know how this feels!!!

Market niche --> Finding the gap in the market that is yet to be exploited. Can you think of any market niches?

~~x~~

So we've come up with our incredible suggestions... now to stop the competition stealing our ideas!

There are three forms of intellectual property protection:

Trademark --> protects a business's distinguishing feature such as a logo or slogan

Copyright --> protects creative and artistic works such as literature or music

Patent --> legal protection that protects a new invention. A patent lasts 20 years and has to be renewed every 5th year.

We need to protect our business ideas so that we have a unique selling point. A USP makes us different from our competitors. If we have a USP it means we can charge more for our product and thus make more profit.

However, by protecting our idea, we are stopping others using the invention to further advancements in society. We may not be where we are today if people like Nikola Tesla had patented his work.