Transcript Competition - Score Houston

SCORE
®
Counselors to America’s Small Business
Create a Winning
Business Plan
Session 2
Competitor Analysis
Your Competitive Advantage
Setting Strategies
Sales and Margin Goals
Marketing Section
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Product and/or services – from customer’s view
Industry Description, size, growth, major trends
Characteristics of target buyer and her unmet
needs
Target market – your niche
Competitor Analysis – Strengths and Weaknesses
Your competitive advantage & niche; i.e., why will a
customer do business with you?
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Strategies – selling, pricing, purchasing, location
and advertising
Goals (sales volume and margins) based on
forecast; list of key assumptions
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Worksheet 5
Marketing Section
Competition
Strengths
(continued)
Weakness
Competitor 1
Competitor 2
Competitor 3
Competitive
Advantage
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1. How many direct competitors do you
have?
2. Are there competitors or products that
may offer indirect competition?
3. In what ways do they compete?
4. Will there be additional competitors?
( Describe your unique competitive advantage)
3
Define Your
Competitive Advantage
1.
Cost
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2.
Technology
Features
Guarantees
Service
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Buying power
Distribution
Technology
Quality/Performance
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3.
4.
Customer service
Strong sales force
Extra services
Customization
Convenience
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Location
Broad line
Product bundling
Hours of service
Define this advantage in your target market (or niche)
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Example - Competition
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Competition comes from health clubs
– national, regional, and local
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Few fitness centers located in downtown Seattle
except several small fitness facilities
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These organizations are primarily exercise
facilities with little emphasis on personalizing
individual plans to improve working performance
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None of these cater their services to corporations
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Example – Competitor Analysis
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YMCA
– market is lower-income families and/or students
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Gold's Gym
– targets motivated and dedicated individuals
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Better Bodies
– aimed at casual fitness-seekers
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Example – Competitive Advantage
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We manage health care costs, by working with
client companies to implement wellness strategies
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An integral part of our service is follow-up and
monitoring the individuals
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Many employees will benefit from our program
without ever visiting the fitness facility
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Worksheet 6
Marketing Section
(continued)
Selling
strategy
 Retail;  Wholesale;  Service
 Home-based;  Internet
Location
Strategy
(Describe advantages or disadvantages vs. competition)
Is your location important to your customers?
Is it convenient?
Is it consistent with your image?
Is it better for you to be near your competitors or far?
Pricing
strategy
 Mark up;  Cost+;  Bid
What are the current pricing practices in your industry?
What is the mark-up used by your competitors?
How aggressive is the “Sales” pricing?
Is chosen strategy consistent with your image?
Purchasing Major categories
strategy
Vendors for each (List up to 5 vendors)
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Example - Selling Strategy
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We will target small- to medium-sized businesses
in downtown Seattle
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The first task is to convince senior executives of
the benefits and needs of wellness programs
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This will be accomplished by aggressively
pursuing interaction and relationships with
business professionals who would profit from using
this service
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Example - Location Strategy
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Corporate Fitness headquarters are located within
the first club located in downtown Seattle
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Upon expansion, offices will be moved to a
different location, not within any individual club
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Example - Pricing Strategy
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Prices for using Corporate Fitness' services are
comparable to those of higher-end fitness centers
and reflect the quality of the equipment and
service
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An employee choosing to utilize a Corporate
Fitness center will pay a $100 monthly fee
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For each employee enrolled in the general
wellness program, regardless of whether or not
they use the fitness facility, the employer will pay
$150 annually
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Example – Purchasing Strategy
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All fitness machines are purchased from exercise
equipment distributors, while all medical
equipment is bought from a reputable supply
company
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Worksheet 7
Marketing Section
(continued)
Advertising Strategy
Develop a Message
What is the purpose of the
message?
 Promote your product;
 Promote your image
Define the image you wish to
promote
What BENEFITS of your products,
or doing business with you should it
emphasize?
How will it motivate the buyer?
Write Your message
Is it clear, concise, understandable?  Yes;  No
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Is it easily remembered?
 Yes;  No
Is it supported by credible facts?
 Yes;  No
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Worksheet 5
Marketing Section
(continued)
Advertising
Strategy
Define
demographic
s of your
target
audience
Select the Media
Select the
right media
 Word of Mouth  Networking  Community involvement
 Newsletter  News release  Publish
Sex:
Age :
Race:
Money:
articles/testimonials
Flyers  Door hangers  Signage  Billboards
 Internet  Newspaper  Directory/Yellow Forms
Radio  TV  Catalog/Direct Mail
Why did you make this selection?
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Advertising Budget
start-up + maintenance
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Avoid start … stop advertising
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Set affordable ad budget as % of
revenue
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Perform cost / benefit analysis
– Track sales outcome from each ad strategy
– Compare it to the cost
– Decide if it is worth it
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Example – Advertising Strategy
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Initial promotional activity
– advertisements in newspapers, magazines, and on television and
radio
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Maintenance advertising
– word-of-mouth to attract more clients
– occasionally supplemented by small promotions thru media
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Forecast Sales & Margins
Educated view of the future with data which can be defended
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Start with Market Research
Disaggregate product lines or services for
improved estimates
Make reasonable assumptions & realistic premises
(list them)
– Census data
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Demographics & competition
Spendable income and growth patterns
– Industry data
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RMA, D&B, Bizstats
Trade Association data
Vendor input and own or other data
– Constructive estimates
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Pre-sold contracts / Commitments from buyers
Market research and focus groups
Historical experience – own or others
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Worksheet 8
Sales Volume-Margin Forecast
Month 
1
2
3
4
5
6
7
8
9
10
11
12
YEAR
# of customers
Average # of units
per customer
# of units you
expect to sell
Average sales price
Average cost of sale
Gross margin
= price - cost
Gross Profit
=Sales units x gross margin
Develop it here and reuse it in the
Cash Flow Forecast in the
Financial Section
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Sales Forecast Example
ASSUMPTIONS
PROJECTION
Month
1
2
3
4
5
6
Sales
Business days in month Schedule: Mon-Sat
26
27
25
27
26
26
Average transactions per day
2
3
5
5
7
7
Total transactions per month
52
81
125
135
182
182
Sales
$ 80.00 average trxn before delivery 4,160
Delivery charges
$ 10.00 per trxn; 100% of all trxns
Total sales
520
4,680
6,480 10,000 10,800 14,560 14,560
810
1,250
1,350
1,820
1,820
7,290 11,250 12,150 16,380 16,380
Cost of goods sold
Purchased Goods
46.0% of sales per attached schedule1,914
Delivery charges
60.0% of sales
Total cost of goods sold
Gross profit
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52.4% Consistent with RMA
2,981
4,600
4,968
6,698
6,698
312
486
750
810
1,092
1,092
2,226
3,467
5,350
5,778
7,790
7,790
2,454
3,823
5,900
6,372
8,590
8,590
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Homework
Session 2
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Finish the Marketing Section by completing
template pages 5, 6, 7, 8. E-mail to the
instructors by Sunday noon, and bring to
session #3.
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Use your SCORE counselor
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