Demand Analysis: Major Marketing Customers
There will be two major types of marketing customers. The first type of customer will be new or prospective entrepreneurs looking for business plan support, feasibility, research, or a market/marketing plan diagnostic. The second type of marketing customer will be established businesses or government agencies looking for advertising design, targeting, or brokerage and retail support, such as: merchandising, price point analysis, research, and promotional needs (drug stores, convenience stores, restaurants, professional services, other retail).
As the questionnaire highlighted, business cards, newspaper ads, and radio ads were the most common marketing expenditures. Website design was identified as a need as well as consultation for general marketing strategy. Without being too presumptuous, there are a dozen or so local businesses that could be considered heavy marketers. These businesses will be key targets.
Where are they located?
There are 800 business located with 45 km of Grand Falls-Windsor. Gander and Corner Brook will be considered as well, bringing the total number of potential clients up to about 2500.
Why will they buy my product/service?
“Why” has already been established. No one offers what DHMD can provide and it will be a matter of time (up to two years) until the business is sustainable. The important question is: HOW OFTEN? Through my questionnaire, I am estimating that the average business in Grand Falls-Windsor spends $6000/year on marketing and advertising. Making the market in the Grand Falls-Windsor area worth:
$6000 x 800 businesses in Central = $4.8M
Assuming a 15 percent commission, the maximum revenue would be $4.8M x .15 = $720,000.
Assuming a 10 percent market share of marketing services then DHMD could expect, at the top end, $72,000 in revenue.
What do potential customers expect in terms of price, quality, and service?
Expectations are quite modest as they have yet to have an opportunity to use a marketing agency. Merely raising the quality at the current price would be a reasonable expectation.
How do they currently buy competitive and substitute products?
When the need arises, most advertising (especially print) is done weekly or seasonally. Some services, such as tax consultants, are heavy advertisers in January and February. They purchase radio time and newspaper ads. Others advertise seasonally, usually during the Christmas season.
Advertising is also purchased when a Transcontinental salesperson (or Joe McGraw) phones a client to inform them of an advertising supplement that may be directed at their target audience. Promo material, from Stagg Signs or Flexo-pak, is purchased as the need arises.
Who or what influences the buying decision?
- An upcoming sale or promotion
- Introduction of a new product
- To stay in the customers mind (awareness)
- Arbitrary allotment of budget based on uninformed Business Intelligence (BI)
Scenarios: Worst, Best, Moderate:
Estimated worst case scenario (sales):
Assuming a 15 percent commission then the maximum revenue would be $4.8M x .15 = $720,000 for a 100 percent market share.
The worst case scenario would be building BAD word-of-mouth advertising which results in only a 2 percent market share: net revenue would then be $14,400/year
Estimated best case scenario (sales):
Assuming a 15 percent commission, the maximum revenue would be $4.8M x .15 = $720,000 for a 100 percent market share.
Assuming a 20 percent market share of marketing services DHMD could expect, at the top end, $144,000 in revenue.
Estimated moderate case scenario (sales):
Assuming a 15 percent commission, the maximum revenue would be $4.8M x .15 = $720,000 for a 100 percent market share.
Assuming a 5 percent market share of marketing services, DHMD could expect, at the top end, $36,000 in revenue.