Tag Archives: marketing

Sizing and Testing Your Market

How to gauge a market for energy efficient hair dryers

How to gauge a market for energy efficient hair dryers

Ok, this is dry but TOTALL magical to me. Ripped from my textbook and regurgitated- some examples of how to size and target a market:

Say that I wanted to sell energy-efficient hair dryers and am best equipped to sell/distribute in San Francisco and LA.

I would start by using the market-buildup method to explore the commercial market. I would go to the North American Industry Classification System (NAICS) to get a directory of all of the hair salons in the two cities. I would then survey a random sampling of hair salons to learn the rate at which they currently buy hair dryers, along with a way to gauge ways that my product could expand that market. Would hair salons replace a perfectly good hair dryer if the energy savings paid back the cost in 3 months? The number of hair salons times the number of hair dryers purchased times the price would be my total addressable market. I would then have to decide which segment of the market to invest in energy efficiency (probably high-turnover hair salons where the dryers get more use and the savings would be more pronounced.)

The next step would be to explore my consumer market using the multiple-factor index method. Say I found a number for total hair dryer sales across California. I would multiply that number by the % of Cali’s population in SF and LA, then tweak it with several numerical factors. I might look at the number of hair salons per capita across california- if it’s above average in SF and LA, I would add that proportion to my equation (presumably more hair salons means that people care more about their hair.) I would also add multipliers if disposable personal income or total retail sales were above average. Once I had my total addressible market I’d be able to use similar math to go census tract by census tract and find the highest-impact retail stores in which to place my product.

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Reading Notes:Marketing Management

That’s right, it’s back to dry reading notes time. I’ll try my best to instill a little narrative from time to time, but this semester’s f’gunna be crazy.

Chapter 1– Defines marketing from a few different perspectives. The one that resonates most with me is that of demand management. Just as operations manages a company’s supply of goods and service capacity, marketing manages the demand that exists for the company’s services, experiences, ideas and products. Like most topics in business, this one claims a necessary presence in all parts of an organization.

From a managerial standpoint, marketing is about all of the decisions impacting demand for your company’s products and services. That includes decisions about where to examine the market, what to sell and how to make the market aware of it.

Chapter 2– Goes into more detail about crafting marketing strategy. The framework that I like most breaks it down into three components:

Exploring Value– Which is about understanding the intersection between the value saught by customers (what can improve their lives and how the think about those things), the value created by the organization (your core strengths) and the value offered by collaborators (the types of value held by stakeholders that you can access and combine in interesting ways.) It starts with listening and integrating, which is very much how I roll.

Defining Value– Once the intersections have been identified, they need to be crystallized into a presence in the market. This includes a product or service, a delivery mechanism, a brand, and stakeholder engagement strategy, and internal marketing to build an appropriate corporate culture. It’s about putting the components in place to create the relationships that your company needs to thrive.

Delivering Value- Once the pieces are in place, you can deliver the value that you have to offer to the marketplace. This is all about finding, connecting with, and staying connected with customers and other key stakeholders. This is where traditional advertising fits in, though I like the model of market-centered community building a lot more personally.

I’d like to see this process modeled as a cycle more than as a linear progression. All three need to happen continuously, how can delivering value also be a mechanism of value exploration that constantly informs value creation? How can these three components be fractalized so that they exist in essentially the same relationship to one another at all scales of the process? Srsly.

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