Question

Topic: Advertising/PR

Reach: How To Determine The Practical Requirment

Posted by public on 7/28/2012 at 8:14 AM ET 40 Points
I am a beginner, so I don't know much.

I am a start-up (or will be) . I have a product idea. Critical decision I have before me is deciding on the production level.

Here is what I grasp:

Let us assume that I calculate that the lower limit of profitable production is 1000 units. And, that my resouces allow me to make 10, 000 units.

I decide that I should try to produce 10, 000 units.

I do market research and establish that total segment production is 1000, 000 units.

Further reaserch forcasts that I could take 5% of market share.

That means if I reached everyone currently absorbing the total production, I have potential sales of 50, 000 units.

My actual sales forecast is a function of my sales/marketing plans. Who I advertise with, which retailer I may place my product with, whether I use TV advertising etc. It's my choice.

Now, if my market share is 5%, then if I could reach 100% of the market, I would in theory sell potential sales - which is 50, 000 units.

My decision is to try to sell the maximum I can produce, which is 10, 000 units, so in theory I have to reach 20% of the market segment.

I believe the above is correct.

Okay, I've got to discover what the practical requirements need to be in order to reach 20% of the markt.

I've never run a business, I'm new to this, and I don't know how I would proceed so that I end up with proper arrangements that allow for 20% reach.

By "proper arrangements" I mean what I should pay for, in terms of advertising, sales. Whatever impacts on putting the product before customers.

Any advice, hints on this? Do I set out to reach 20% of the market - or what? Who do I talk to? Etc etc.

I guess in a nutshell I have to produce a plan.

I need a way of working, so I know what my requirements are in order to get the required 20% reach. Thanks.
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RESPONSES

  • Posted on 7/28/2012 at 9:59 AM Member
    I help people market/promote their new products all the time. It seems your potential customers are easy to identify, but are they easy to reach?

    Are there magazines, mailing lists, specialty stores that cater to them? It's almost impossible to answer your questions without knowing more.

    JDS
  • Posted by public on 7/28/2012 at 10:40 AM Author
    What does reach look like in the garden market?

    Of the top of my head I'd say:

    Product on shelves at food retail stores (ASDA, SAFEWAY Etc)

    Product on shelves at DIY stores (B&Q, WICKES, WILKINSONS)


    Product on shelves at Hotricultural centres.

    Adverts in Garden Magazines (The English Garden, Gardener's World)

    TV and radio adverts

    A plan would involve the above. But, to sell 10, 000, in theory my reach would have to be 25%. But, I'd have no idea- how I could know - I'd likely reach 25%.

    That reach would directly determine my sales forcast of actual sales.
  • Posted by public on 7/28/2012 at 10:41 AM Author
    Just another thing, before anyone gets into this:

    You see that I'm taking a certain kind of approach, which I would classify as "apparantly" logical.

    Which is, for a product similar/exchangeable (but hopefully a bit better) to competitors:

    * Establish market share

    * Decide on your desired level of production (10, 000 in this is case deemed achievable).

    Figure out a sales/marketing plan so that you achieve the market reach, such that you are likely to sell your 10,000.

    Whether this apparantly logical approach above is what starters do, I know not. Someone might say this approach seems okay on the surface, but in practice people take X appraoch. I'm sure someone will point thgis out if this is the case.

    As to some detail, in my case I'd be in a segment of the garden market. Where there are magazines, horticultural centres.
  • Posted by public on 7/28/2012 at 10:49 AM Author
    BTW, this message system is not good. I ought to be able to remove duplicates. Confusing sytem.
  • Posted on 7/28/2012 at 11:32 AM Accepted
    (The system will get easier as you use it more.)

    Your "logical" approach is logical, but it may not be the only or best way to plan. That's because the ideal distribution method may be prohibitively expensive, if not impossible, until you've demonstrated that the product will sell.

    Sophisticated retailers are not going to take any risks. They will want to know exactly how you're going to promote the product and what volume level they can expect. In fact, they'll expect YOU to guarantee the sale (or agree to take back any excess inventory).

    You should probably find some way to test-market your product in a few stores -- as a carefully monitored "experiment" -- before you approach any of the major retailers. This will also require that you develop an initial marketing plan, packaging, promotion and pricing strategy before you even begin. So the "market share" approach is probably starting at the wrong end of the telescope.

    To some extent you have to work it from both ends. But the key will be to test your assumptions with some kind of research or experimentation. This costs money, but not nearly as much as it would cost you to just try stuff and only get half of the decisions right.

    There are a few online seminars here on the MarketingProfs site that might be worth viewing. They deal with start-ups, do-it-yourself market research, why most new businesses fail, etc. Start with these:

    https://www.marketingprofs.com/marketing/online-seminars/110

    https://www.marketingprofs.com/marketing/online-seminars/115

    Or you can get the reports here: https://bit.ly/O8PjDz
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