Methods Used to Analyze the Marketability of a Firm - Essay Example

Methods Used to Analyze the Marketability of a Firm Analyzing methods to determine marketability are as many and diverse as the industries utilizing them. Analyses can include some of the following: expert, similar case, industrial relationship, organizational, marketing, technical, consumer and consumption, competitive, strategic, and financial. Methods used by some ventures are specifically tailored to their business. For example, a study was performed to determine marketability in December 2003 for thirty-two pay pond businesses in West Virginia. A fee is paid to fish in these ponds stocked by farm raised fish. Interviews, by mail and on-site, were conducted to determine the demographics and characteristics of the typical angler. Discovering the motives of paying anglers proved to be beneficial in the analysis (relationship). The methods used by the West Virginia Division of Forestry included: 1. GIS Applications, a resource tool used to obtain geographic data. 2. Multi-criteria Decision Making, a system used to decipher problems. 3. Selection of Criteria pertains to referencing distances between pay ponds and populated areas. The above methods used would then be helpful in structuring marketing and strategic analyses. Pierskalla, Schuett, Fields, & Moldovanyi West Virginia Fee Fishing Study Summary Report March 2003 Let's discuss the various previously-mentioned approaches to determine marketability. TECHNICAL ANALYSIS This analysis will assess needed requirements and how well they are suited to the company's capabilities. Organizations can use this data to choose ideas and products which match their technical support, leading to competitive advantages. This analysis will also help to determine whether in-house or external technical support is the most feasible. A number of methods can be used when conducting a technical analysis. Checklists, scoring tools, environmental scanning, and decision-making models (as used by the West Virginia Department of Forestry) are some of the most widely used methodologies. A company should not, however, make the technical analysis its main focus. The analysis may show the firm's marketability in a glowing light, but this opinion may not be equally shared by its customers. A case in point is RCA's introduction of their quadraphonic 8-track system in 1970. This product issued booming marketability for RCA; however, predictions for future technology were not illustrated on their then-technical analysis. MARKETING ANALYSIS Collection of market data on products and ideas are essential to determine marketability. If a company isn't competent in marketing skills, it will not succeed. An example is the largely-populated country of China. They can offer numerous opportunities; however, it has been quite challenging for the Chinese to market their products in their own country. Marketing challenges must definitely be addressed. Each concept requires different marketing data and strategies. Very much like the technical analysis, checklists, scoring tools, and environmental scanning are effective tools. A decision-making resource, such as the Analytic Hierarchy Process (AHP) is also beneficial. Always keep in mind that a firm is never marketable without customers who are seeking your products or ideas. It's also crucial to analyze your target customer base and the demand and supply of your products. FINANCIAL ANALYSIS The primary goals of an organization are to produce a profit, increase sales and customers, and to show a return on their investment. To be marketable, a firm should set financial guidelines. To get an accurate financial analysis, much financial data is needed. Budget goals must be set and met. Benchmarks must also be laid down to agree with financial returns put in place. The most widely used financial analysis methodology is the Net Present Value method (NPV). This method associates the monetary benefits and expenditures against the products. The product's NPV is then weighed against the interest rates and the investment put into the product. There are many unknown variables to deal with analysis, since the future is only a prediction. Because of these unknown variables, the method of option pricing relates to future probabilities. Having expenditures beyond your budget goals is financial disaster, and, therefore, eliminates the firm's marketability. Keep in mind that the financial analysis also has its limitations. It's important to not rely solely on short-term predictability. Also, this analysis may not correctly identify the risks involved, since only a snapshot is being depicted. ORGANIZATIONAL ANALYSIS Cultures, structures, and organizational processes are extremely important to the marketability of your firm and its products. Companies must be innovative, creative and indulge in some organized risk-taking. There must be a planned fit between the analyses and capabilities concerning the technical, marketing, and financial approaches. Now it's time to pull it all together to make it work. Without this step, a company can easily fall apart. The organizational approach encourages the importance of all the processes required to make your company and its products marketable. As with each analysis, the organizational approach also has its limitations. All approaches must be coordinated in an organized manner to be beneficial. STRATEGIC ANALYSIS This analysis forces a company to closely inspect how its strategies impact the marketability of its firm and their products. Internal audits and communication between corporate and staff are crucial. A new product added to the existing line must create harmony in the organization. A new product is not meant to take business away from the existing products (cannibalism). An example is when a company's online business overrides its offline sales. Appropriate strategy has to be enforced to alleviate this dilemma. Companies should prepare to alter strategies as needed to take advantage of present and future innovations. RELATIONSHIP ANALYSIS To encourage a firm's marketability, a partnership must be formed with distributors, suppliers, and customers. In order to set industry standards, a solid relationship with competitors makes good business sense. This can be a key factor to the success of the company. Seller-buyer relationships build value to the firm. Generating a list of potential partners and aggressively pursuing a relationship can ensure marketability for your firm and its products. The suitability of each partner should be assessed by using scoring tools and the AHP technique. Keep in mind that this analysis can be misleading if relied on solely. INDUSTRIAL ANALYSIS Organizations need to run within a business scope of competitive, economic, technological, political, legal, cultural, and social environments. Methods used to conduct this analysis can include scanning secondary databases for pertinent data. The firm can interview futurists to obtain information pertaining to future changes within the industry environment. This approach can help foresee future trends, and assist in the marketability of your company and its products and ideas. COMPETITIVE ANALYSIS For a company to be marketable, its ideas and products must be better than those of its competitors. Customers seek products that are new and better than what is currently available. Firms must identify and improve on the similarities of its competitors' products. Comparatives of the current and new product must be closely examined to achieve the competitive edge which enhances your company marketability. SIMILAR CASE ANALYSIS In this scenario, assume that your company will succeed as well as your competitor. Comparisons of every foreseeable event, product, idea, and problem can determine the probability of your success. Where have other similar firms failed or succeeded Budgets and costs can also be examined with this methodology. Diffusion models can calculate future sales of a product by comparing past sales. This method can be useful in deciphering future success as well as selecting the best strategies to reach that goal. CONSUMER AND CONSUMPTION ANALYSES Marketing a product based on the opinions of a targeted audience can ensure your company marketability. Via questionnaires and interviews, your potential customers will tell you what their needs are. Comparing different versions of the product can be a useful tool. Conduct surveys to identify the strengths and weaknesses of your firm and its products. EXPERT ANALYSIS Collaborating with people who have the expertise should be considered. This method is helpful because it will give your company access to pertinent information that is not easily attainable. There are always limitations in every method. Experts are not always right. For example, the design for hang gliders was based on expert opinion, but not on the opinion of the every-day user. Hence, the sport became available to only experts. Muammer Ozer. n.d. Department of Management, City University of Hong Kong CONCLUSION A combination of these methods must be used to predict the marketability of your firm and its products. Lessons can be learned from Proctor & Gamble, Gillette, Toyota, Dell, Dow Corning, and Starbucks to name a few. These organizations did nothing beyond the capabilities of competitors and peers. None has a better product than their strongest rival. What has made these companies enter the realm of excellence is their consistent strive for marketability. MarketAbility's Marketing Briefing Issue 7, 2004 A case in point for constant marketability is McDonald's recent analysis and research related to the concept that fast food restaurants are contributing to obesity. One thousand thirty three residents of Minnesota were surveyed by phone. Distance of home and work to their restaurants were assessed by Global Index System (GIS) methodology. Consuming fast food was definitely associated with a diet high in fat. However, proximity of the eateries to work and home was not associated with dining there. Failure to define the similarities between fast food eateries and obesity may be due to the weaknesses of the methodology used to analyze the situation. International Journal of Behavioral Nutrition & Physical Activity University of Minnesota, January 2006, author unknown Another scenario of marketability would be Starbucks' study and analyses conducted to find another way to increase their marketability. In 2004, the company decided that they would give bags of used coffee grounds to anyone who asked; coffee grounds, when used correctly, provide nutrition for a garden. Because of their analyzing to think outside the box, they found a way to increase their marketability. Blogcritics, April 2004, author unknown Shuffle Master, the top manufacturer of card-shuffling machines, has mastered the art of marketability. By promoting its cost-saving product to casinos worldwide, sales grow an average of 19.8% per year. By analyzing casino growth and poker growth, they are able to maintain their increasing marketability. Growth Companies, Business Week, June 2004, author unknown Toyota constantly tests its marketability to stay on top. The Research and Development method combined with financial analyses has spurned its advancement of plug-in hybrid vehicles. Hybrid Car Blogs, June 14, 2006, author unknown A firm's marketability is constantly in public focus. Dell's recent recall of four million notebook computer batteries, one of the largest in US history, will likely hurt the company's marketability. Dell already had problems with its poor customer service. Just as the American Customer Satisfaction Index was showing that their customer service scoring had increased from the previous year, the Dell recall was announced. Recent customer satisfaction improvement was beginning to improve the marketability of Dell Computers. The timing of the recall adds a negative impact to its marketability. Obviously, more research and analyses need to be done by Dell. It may be improving the quality of its customer service department; however, their competitors are also moving to surpass them. Dell's major rival, Hewlett-Packard is experiencing significant scoring increases. Apparently, not enough methodologies of marketability were used to head off Dell's problems at its onsets. Dell's Untimely Recall, Business Week Louise Lee, August 2006 At a current Gamefest in Seattle, MicroSoft announced its plan to present console development for its existing games and introduction of new ones. To increase its falling gaming core and enhance the marketability of MicroSoft, a revised gaming site will be launched. Updates for gamers will also be made accessible. Neowin, posted August 15, 2006 Arvind P. Datar says that marketability continues to be the conclusive test for determining the excisebility of goods. Quote from The Marketability Test Business Line, Financial Daily from The Hindu group of publications, August, 2001 WORKS CITED Financial Daily from THE HINDU group of publications Business Line, 2001, author unknown http://www.hinduonnet/com/businessline/2001 Grounds For Your Garden Blogcritics, April 18, 2004 http://www.blogcritics.org/archives Business Week Online Hot Growth Companies Business Week Online, June 7, 2004 http://www.businessweek.com Jeffery, Baxter, McGuire, Linde International Journal of Behavioral Nutrition & Physical Activity University of Minnesota, January 25, 2006 http://www.pubmedcentral.nih.gov Felix Kramer, June 14, 2006 Power, Plugs, and People Hybrid Car Blogs http://www.hybridcars.com Louise Lee, August 15, 2006 Dell's Untimely Call Business Week Online http://www.businessweek.com MarketAbility's Marketing Briefing Issue 7/2004 http://www.marketability.org/data Aurora Moldovanyi, December 2003 West Virginia University, Division of Forestry http://www:wvu.edu/agexten/aquaculture Neowin Post August 15, 2006 http://www.neowin.net/index Muammer Ozer, n.d. What Do We Know About New Product Idea Selection Department of Management City University of Hong Kong http://cims.ncsu.edu/documents Pierskalla, Schuett, Fields, Moldavanyi West Virginia Fee Fishing Study Summary Report Summary of Selected Findings, March 2003 http://www.wvu.edu/2003 Read More