The Target Market for the Business - Term Paper Example

 The Target Market for the Business Contents Introduction 3 Target market 3 Income levels and life stage 3 Demographics 4 Market Feasibility 5 Location analysis 7 Operational Viability 7 Technical Analysis 7 Manpower Analysis 7 Legal Feasibility 7 Financial feasibility 8 Economic viability 8 Competition Analysis 9 Other Feasibility Studies 9 Ecological feasibility 9 Resource Feasibility 10 Support Services 10 Conclusion 11 Works Cited 12 List of Figures Real Estate Websites……………………………………………………………………………..6 Online Real Estate Searches……………………………………………………………………...7 Introduction The history of marketing theories can be traced back to the time when the concept of trade and commerce came into light. The marketing theory, in turn has greatly influenced the culmination of other theories pertaining to business. Currently the concept of entrepreneurship is widely accepted and is judged as a vital part of the contemporary world and a well established erudite discipline (Thompson 35-50). Moreover, government of a number of countries also judge entrepreneurship as a mantra for success and development of the economy. The present study aims to evaluate feasibility of a new business venture. it will include buying and selling of homes and will come under real estate sector. Also, employees will be recruited for the business and funding will be provided with government institutions such as banks. The study will evaluate the various factors influencing a real estate business. These include operations, economical, marketing, financial etc. Also support services required for overall establishment of the business will be discussed. The target market for the business will be discussed and a systematic analysis of business strategies will be done. Target market One of the foundations of building a good business is finding out clients. As it is commonly said, until we know whom to sell, it is almost impossible to know how to sell. Choosing a target market not only helps to focus on a niche segment, but also helps in fine tuning the support services to suit the target market needs. In order to define a niche target market, two broad categories can be established. Income levels and life stage The first target groups in this category are first time sellers or buyers. The probable home they seek will be of basic design and construction and afterwards working their way up in the property ladder as their income, family and needs grow. The next target group will be customers purchasing a second home who either are looking to downside or upsize. Other target group will be high end expensive and luxury seller or buyer. Doing business with these clients will mean higher commission, high amount of hand-holding and personal involvement, monetary risk and expensive collaterals (Beri 46-69). Apart from the above, there are recreational buyers who need highly specialized and unique areas of focus. Demographics According to age demographics, clients can be divided into seniors, gen X and gen Y. accordingly, different business tactics can be made in order to attract these demographics into the business. While it is clear that seniors will look for a more traditional and ethnic style, gen X will be contemporary and evolving while gen Y will be technologically oriented (Croft 35-50). Each of the groups discussed above have their collective individuality, cultural icons, memories that can be worked with. Another criterion which can be added is through philosophy and lifestyle which may include country or city, a detached or fully integrated lifestyle, an eco-friendly environment or a home with full amenities (Hoagland and Williamson 57-75). Apart from that, business can also consider factors such as current location of the clients, real estate as well as educational levels of clients. In order to facilitate the process of acquiring right target market, the business can also collect information from real-estate websites. For example, Nielsen has conducted a study of real estate websites having unique visitors. Figure 1 Real Estate Websites (Source: “Dedicated real estate websites deliver target audiences”) Thus, with the help of social websites, an entrepreneur will be able to find out the target as well as patterns of purchase among different customers as well as clients. Market Feasibility Analysis of market helps to gain an overall perspective of the business. Market information involves business evaluations, supply and demand functions and issues, vacancies, demand of the space as well as information on top rents in the market. The market segment analysis done above will help in formulation of the right strategies for the target customer/client group. In case of buying and selling homes, the overall typological and geographic market segments can be evaluated. Market analysis can be conducted in a qualitative or quantitative manner or a combination of both. In order to make the business plan feasible, the market analysis should involve the following strategies; Evaluation of consumption trends in terms of land and housing Supply chain positioning of the vendors and third party investors Evaluation of production process as well as possible constraints Export and import issues in terms of raw materials and other construction equipments. Consumer behavior, motivations and intentions, preference, attitudes and requirements. Current marketing strategies and distribution channels in use. Franchising and third party arrangements According to Neilson online survey, number of people searching for real estate is constantly rising. Figure 2 Online Real Estate Searches (Source: “Anticipation for a great 2010 in real estate”) This makes the business of real estate very lucrative; given it is properly evaluated in terms of available resources as well as potential threats. Here the evaluation of market feasibility of real estate business will come in handy. Location analysis In a location analysis macro and micro characteristics of target geography and their influence on the real estate business is analyzed. The objective of location analysis is to determine the best possible target area for the business. It can be described in various terms such as close proximity to infrastructure, roads, customer accessibility and cost of acquiring land, availability of cheap labor, easy transportation of finished products and availability of raw materials (Baxter 15-30). Operational Viability Technical Analysis Technical analysis is done in a feasibility study in order to find out the technological requirements of the business. It will help organizations to determine the right production methods to be employed. Right equipments, site development, tools and spare parts, supporting facilities, nature of building and factories, fencing are few important details which can be analyzed with the help of technological advancements. Manpower Analysis In order to evaluate the level of professionalism, required skills and knowledge, manpower analysis is conducted. With the help of manpower analysis, exact number of employees and their required skills, experience and time frame can be evaluated which in turn will help in proper and rightful recruitment of candidates (“Conducting a Feasibility Study”). Manpower analysis is also helpful in determining other criteria such as pay package, incentives, salary scale, bonuses and many other data related to human resource management. Legal Feasibility Legal feasibility analysis is conducted in order to determine the legal acceptance of the proposed systems. An evaluation of the legal issues helps to find out if there are any conflicts, misunderstandings or misrepresentation of legal procedures. For example, in case of real estate business or buying or selling of homes, management of data as well as proper documentation of real estate properties is essential. This is done with the help of data processing and analysis system. This processing system must comply with the local laws and regulations of data protection. However, a project or a business might face legal obligations even after completion of the project. During the course of the project, the major legal obligations come in terms of authorization. Financial feasibility Financial analysis is conducted with the objective of ascertaining financial viability of the proposed project. It is very important to determine whether the long term goals of the business will be able to repay the capital debt. Also, financial evaluations help to determine the returns on investments and profits to all its shareholders as well as investors. Real estate business is a long term project. In the present case, the entrepreneur is involved in selling and buying of homes. There are many aspects which should be taken into consideration before putting capital in this business. Overall project cost and investment outlay should be determined before putting actual money into the business. The present financial position should be analyzed and proper goals and objective should be prepared. Also, a track record of financing means as well as projected profitability is essential. The initial funding required should be determined and analysis of the sources of funding should be done. Determination of project cash flows and break-even point are other aspects of financial analysis which will help a business to be successful. A continuous review and monitoring of the financial planning process will also help in minimizing errors in the planning process. Economic viability Economic viability is basically the study of overall benefits and costs related to the real estate business. In order to determine the economic viability of a project or a business, product costs as well as capital costs are justified with respect to the selling or market price of the product. Analysis of costs and benefits is used in economics in order to find the profitability of a business or a venture. One important aspect which should be noted is differentiating between commercial and economic feasibility. While economic viability is used to evaluate the unit cost of a service or product offered, commercial viability forecasts the selling pattern or growth rate of the products or services offered. Apart from that, economic analysis also helps in finding out the social cost- benefit of the business. Competition Analysis The next step in determining the feasibility of the business is to analyze the extent of customer reach. In order to do a successful competition analysis, the business can involve in identification of relevant real estate competition in the target market. This can be done by preparing a thorough and exhaustive checklist of the important criteria defining a competitor. Then the relevant competitions will be put according to their rank and matched criteria. In real estate business, it is very important to evaluate the goals and objectives of various competitors and find out which of them are closely related to the business in terms of objectives and long term plans (Thompson 24- 60). Other Feasibility Studies Ecological feasibility Environmental safety and maintenance of ecological standards have become one of the major concerns whenever a business is established. Factors such as water supply, power consumption and waste products are critical and are under continuous scrutiny of the government as well as environment officials (Hisrich, Peters and Shephered 40-50). Though ecological factors would not be much of concern in the present business as it involves buying and selling of homes, the entrepreneur should take into consideration factors such as where the house is located, proper waste disposal, proper sanitation etc. Resource Feasibility Resource feasibility is conducted in order to determine the overall time frame for the successful completion of the business or project. For example, a detailed resource feasibility study will help in determining how much money and time is available for immediate establishment of business. Support Services As it has been observed that in a feasibility study the major critical components include market analysis, technical analysis, financial analysis as well as economical analysis. However, in order to start a venture, there are many support services which are needed. These services are important as they help in proper and smooth functioning of the business. In case of real estate, where the entrepreneur is buying and selling homes, the various support services can be; Collaboration with financial services- Since it is a real estate business, the owner or the entrepreneur will require capital in order to start the business. This fund can be provided by collaboration with public institutions such as banks. They can provide necessary fund to start the business as well as continue till the break-even point is reached (French and Gabrielli 50-60). Association with government- In order to make sure that the business is not slowed down because of legal obligations and lengthy paperwork, businesses can take help from government officials. These officials can help in pin-pointing the necessary and required legal works, so that they can be finished within stipulated time. Expert service- This is helpful especially in case of inexperienced, first-time entrepreneurs. Taking consultation from experts in areas such as finance, real estate marketing, client management etc can be very helpful in taking the right decisions. Social media marketing- Marketing through social media is the latest strategy to reach target audience. Especially in case of young customers, internet and social media platform can be very crucial is sending the message as well as increasing customer base (Carr 286-290). Design and maintenance of website- in order to increase the brand awareness, it is necessary to have a reach in maximum media channels. The business can hire web-designers. Conclusion Real estate business is on the rise. However, there are many obstacles and hurdles in successful establishment of a real estate business. With a proper segregation of market and an effective feasibility study, the business can avoid various hurdles and mistakes. More and more individuals are looking for homes, not only for residence but for recreational as well as business purposes. An extensive feasibility study helps in determining the target market as well as the purchasing power of clients. Economic and financial feasibility studies are helpful in forecasting the future of the business as well as long term strategies to be made. Feasibility study is also critical for the evaluation of right strategy of marketing. As it is known that marketing and branding of business are the core factors responsible for expansion and revenue generation, test of marketing feasibility will help in finding the appropriate strategies for the concerned business. Thus, it can be concluded that a proper feasibility study can help a business to minimize risk and maximize profits with the available resources. Works Cited “Anticipation for a great 2010 in real estate” unconditional. Real Estate Organization. 2013. Web. 4 September 2013. Baxter, Bill. Evaluating the Feasibility of Business Opportunities. Ontario: Ministry of Agriculture and Food, 2003. Print. Beri, G.C. Marketing Research. New Delhi: Tata McGraw-Hill Education, 2000. Print. Carr, Mardene Rosalee. "An analysis of the feasibility of a paperless environment – the case of the Mona School of Business", Management of Environmental Quality: An International Journal, 16.4(2005): 286 - 290. Print. “Conducting a Feasibility Study.”uwcc. Web University of Wisconsin Center for Cooperatives, 2013.Web. 2 September 2013. Croft, Mary Jane. Market Segmentation: A Step-By-Step Guide to Profitable New Business. London: Routledge, 2000. Print. “Dedicated real estate websites deliver target audiences” unconditional. Real Estate Organization. 2013. Web. 4 September 2013. French, Nick and Laura Gabrielli. "Uncertainty and feasibility studies: an Italian case study", Journal of Property Investment & Finance, Vol. 24.1(2006): 49 - 67. Print. Hisrich, Robert, Micheal Peters and Dean Shephered. Entrepreneurship. New York, NY: McGraw-Hill Irwin, 2010. Print. Hoagland, Heath and Lionel Williamson. Feasibility Studies. Kentucky: University of Kentucky, 2000. Print. Thompson, Alan. Business Feasibility Studies: Dimensions of Business Viability. Perth: Best Entrepreneur, 2003a. Print. Thompson, Alan. Understanding the proof of Business Concept. Perth: Best Entrepreneur, 2003b. Print. Read More