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When choosing a market segment, not only is the potential considered. Also consider threats. Sometimes it must be avoided, by looking for other segments. Even so, the easiest segment has threats. Michael E Porter formulated threat factors as well as generic competitive strategies, or outlines. Threats are dynamic, so the strategy is effective so that it needs to develop. The following threats in a business field.

The threat of hard competition.

Hard competition is not always caused by market attractiveness, for example large demand and purchasing power. It could also be because companies that enter the market are unable to get out of the business. Large investments have been made. Do not have the skills to strive in other fields. Such conditions encourage price wars and advertising wars. Profits shrink and costs increase.

The threat of newcomers

The most interesting market segment is that if newcomers find it difficult to enter and the old players are easy to get out. The terms are high entry barrier and low exit barrier. So that new players will have difficulty entering a business field.

That situation can change. The existence of the internet can change this, for example the circulation of rotiboy recipes, allowing new players in the same bread field. Thus, Rotiboy can no longer enjoy monopoly as before.

If entry barrier and exit barrier are high, profits may be high, if between players form a price agreement. But in such situations, players can compete hard, because they have no other choice.

If the entry barrier is low and the exit barrier is high, competition will tend to be tight. More and more players, there are no exits. Production exceeding market capacity can occur and prices fall.

Threats from substitute or substitute products

In this era of digital technology, more and more new innovations, substitute products often appear. Telecommunication shops are replaced by symbian phones. Symbian mobile replaced Android or Apple smartphone. It can also happen that these substitute products are cheaper and easier, so that they reduce prices and profits.

Threats from the bargaining power of buyers

A market segment is less attractive if the buyer has large and increasing bargaining power. Suppose that the bargaining power of national minimarket at suppliers will tend to be large along with the amount of turnover. The national minimarket erodes competitors, so that suppliers increasingly lose alternative buyers, then with a large turnover can reduce prices. The bargaining power of buyers increases if the product does not have a differentiator or an easy buyer switches to another supplier with risk and low cost. The best defense is to arrange good and inimitable products, so buyers don’t move.

Threats from the size of the supplier’s bargaining power

Market segments are less attractive if suppliers can easily increase prices or reduce the amount of goods sold. The strength of suppliers is strong if goods are scarce and there are no substitute or substitute materials, and it is difficult to change suppliers. The best defense is to build mutually beneficial relationships or use a variety of sources.

These are the factors that influence the competitive climate. Each market segment has a different level of competition based on its industrial structure. With that insight, it is better to choose an industry with a low level of competition and not increasing. Even so, in general every business sector is always in competition.

Business is a system that have purpose to grow. So all components, from products, activities, financials calculation, and team management and so on and so on support that purpose. Grow is mean sustainable increase profit. Sales of products create this profit.

How to make the growing is possible?

That is possible if,

1. your products match with need of customer segment
2. The customer know about your products
3. customer segment belief about your credibility
4. they are easy to access
5. the price is affordable
6. Your cost is lower than previous.

However, need of the customer segment is ongoing changing process. So growing the business need on going adjustment. These the list of idea to growing

• Improve your value proposition or positioning. Evaluate your value proposition. Is it something that customer segment need? Is it different from competitor? Does your customer prefer your offer?
• The value proposition define product that you offer. Is product say about the value proposition? You can add more value to current products and services.
• Value proposition also define price. Low price have meaning affordable, efficient, good value. However, it also has meaning bad quality. Change price to make good position in the market. That is also considering another customer cost. Check customer cost and find what you can do to fix it. It include payment term.
• Improve the copywriting. Add a more relevant benefit in your offer. The benefit is more than feature. It is result and further implication. It is also outcome.
• Because, products have life circle, you can create new products or services.
• Up sale is for existing customer. It means Increasing spends products that customer buy. The products usually related to other products. If they buy shoes, they also need socks. It find whether existing clients will buy another related products.
• Find for new customer outside city or country.

Businesses are not in a vacuum or alone, always related to the environment. The environment is rapidly changing and has an impact on the level of relevance of a business with markets and government, socio-cultural and economic regulations. Business adjustments are needed for the situation so that business presence is important for the market, which is served by the business. Ignoring the environmental situation will have an impact on business relevance for the environment. Business becomes less important for the environment, including the market and ultimately its existence is difficult to maintain. Demand decreases or disappears. There are no sales transactions. Without it the business in the end can’t survive.

The environment that mention here is the environment related to business. The examples are market situation, industrial situation, macro economy and key changes that include technology, government regulation, purchasing power, social and culture.

One environmental situation that has a strong influence on business is the market and industrial situation. The market situation is like developing and shrinking market segments, shifting market segment spending patterns, changing their demand for a product. While industry is closely related to competitors, the development of material providers, the emergence of substitute products and so on.

Comparing the environment with business gives insight into strengths, weaknesses, opportunities and threats (SWOT or TOWS Analysis). What is the environmental side that poses a threat (threat), what side of the environment that provides opportunities? Insights about TOWS encourage businesses to adapt or business strategies. Business strategy composes a business plan by weighing threats, opportunities, strengths and weaknesses. The strategy uses power to take advantage of opportunities. If for threats, if it can’t be dealt with, just avoid it.

What is the situation of the business environment in this early millennium era. Because the scope of the business environment is wide and diverse in each industry and business, the key trends will be discussed in this article. It include technological, social and economic innovation.

Technological Innovation

Often the technology is identical to the engine. Though not necessarily. Technology comes from Greek words, techne and logia, Techne means hand skills, art, expertise. Logia mean science or study. The meaning of the term technology is a set of tools, modification of objects, ways, skills, methods and processes used to create goods and services or complete a task. If a tool actually hinders doing a task even though it is more complicated, it means that the tool does not reach its destination.

The simplest technology is stone in the prehistoric era. The stone has been modified more pointedly, and the longer people make it more smooth and nice. Modification of natural objects has a purpose. According to archaeologists, the modified stone is useful for cutting, hitting, carving, tools that relieve human tasks.

In the current development, technology can actually incriminate humans in carrying out their duties. Cars help people to move from one place to another, but in a city, cars can make it difficult for people to move because of traffic. Email is one of the technologies for communicating, but it can also happen that electronic messages enter too much in e-mail, so unnecessary letters hoard important letters. As a result, e-mail does not function optimally as a communication channel.

This shows that the tool was originally intended to alleviate human work, then it could also happen to incriminate humans, so that a tool is needed for renewal. Email on Gmail, for example, can now recognize spam and also categorize which messages are urgent and important and which can be delayed and less important.

Technology and Business

Technology is developing. The development can be renewal or improvement; it can also be a replacement. New technology replaces old technology. Paper mail delivery is replaced by electronic mail. Bank transfers replace postal money orders. Telegram letter is replaced by SMS.

Business related to technology. There is technology involved in the process of producing goods and services. There are technologies that become products that businesses produce. Examples of technologies involved in manufacturing products, for example sewing machines in the clothing business. While the business example that produces, technology is the sewing machine business. They sell the sewing machine.

Thus, technology is very large in relation to technology. When there is a substantial adoption of new technology in the community and replaces old technology, businesses that are associated with old technology may become obsolete. For example, when Android smart phone technology is increasingly being used and favored by GSM phones, the GSM phone business is naturally affected. This is what Nokia experienced. Nokia’s turnover dropped not because it was less well known and less well managed, but because there was a GSM cell phone replacement product that was preferred over Nokia products.

For businesses that do not sell technology, they can also be affected by technological shifts. Motorcycle public transportation services do not sell technology, but are affected by technology. The emergence of IT-based businesses such as go-to, grab eroded the previous motorcycle taxi business. With the mobile application going away, motorcycle taxi drivers do not need to wait for passengers at motorcycle taxi posts. He can wait at home or anywhere. So that the time and energy resources they spend on this business are more economical. Furthermore, online motorbikes are able to offer a much cheaper price, because the cost components are decreasing.

The markets of old model businesses are disrupted by substitutes for new business models that are often much cheaper and / or better. These are the symptoms popularized by Rhenald Kasali as a symptom of disruption. The term was coined by Clayton M. Christensen and Joseph Bower in the article “Disruptive Technologies: Catching the Wave” in the Harvard Business Review journal (1995). Disruption literally means disturbing. Disruption in business terms has connotation meaning about the word disruptive innovation. Disruptive innovation is a finding that helps entrepreneurs find new market opportunities, while disrupting or damaging existing markets. In disruption, a new finding replaces the old ways, so that old ways are no longer needed. Disruptive innovation creates products or services that surprise the market. Shocking can be a cheaper price, or finding a new and different type of consumer.

 

 

 

What is a promotional concept?

Promotional concept is umbrella of ideas that promote your offer. It is ideas about how to win competition and get customer attention. Marketer thinks about their promotional goal by defining their customer segment, differentiation value proposition, products, and promotion. If promotion have target to get sustainable sales, it need to be a system that fix every barrier to that goal. Promotion is only fix one component. If we only fix one component, another barrier is still exist, no sales, no business.

The barrier is:

• products is not match with their problem
• They have no mood for the products
• Customer think that price is not worth
• They have no proximity with products. They have no quick access to get products.
• Customer don’t know about reputation of producer
• They don’t know about

Several Ideas about promotional concept

• Reach promotional goal by select market segment. For example Seth Godin offer strategy by choose geek customer or obsessed customer. This is choosing who are most easy to give attention, try the products. Geek also share and buzz easily the promotion.
• Get promotional goal by create message. This is guide to create copywriting message.
• Create desire by create environment in promotion or your products. Human perceive products not only by their sense, but also by their mood and brand. So, create conducive environment can support their acceptability.
• Create special offer of special obsessed customer. That is value proposition. Consider the component of value proposition.
• Give so gift as persuasion strategy.
• Promotional concept is not only one time shoot. But, promotional concept is sustainable promotion to get impact.
• Keep in mind that all way to do is to pass barrier to buy for customer. Another thing is not necessary. We can pass the barrier by align products (customer value) and customer demand, products price, proximity and communication to create mental picture that the products is solution.