Chapter_04 - Chapter 4 Volume and Volume Strategies...

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Copyright Atomic Dog Publishing, 2006 Chapter 4 Volume and Volume Strategies
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Copyright Atomic Dog Publishing, 2006 4-1 Introduction The total revenue generated by a venture is a function of a simple equation: Revenue = Price × Volume Volume is a difficult aspect of business for many entrepreneurs to master because it involves both logic and creativity. The logic of volume refers to the need to conduct market research to understand the consumer needs that drive demand for the venture’s products and services. The creativity aspect of volume generation is often referred to as marketing.
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Copyright Atomic Dog Publishing, 2006 4-1 Introduction (cont.) In standard marketing classes, students are taught the so-called Four Ps: Product Price Placement Promotion Creative volume strategy is required in the early days of a venture to make sure that the venture’s precious resources are well spent and that sales volume, in short order, takes on a life of its own.
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Copyright Atomic Dog Publishing, 2006 4-1 Introduction (cont.) Entrepreneurs have a multitude of tools to generate sales volume. The most used tool is price. It is the process by which the tools are applied that determines the revenue achievements of the venture. Three primary steps are involved in driving volume to achieve revenue goals: - Identify the venture’s target market - Communicate with the target market - Persuade the target market to do business with the company rather than a competitor or substitute
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Copyright Atomic Dog Publishing, 2006 4-2 Identifying the Target Market The difference between the market and a venture’s target market is profound. Target market: Consists of the subset of potential customers who can be made aware of the venture’s products and services and who can be persuaded to purchase those offerings. - It is defined as some fraction or portion of the overall market. - Defining the target market is a logical process: It starts with an understanding of who the customers are It drives their desire to buy a product or service.
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Copyright Atomic Dog Publishing, 2006 4-2 Identifying the Target Market (cont.) The venture must also understand its own product or service offerings. First step in determining the venture’s target market is to segment the overall market. The venture’s market can be segmented using a variety of criteria. - One of these is demographics, which refers to age, gender, ethnic background, household income, and number of children. - Entrepreneurs can use the data generated by these sources to segment their market and to adjust their product or service offering to match the needs of the target market.
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Copyright Atomic Dog Publishing, 2006 4-2 Identifying the Target Market (cont.) Another strategy used in segmenting markets is to determine the relative size of the various segments.
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This note was uploaded on 10/02/2010 for the course ENTR ENTR 3310 taught by Professor A.lish during the Fall '09 term at University of Houston-Victoria.

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Chapter_04 - Chapter 4 Volume and Volume Strategies...

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