Tag Archives: concept

General Theoretical Marketing Techniques

For a marketing plan to be successful, the mix of Product, Price, Promotion, and Placement must reflect the wants and desires of the consumers in the target market. Trying to convince a market segment to buy something they don’t want is extremely expensive and seldom successful. Marketers depend on marketing research, both formal and informal, to determine what consumers want and what they are willing to pay for. Marketers hope that this process will give them a sustainable competitive advantage. Marketing management is the practical application of this process.

Most companies today have a customer orientation (also called customer focus). This implies that the company focuses its activities and products on customer needs. Generally there are two ways of doing this: the customer-driven approach and the product innovation approach.

In the consumer-driven approach, consumer wants are the drivers of all strategic marketing decisions. No strategy is pursued until it passes the test of consumer research. Every aspect of a market offering, including the nature of the product itself, is driven by the needs of potential consumers. The starting point is always the consumer. The rationale for this approach is that there is no point spending R&D funds developing products that people will not buy. History attests to many products that were commercial failures in spite of being technological breakthroughs.

The next big thing is a concept in marketing that refers to a product or idea that will allow for a high amount of sales for that product and related products. Marketers believe that by finding or creating the next big thing they will spark a cultural revolution that results in this sales increase.

In a product innovation approach, the company pursues product innovation, then tries to develop a market for the product. Product innovation drives the process and marketing research is conducted primarily to ensure that a profitable market segment(s) exists for the innovation. The rationale is that customers may not know what options will be available to them in the future so we should not expect them to tell us what they will buy in the future. It is claimed that if Thomas Edison depended on marketing research he would have produced larger candles rather than inventing light bulbs. Many firms, such as research and development focused companies, successfully focus on product innovation. Many purists doubt whether this is really a form of marketing orientation at all, because of the ex post status of consumer research. Some even question whether it is marketing.

Diffusion of innovations research explores how and why people adopt new products, services and ideas.

A relatively new form of marketing uses the Internet and is called internet marketing or more generally e-marketing, affiliate marketing or online marketing. It typically tries to perfect the segmentation strategy used in traditional marketing. It targets its audience more precisely, and is sometimes called personalized marketing or one-to-one marketing.

Accoying the Fears of Real Estate Financing

Financial concepts in real estate can be frightening; these fears can be eased by understanding some simple concepts:

Three key financial concepts must be clearly identified prior to calculating the desirability of a real estate investment, which are the required rate of return, the time value of money and depreciation. The required rate of return primarily reflects the investors required rate of return. Whereas the concept of time value of money is that any specified amount of cash to be received at some date in the future is not the equivalent of the same amount of cash held at an earlier date. A sum of cash to be received in the future is not as valuable as the same sum on hand today.

In order to calculate the required rate for a real estate investment the following steps most be taken: identify the sources of financing that will be used to fund the investment, calculate the cost of capital for each of the sources of financing, calculate the Weighted Average Weight Cost of Capital. Investors use different source of financing for their real estate investment project. Most commonly mortgages are used, but there are other options such as owners financing and lease-buy-options.

Once the sources of funding have been identified the cost of capital of each source of financing must be calculated. These calculations vary depending on the type-financing source. There are two real and important concepts that must be identified before starting to calculate the cost of capital of each type of source of financing, these are taxes and flotation costs.

When an investor borrows money to finance the purchase of a real estate asset, the interest expense is deductible for federal income tax calculations. This means that the amount from revenue that will be used to pay interest to your lender should not be taxed. On the other hand flotation costs are the transaction costs incurred. Transactions costs must be deducted from the real estate investment proceed before calculating the cost of capital.

The cost of capital of all the individual sources of financing combined together gives the weighted average cost of capital. To estimate the weighted average cost of capital of a real estate project the following elements need to be known:

1.Estimate the cost of capital of all the sources of financing used to fund the real estate project
2.Estimate the capital structure of each source of financing (capital structure is the proportions of each source of financing used by the investor).
3.Calculate the product of the cost of capital times the capital structure for each source of financing
4.The sum of all the products will give the Weighted Average Weight Cost of Capital

These methods are typically more applicable to advance real estate investors. Real and serious investors might finance their real estate endeavors using different sources of financing, whereas small investors typically only use one form of financing.

The concept of time value of money is that any specified amount of cash to be received at some date in the future is not the equivalent of the same amount of cash held at an earlier date. A sum of cash to be received in the future is not as valuable as the same sum on hand today, because cash on hand today can be invested to earn income.
When estimating the desirability of a real estate project all dollar values must be first comparable since a dollar received today is worth more than a dollar received in the future. Therefore in order to measure the desirability of a real estate project all dollar flows must be moved out to a common future date or back to the present. To move dollar amounts to the future one calculates the dollar amount compound interest and to move dollar amounts back to the present one calculates the dollar amount present value. Time value of money can become an important strategic factor in planning and presenting real estate projects.

When money is moved to the future the initial amount of money is known and the goal is to try to determine how much that sum of money will grow in a certain number of years when compounded at a specific rate. Whereas when money is moved back to the present the goal is to determine the value in today dollars of a sum of money to be received in the future.

In summary more than one source of financing for real estate projects, when doing so there are some concepts that need to be considered, such as the weighted average weight cost and time value of money. Advance investors with large real estate projects typically use different sources of financing, as opposed to smaller investors who typically finance their projects using mortgages. Using a mix of financing sources can provide a boarder platform of opportunities, but it also complicates the calculations when assessing the desirability of the project.

Business Planning Software

Once a business plan is chosen, it’s highly counseled that we tend to sharpen the concept by an in depth coming up with method. The results of this step could be a comprehensive business set up, with its major elements being the promoting “mix,” the strategic set up, operational and logistical structures, and also the monetary proposal. the aim of the business set up is to acknowledge and outline a business chance, describe how that chance are seized by the management team, and to demonstrate that the business is possible and value the hassle.

While this could appear a frightening task to first-time entrepreneurs, several “veterans” have found that there are software packages which will facilitate to arrange and format the fabric needed for a comprehensive set up. These packages are significantly useful to people who are intimidated by ranging from a blank piece of paper.

So is there a draw back to buying software that has most of the text “in place?” The text isn’t invariably well-written, “fill-in the blanks” tends to not manufacture terribly fluid copy, and also the components you write could also be in a very totally different vogue than the words surrounding it. Some consultants counsel that the $64000 usefulness of such packages lies within the examples, after they are in a very business like yours. Continue reading