Markets
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Deciding to whom you will sell products is as important as deciding what products to sell. In fact, the two are actually inseparable. If you don't know who your customers (i.e., your market) are, how can you determine what their needs are? And if you don't know what their needs are, how can you determine what products you will sell them? Alternatively, if you don't know what products you want to sell, how can you determine who might want to buy them?
On this screen, you will define assumptions about your target markets. Here is what the screen looks like:
- Name of market. This is a name that you can use to help you remember the market about which you are recording information.
- Market size. Optional! You only need to enter this if you are going to predict your sales using market penetration techniques. These so-called top-down techniques for predicting revenues are terribly unreliable, not to mention overly optimistic and unbelievable to any informed third parties. On the other hand, top-down forecasting is usually the first approach used during the first few weeks of business planning . . . just to get started. In any case, it is always helpful to know how large your market is just to make sure it is large enough to make your business worthwhile.
- Annual rate of growth of market. Optional! Once again, only necessary if you are going to predict your sales using market penetration techniques. Although a growing market is neither necessary nor sufficient for success, it is helpful to understand how fast it is growing. Also, during those early stages of planning, when you are trying to get a handle on your potential sales using top-down techniques, you need to record growth rate.
Remember: You do not need to enter the size or growth rate of a market. These are important only if you are going to do use top-down sales forecasting.
Additional Questions:
How do I decide on what my market should be?
Which do I define first? Products? Markets? Prices? Or my sales technique?