ACC 800: Accounting Analysis for Decision Making

When you are planning a new product or innovative business, brainstorm product ideas and understand basic concepts and product information.  Research companies and industries that relate to what you hope to do.  Understand the market for your product by finding demographic and consumer information.  Know how your product competes against your competitors, adjusting your business's culture around a brand, and allocating funds should all be part of your marketing strategy.  Know the field. What are the goals for the company, for the product.  What are the short/long term effects for the company/idea.  Are there companies doing the same thing?  What's been in the news about this new innovative business?

Think broadly and creatively about where your product fits. Some industries are too new or too odd to fit into an established category, you may need to look at multiple industries.

Industry reports provide general information about the companies that sell the same product or service. Reports generally include information on the largest companies, suppliers, emerging trends, regulatory changes, performance benchmarks, and key business issues.

Think about the following questions:

• Which market is best suited for my product or service?

• What are emerging trends in the industry?

• Who are my competitors?

Industry Codes

An industry classification code can ensure relevant results since many databases allow you to use this code to search the contents. Two codes that are assigned to all US businesses are NAICS (North American Industry Classification System) and its precursor SIC (Standard Industrial Classification).

SIC and NAICS codes can be useful tools when doing research on an industry or looking into a company's competitors.They are American standard codes and they essentially classify the industry areas in which companies operate.

NAICS Example:

44 - Retail

448 - Clothing and Clothing Accessories Stores

4481 - Clothing Stores

448140 - Family Clothing Stores

• NAICS: North American Industry Classification System

• SIC: Standard Industrial Classification

Market research contain industry information, demographic data, purchasing habits of potential customers, and an analysis of a market. 

Essentially, market research helps you answer some of the following questions:

• What is the size of my market?

• Who are my competitors?

• Which market is best suited for my product or service?

• How much will customers pay for my product or service?

• What are the emerging trends in an industry?

Analyzing the Market

Marketing Plan

A marketing plan is one component of a business plan. Marketing plans contain information about a company's products and/or services and discuss how potential customers will be identified and how the company's products and/or services will be marketed to them.

Putting together a marketing plan is a time-intensive process that involves conducting a great deal of research using a variety of different resources and then synthesizing that research into one cohesive document that provides a detailed discussion of a company's target market, its competitors, industry trends, etc.

Below is a list of some of the elements generally included in a marketing plan.

I. Executive summary

A brief synopsis of the marketing plan that provides highlights about a company's offerings and marketing strategies

II. Situation analysis

Presents pertinent information about a company. Commonly included sections include:

1. Mission statement - explains a company's purpose, goals, and/or strategy. 

2. Product or service description - provides a detailed description of a company's products and/or services.

3. Value proposition - explains the benefits that customers will receive from a company's products and/or services.

4. SWOT analysis - explains a company's internal strengths and weaknesses, as well as its external opportunities and threats.

5. Critical issues - outlines the strategy that would best utilize a company's strengths and opportunities while minimizing the effects of its weaknesses and threats.

III. Market analysis

Includes information about market trends and dynamics, as well as about the target market and the competitive environment. Commonly included sections are:

1. Macro environment - includes information about the political, economic, social, and technological factors affecting a company, as well as information about the industry in which the company operates

2. Market size - discusses current market size as well as expected growth rate. 

3. Market trends - discusses the market factors that may affect purchasing behavior. 

4. Target market analysis - explains which particular population will be the focus of a company's marketing efforts and why the population's characteristics are relevant to the company's marketing plans

5. Consumer analysis - discusses demographic, psychographic, and behavior characteristics of the target market identified above.

6. Need analysis - explains what needs the target market has and how a company's products and/or services could meet those needs. Target market needs may be identified from the consumer analysis conducted above.

7. Competitive analysis - lists a company's major competitors and their marketing strategies. 

IV. Market strategy

Provides measurable information about how a company will meet its objectives and the time frame in which it will do this

1. Marketing objectives - describes a company's goals, usually in terms of sales (units or dollars) or market share

2. Financial objectives - describes a company's expected profits or revenue

3. Positioning strategy - discusses how a company's products or services will be introduced to the marketplace and differentiated from the products or services of its competitors

4. Product strategy - provides detailed information about a company's products or services, including potential future offerings

5. Price strategy - explains how a company's products or services will be priced, taking into account internal as well as external factors that may affect supply and demand, etc.

6. Distribution strategy - describes where and how a company's products or services will be provided to customers

7. Integrated marketing communications strategy - discusses how customers will be informed about a company's products or services

8. Branding strategy - describes how a company's name, logo, slogan, design, etc. will be marketed so that they will be increasingly recognized by members of the company's target market.

9. Marketing research - describes the market research activities that will be conducted during the period for which the marketing plan is being written -- for example, consumer research, industry research, forecasting, competitive analysis, etc.

V. Financial analysis

Provides detailed information about a company's projected financial situation

1. Break-even analysis - estimates how much of a company's products or services need to be sold in order to cover the company's costs

2. Sales forecast - estimates a company's sales for a given period of time.

3. Expense forecast - lists the marketing expenses needed to achieve a company's marketing objectives

VI. Implementation and control

Explains how a company's marketing plan will be implemented and what measures the company could in place in order to handle unexpected events

1. Implementation - provides a detailed timeline for the execution of the various activities described in the company's marketing plan

2. Controls - discusses the benchmarks a company will use to chart its progress against its implementation schedule

3. Marketing organization chart - outlines the structure of a company's marketing team, specifying which person is responsible for which marketing activity

4. Contingency planning - explains how a company will handle unexpected events