Market Analysis Summary
The methodology for MDA is focused on the top two things that influence a consumer's purchase decision. Brands have spent over $330 million last year on advertising and 84% of this was ineffective.
Advertising in-store where 70% of purchase decisions are made is key. Independent research by the Kiplinger Study found that "advertising can increase sales on a brand by 85%, and can also increase consumer shopping basket rings by 84%".
4.1 Market Segmentation
The experience of the firm is that the hardware trade is the most fertile; therefore, the most sales and profit can be gleaned in hardware. There are currently 15 retailers in this channel that are potential partner retailers. The firm has targeted to add four each year. Beyond the hardware class are several other trade classes that show promising possibility.
Hardware - more retailers are in the traditional hardware class of trade and this is where most of the current targeted advertising takes place. It is estimated that 75% of advertising in the industry travels through "hardware" stores.
Small - this class of trade is growing by leaps and bounds mostly driven by growth of Wal-Mart. Some erosion has taken place due to reorganization of Kmart.
Medium - growth of specialty stores such as PetSmart and PETCO will be fertile ground for promotions in pet care supplies and toys.
Large - growth of Staples, Office Depot and Office Max lend well to promotions due to growth of small businesses and their office supply needs.
Chain - continued growth in Home Depot and Lowe's sales due to their expansion will fuel opportunity in home supplies, paint and tool needs.
Franchise - consolidation in the auto industry will drive shoppers to fewer outlets such as Auto Zone, Discount/Advance Auto and Pep Boys.
Home Health Care - consolidation in the drug stores with the departure of Eckerd will drive opportunities in drug class.
Kiosk - with the growth of new electronic devices, there is great potential for success in retailers such as Best Buy and Circuit City.
4.2 Target Market Segment Strategy
The core expertise and "low hanging fruit" is with the hardware class of trade. The financial rewards are greatest in this class due to the size and advertising monies spent for promotions. A full and complete understanding of industry branded goals, objectives and spending processes as well as how to apply these principles with key hardware retailers makes this segment the most valuable. As the firm expands across the hardware trade and brings this class to maturity, it will expand ventures into the other classes starting with those with financial rewards and funding practices most simular to that of the hardware Industry.
4.3 Service Business Analysis
The advertising industry is full of companies that provide "consumer advertising" opportunities that do not meet the specific need of retailers or brands at the same time. With current programs it is usually not a win/win situation for retailers and brands together, as most times one will gain benefit at the expense of the other.
Mirabile Dictu Advertising will provide a very specific service that fits a wide variety of brand and retailer objectives. This program is truly is a win/win situation for both national brands and retailers.
4.3.1 Competition and Buying Patterns
In the co-marketing industry, brands decide the best spend for the return on the investment. With the firm providing advertising programs, brands are guaranteed to deliver their message to their targeted consumer in the desired retailer on the desired aisle at the desired time. With better targeting, brands have less fall-out and therefore a better return on their promotional investment.
Since the retailer is also benefiting on their sales, they traditionally support the brand more by providing additional purchases of inventory for display...a true win/win!