Importance of PEST Analyses

Here is an interesting article in the New York Times about how the market has changed for creative artists due to digital technology. This is an example of why doing PEST analyses is important. As there have been developments in the digital technology world the cost to deliver creative works such as songs and movies greatly decreased making it easier for amateurs to enter the market. Yet, while it is now easier for people to enter the market they are not able to earn a high market share. It seems like the markets are growing as a whole with the established superstars still claiming the most share. New entrants to the market should probably not have market share as a pricing objective but they do have a chance at a career due to the technology changes. 

The trouble facing all young entrepreneurs

Karl Ulrich, an expert Wall Street Journal columnist, wrote a commentary speaking to the "make-1000" issue affecting young entrepreneurs. As we have discussed through our venture group projects, the vision and drive of an aspiring entrepreneur is perhaps the easy part. The challenge, writes Ulrich, "is taking delivery of the first batch of product available for sale." As our venture groups struggle with finding funding for our products, so do many millennial entrepreneurs in the real world. Ulrich cites a term called "Crowdfunding", like Kickstarter or Indiegogo, which urges the public to fund a product based on appeal and interest to the consumer. Could this be a good market research tool while also building revenue for the company?

Why price matters...really matters...as a critical piece of the marketing mix

This week we will be discussing the “price” component of the marketing mix. Here is one example of why price is a critical piece of the marketing mix.

An article on the Apple Insider blog points out that Apple's share of the mobile phone market is “below 10 percent, even as Apple and its development community rake in profits from an actively engaged user base.” (Market share can be measured several ways: by unit sales or by revenue. It is sometimes looked at as just US, other times on global basis).

Too many analysts focus on the “market share” as the metric that is equated with the success of a product. By this measure Apple has not done well, as its global share has been declining since shortly after the initial iPhone had the consumer market to itself. Samsung has overtaken Apple substantially by the market share measure.

 

But take a look at this chart. It’s a bit out of date, but the general trend has been maintained.  Apple accounts for about 70% of total industry profit. Why is that?  That is what we will be talking about when we look at pricing.