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Firm Advocates Complete Market Review Before IPO

Jan. 13, 2005

Compiled By Tonya Vinas IPOs -- initial public offerings of companies -- have become a hot topic in recent years due to investors' appetites for high returns from Internet-related companies. But as venture funding becomes scarcer and major dot.coms ...

Compiled ByTonya Vinas IPOs -- initial public offerings of companies -- have become a hot topic in recent years due to investors' appetites for high returns from Internet-related companies. But as venture funding becomes scarcer and major dot.coms such as Priceline.com's WebHouse close their doors, IPO-mania is moderating. That's a good thing, says a Middletown, Conn., communications and marketing firm that specializes in creating corporate marketing strategies. "Our experience is that companies considering an IPO automatically go to investment firms to do the business plan, but overlook the need for a complete market analysis and strategic marketing plan before beginning the process," says Susan Daniels, executive vice president of Marketing Services for KGA Advertising. "Without these elements," it's hard to determine whether the growth needed to justify an IPO's success is there. KGA advocates creating a corporate marketing review and strategy that enables companies to predict future markets and understand their relationship to existing products and services. Such a plan would include:

Trends in the industry, including sales trends.

An evaluation of the industry's health.

A look at the labor situation. ("If they are having difficult times hiring good people, that could affect the product," says Daniels.)

An analysis of the competition including what they are doing, their share of the market, their strength and their geographic reach.

The company's internal strengths.

The size of the market today and its projected growth based upon demographic trends.

Current customer profile. Is the size of the company's market segment growing or declining? Will their propensity to buy product decline or increase? "You can't let the speed of today's marketplace blind you to the need to set and maintain realistic projections for growth," Daniels says. "Only a 360-degree analysis of where you are today and what your company can be tomorrow should be the basis for such a momentous business decision."