Dallas Business Consultant Elijah ClarkDallas Business Consultant Elijah Clark

Initial Public Offering (IPO)

Initial Public Offering
Initial public offerings (IPOs) are transactions in which businesses publicly sell their common stock within an inefficient market. In the IPO market, sellers often have more company information than buyers and insider trading is considered legal. The day in which the IPO begins trading, the stock price is likely to close higher than its original value in an attempt to sell the stocks in aftermarket trading. Within the aftermarket trading is where the value reflects the true stock price, as buyers and sellers bargain transactions. A benefit of IPOs is that they grant liquidity to company owners and raise company capital. Taking a company public is when daily operations are overseen by corporate officers who are monitored by shareholder-appointed board of directors.

The Hypothesis
Selling shares in the aftermarket can be referred to as spinning. The term spinning defines IPOs that are immediately sold in the aftermarket and are spun for a quick profit. As firms try to prevent their willingness to participate in underpricing, they may hire a lead underwriter with a highly ranked analyst. This process is known as analyst lust hypothesis. Both the spinning hypothesis and the analyst lust hypothesis are associated with the changing issuer objective function hypothesis. First-day returns create low-frequency movements in underpricing that is less common than hot issue markets. The change in underpricing is known as the changing risk composition hypothesis. The hypothesis states that riskier IPOs are underpriced more often than less-risky IPOs. IPOs are underpriced as a way to entice investors to participate within the market. The realignment of incentives hypothesis is similar to the changing risk composition hypotheses in that its ownership changes instead of pricing relations in average underpricing.

Market Efficiency
Market efficiency is when stock price values are determined by all publicly available information. According to the efficiency market hypothesis, no one investor has the ability to outperform the stock market based on private information. Consequently, stock values are equally priced because of market efficiency. Furthermore, market efficiency requires investors to use their skills and knowledge to interpret the information to achieve profitability.

Market Inefficiency
Market inefficiency creates undervaluation for investors looking to buy into the market. Additionally, it creates overvaluation in which investors can sell. An inefficient market opposes an efficient market by stating that stock prices are not priced accurately and deviate either above or below their true value.

The hypothesis states that issuing firms are willing to accept underpricing when they hold constant the level of characteristics and managerial ownership. Within the changing issuer objective function hypothesis issuers are more likely to leave money on the table considering they place more attention and value on hiring a lead underwriter. Consequently, they are less concerned with avoiding underwriters with a history of excessive underpricing. This method of doing business is referred to as analysts lust hypothesis.

IPO proceeds are functions based on the choices of underwriters and auction and bookbuilding contracts. The changing issuer objective function hypothesis states issuers may put weight on proceeds from future sales and side payments instead of IPO proceeds. Within the changing issuer objective function issuers hire prestigious underwriters who charge by leaving more money on the table. Decision-makers of the issuing firms pay the price because they receive side payments and positive analyst coverage.

To launch an IPO, company’s work with investment banking firms as advisors and underwriters. As an underwriter, the bank purchases the IPO shares from the company and distributes the shares to the market. Underwriters advise issuers on pricing decisions. When an underwriter receives compensation for their recommendation, it creates an incentive to recommend a lower offer price. Bookbuilding is used to price and allocate IPOs. If there is an excess demand for shares, underwriters make the decision to whom to allocate those shares. With bookbuilding, underwriters can allocate who receives hot IPOs. Money on the table is when underwriters have influence over venture capitalist and issuing firm executives. Allocating IPOs allows for underwriters to continually underprice stocks. Decision-makers gain profits in their personal accounts when hot IPOs are allocated to them.

A hot IPO is considered an IPO that is expected to spike in price immediately upon trading. Spinning creates incentives for issuers to select bankers who underprice. The term spinning was formed when the underwriters for the firms allocated hot IPOs to brokerage accounts. The analyst lust hypothesis states that the coverage of analyst is an important factor when choosing a lead underwriter. Considering underwriters are not paid high fees for providing analyst coverage, issuers pay via the cost of underpricing. However, a concern with the analyst lust hypothesis is that it does not consider conflict of interest between managers and pre-issue shareholders, which could benefit pre-issue shareholders in situation where the analyst coverage produces higher market value.

Full Sail University Brand Image

I’m a graduate of Full Sail University. I enjoyed earning my graduate degree in internet marketing from the University. Just for fun, I’ve created a brand image campaign with the school as the case study.

  • Real world experience –
  • Beyond simple education – Full Sail University creates a unique environment that prepares its students for real world experiences. Students are provided the same software and hardware that is used throughout its chosen industry and they are also mentored not only by educators, but professionals in the industry. Each of Full Sail University’s degree programs is designed to provide students with hands-on knowledge and real world experiences.
  • Professionalism –
  • Full Sail University also initiates an industry driven Global Professionalism Standard program to further guide its students into a professional career.
  • This GPS program contains 5 key components which are;
  • Timeliness – evidencing respect – preparedness – attentiveness and compliance with Full Sail’s policies as well as local and federal laws that directly reflect the industry’s expectations of their employees.


Full Sail University and the law of branding: 

  • The Law of Expansion:
  • Beginning as a Recording Arts program, Full Sail ran its first advertisement in the January 1979 issue of Rolling Stone magazine. Through the law of expansion, Full Sail has grown over the last three decades and now offers masters, bachelor’s and associate’s degrees in 20 degree programs, and has graduated more than 31,000 alumni.
  • The Law of the Category:
  • With expanding its brandfull sail university has also acknowledged the law of the category. As media and marketing have changed, full sail has changed and added new categories to its degree lineup based on the new industry desires. By continuing to expand its programs, full sail continues to remain relevant in its industry market.
  • The Law of Contraction:
  • Though Full Sail has expanded its programs over the years, it has also broken that law of contraction. Full Sail University started with a narrow focus of programs and degrees within the recoding arts industry and now has expanded to offering programs within marketing, creative writing and web design and development to name a few. This expansion could weaken the brand by loosening the focus.
  • The Law of Sub brands:
  • Full Sail University originated as an on-ground facility and shortly sub branded into also offering online courses. By offering online courses, full sail could have jeopardized the quality of its brand in the minds of current prospects. Along with this new online sub brandfull sail also created two separate websites for the two that includes different marketing, different programs, and different colors.
  • The Law of Color:
  • Full Sail University hasn’t seemed to hold a direct color for its brand. While full sail university on-ground has colors of blue, gray and white. Its online community uses orange, tan and green. By full sail not branding a color for its brand, it doesn’t help embed its image into the minds of viewers. One way full sail university could prevent this is by simply creating one brand logo with one brand color.

Full Sail University’s branding decisions

  • Positive –
  • A positive branding strategy that full sail has used is with its ability to expand into new programs and degrees based on the industry and consumers wants expanding. By providing new and updated degree programs, full sail has kept itself in the real-world market and will continue to do so as long as it stays updated by offering relevant industry programs.
  • Positive
  • Another positive branding strategy full sail has used is in initiating its global professional standard (GPS). This does not only help to create a quality student, but also a quality employee. By implementing the GPS program, it helps students prepare for real-world careers and it ultimately helps connect the name and brand of full sail with another success story.
  • Could have done better-
  • Though full sail university has just recently started its online degree programs, it does not seem to have a strong international marketing campaign. Most of its marketing is done online, but it seems to have neglected offline marketing to its international consumers who live outside of its local address.

Key strategies

  • Implement –
  • Full sail has a great marketing plan for its online consumers. However, it should implement a better plan to market towards offline consumers. By full sail marketing on television, radio and in print, it will be able to reach a wider audience without having to simply depend on word of mouth. From a personal opinion – I believe that a great marketing is not one that you have to find, but one that finds you.
  • Avoid – law of contraction
  • Though full sail university has been a success with its expansion of degree program categories. It should remain close to and keep in mind the law of contraction. Full sail shouldn’t want to steer too far away from where it started. It started with a focus in the arts and it should want to remain there without expanding too far into a state university marketed toward everyone in all industries.

Full Sail University in the industry

  • Full sail is and is not distinctive from other similar products. These similar products include other art schools and other online art schools. Schools I will compare it to here will be the art institute and Academy of Art in San Francisco. All of these educational institutes offer onground campuses and online education. And are all relatively close within the same field of art schools.
  • While the art institutes offer multiple onground campuses in many major US cities, full sail and Academy of Art only offer their campus education from one location. The benefit of doing this for the Art institute is that it allows for more flexibility for its students and allows for more students to enroll in program, which are offered only at onground campuses.
  • Full Sail University also offers degrees in categories for a smaller group than the others. While full sail seems to aim more toward media, Internet and gaming degrees. The other educational institutes have expanded further in the art field by offering degrees in subjects such as Photography, Fashion, and Architecture.
  • While full sail does offer a smaller variety of courses, it has been around for the least amount of time. The art institute was started in 1921. Academy of the art originated in 1929 and Full sail was founded in 1979. Based on where full sail currently stands against its competitors, it ranks fairly high based on its short amount of time in the industry.
  • What full sail offers over its competition is its brand name in the industry. The educational institute is highly ranked and praised within the industry and against its alumni. To create a better marketing campaign from its competition, full sail university should also market that it has higher industry ranks, graduation rates and higher student retention rates. Unlike its competitors, full sail university should strive to be a university, which graduates a quality of students rather than a quantity of students.



  • I believe that full sail university can improve life, solve problems and fulfill desires. How it can improve life is by offering degree programs that are highly sought after and have a great success rate once students look for employment.
  • It can solve problems by providing programs that other schools or universities don’t offer and solve the problem of providing on online campus to reach out to students across the world who may have a full-time career and family and may have concerns about moving locations or dealing with time schedule conflicts of going to onground campus courses.
  • By providing prominent courses for students, full sail is able to fulfill student’s desires to attend the university and graduate with a desired degree.
  • Though full sail can improve life, solve problems and fulfill desires, it is ultimately up to the attending student to gain the full experience full sail has to offer. Without abiding by GPS standards, working hard on their studies and making the most of their opportunity; the student can miss out on gaining the full sail experience.

Strategy Contents

Contents

Table of contents so that investors can quickly find the information they are looking for.

Introduction

[Background]
[Summary of financial needs]

Executive Summary

[Company information]
[Market opportunity]

Benefits to the Community

Economic Development
[Describe jobs created by the business]
[How will purchases for the business help other local businesses?]
[Any additional information]

Community Development
[How will the company’s goods/services help the community?]
[Any additional information]

Human Development
[How will the business help its employees?]
[Any additional information]

Company Analysis

Form of Business Ownership
[Will your business be a sole proprietorship, partnership, or corporation? Why?]
[Describe any necessary licenses or permits and your plans for obtaining them.]
[Will yours be an independent business, a takeover of an existing business, an expansion of an existing business, or a franchise?]
[Any additional information]

About the Company
[If you are taking over or expanding an existing business, describe any relevant history.]
[How will the business satisfy customer needs?]
[How did you choose and develop the company’s products/services, and how are they unique?]
[Any additional information]

Industry Analysis

[In what industry does the business operate?]
[Who are the competitors?]
[Have any other businesses recently entered or exited the industry?]
[How will the business be profitable, and what are the growth opportunities?]
[Describe any e-business opportunities.]
[Any additional information]

Management Team

[Who are the key members of the business team?]
[How will the company be structured?]
[How is the team balanced in terms of skills?]
[What is the company’s management philosophy and culture? What is your leadership style?]
[Describe the key management positions and compensation for those positions.]
[What other professionals will assist the management team?]
[Any additional information]

Manufacturing and Operations Plan

Location and Space Requirements
[Where is the planned location?]
[Discuss the location’s proximity to customers and suppliers.]
[Discuss tax rates and zoning requirements for the location.]
[Discuss transportation issues.]
[Discuss utility costs.]
[Will you rent, lease, or purchase the facility?]
[Any additional information]

Equipment
[Will you rent or purchase equipment?]
[Any additional information]

Labor Force

[Discuss the local labor pool. Is there a sufficient quantity of skilled people to meet the business’s needs?]
[Discuss wage rates and unionization issues.]
[Any additional information]

Inventory Control
[How will you control quality, inventory, and production?]
[Any additional information]

Purchasing Requirements
[Will you make or purchase component parts to be assembled into the finished product?]
[Any additional information]
Subcontractors and Suppliers
[Who are your potential subcontractors and suppliers?]
[Any additional information]

Labor Force

Labor Requirements
[How many employees are needed? Full time or part time?]
[What are the job qualifications?]
[Will you have written job descriptions?]
[What will you pay your employees? How does that compare with the going rate in your region and industry?]
[Any additional information]

Selection, Orientation, and Training
[Do you have a job application form?]
[What criteria will you use in selecting employees?]
[What orientation process will there be for new employees?]
[How will new employees be trained?]
[Any additional information]

Evaluation, Policies, and Rules
[How will employees be evaluated?]
[Will authority be delegated to employees?]
[How will you discipline employees?]
[What will you do when employees resign?]
[Any additional information]

Marketing Plan

Target Market(s)
[What is/are your target market(s) and what common needs can the business satisfy?]
[What are the current needs of each target market? Describe the target market in terms of demographic, geographic, psychographic, and product usage characteristics.]
[What changes in the target market are anticipated?]
[What advantages and disadvantages do you have in meeting the target market’s needs?]
[What are the relevant aspects of consumer behavior and product use?]
[Any additional information]

Environment
[What are the competitive, legal, political, economic, technological, and sociocultural factors affecting your marketing efforts?]
[Any additional information]

Marketing Objectives
[Describe your product introduction, improvement, or innovation]
[State the market size in dollars and units. Indicate your primary and secondary sources of data and the methods used to estimate total market size and your market share.]
[Describe your distribution plans.]
[Describe your pricing objectives.]
[Describe your advertising and promotion efforts.]
[How will the results of your marketing plan be measured and evaluated?]
[Any additional information]

Financial Plan

Startup and Operating Needs
[How much money do you have, and what is the actual amount of money you need to open your business (start-up budget)?]
[How much money is needed to keep the business open (operating budget)? Prepare a realistic budget.]
[What sources of funding do you anticipate?]
[Any additional information]

Financial Statements
[Prepare an income statement by month for the first year of operation and by quarter for the second and third years.]
[Prepare balance sheets for each of the first three years of operation.]
[Any additional information]

Financial Analysis
[Prepare a breakeven analysis. How many units of your products or service will have to be sold to cover your costs?]
[Reinforce your final projections by comparing them with industry averages for your chosen industry.]
[Any additional information]

Exit Strategy

[How do you plan to get yourself (and your money) out of the business?]
[Do you intend to grow the business to the point of an IPO?]
[Do you intend to sell the business?]
[How will investors get their money back?]
[Any additional information]

Critical Risks and Assumptions

[What will you do if your market develops either more slowly or more quickly than anticipated?]
[How will you react to competitor challenges such as underpricing or new products that make yours obsolete?]
[How will you react to favorable or unfavorable changes in the industry?]
[How will you react if there is a labor shortage or other labor-related issue?]
[How will you react if there is an erratic supply of products or raw materials?]
[Any additional information]

Appendix

Evolving Consumer Behavior – Case Study

CompanyEC’s (CEC) current marketing plan is not currently aimed at engaging the online consumer behaviors identified in the Meet the Connected Consumer study. The reason for this is not that CEC finds these studies irrelevant. It’s due to CEC simply not having the strongest of marketing plans. Currently, the marketing plan is to create backlinks mainly within forums and blogs within its niche market. Nonetheless, CEC does have its company brand within the most popular of search engines and social networking websites. What CEC could do to improve its marketing for this study is to place more ad dollars and marketing within the areas mentioned. A majority of CEC’ consumers have a MySpace, Facebook and Twitter account. With that knowledge, CEC could benefit greatly from advertising within these markets.

Being that CEC is an online-based company, using this consumer study for its marketing techniques could allow for the company to gain a true understanding of its online consumers. CEC could easily implement most of the web 2.0 techniques into its own company. Previously, the tag cloud technique was used on the main page of the website. However, this was removed due to room for further marketing. In addition, RSS feeds and social bookmarking tools are currently implemented within the website.

While this consumer study can be beneficial to use for marketing, it would also seem to be most affective with a dedicated team member to handle this portion of the marketing on a regular basis. This type of marketing needs to be kept and updated regularly, possibly on a daily and/or hourly basis. Assigning the task of keeping these techniques updated will be the best method to create its success. In addition to marketing, creating online contest and awards can also encourage user interactivity within the social networks (Welborn, 2009).

The Internet and customer behavior

The Internet isn’t changing the way that CEC’ customers behave mainly because the business has always been an Internet business. The only difference is the locations in which CEC is marketing itself. It has previously been marketed within locations such as Craigslist.org, Backpage.com, Yellowbook.com, and other local advertising websites. With the internet changing and advancing with user interacted web 2.0 websites, the business now has the opportunity of being marketed on broader networks such as Facebook, Twitter, MySpace and LinkedIn. In the order to create success within the web 2.0 market place, CEC needs to join this social online environment and make its brand positively known (Eikelmann, Hajj, Peterson, 2007).

With the thousands of additional social networking, blogs and forum type websites, CEC has a greater opportunity to build its brand name. Searching for the keyword “CompanyEC” on search engines will bring up a large list of the websites links and name within other websites. Currently, CEC has as many as 120k backlinks.

What the development of new websites and the growth in online networking, the Internet has been created as the largest marketing tool for CEC. This is done through a combination of CEC’ own online marketing and through previous customers promoting the brand online through their social networks. This allows for CEC to be found through many new, relevant and trusted sources on the Internet.

There hasn’t been any noticeable difference in how the users view the website or company or any changes within their decision-making process. Visitors are still looking to visit the website and find what they are looking for quickly with as little amount of clicks as possible.

Shifting behavioral patterns

CEC’ current marketing efforts are capitalizing on the shifting behaviors of its target audience. Ways in which is does this is through social networking websites, forums and blogs. With each of these online networks growing in users and in popularity, CEC has found many opportunities in joining these networks to build its brand name.

In addition to CEC’ own marketing techniques, potential and past consumers are also discussing the services offered through the company. While searching through the Internet for the company’s name, it has showed up on many additional forums and blogs through users own discussion postings. CEC has found that the company name in these situations is being used as references from previous customers or questions from potential customers. With seeing the affects of this type of marketing, CEC has placed high priority on customer satisfaction, as the users experience is likely to be shared throughout the Internet.

Brand evangelists

CEC has some great opportunities to create and identify brand awareness. The ways in which it creates them is by providing them a valuable service and simply ask them to tell their friends. A happy customer is very likely to tell their friends of the service they received from CEC. Creating brand evangelists doesn’t necessarily involve rewarding the customer with free services. The best method that has been proven successful is by letting the customer know that they are appreciated as a customer and advise them to please tell their friends of the service they have received from the company.

Previous customers are also likely to socialize about the service they received form the company without being asked. If they are happy, they will likely tell everyone why they are. Whether a Facebook, Twitter or MySpace status update, blogs or forums, they will tell their story of success. Customer satisfaction goes a long way when creating brand evangelists.

Ways in which CEC can identify brand evangelist is firstly by joining and staying updated with its social networks and watch for when the company name is mentioned. Another method is by understanding the type of user that the service is being created for. If CEC is creating a website for a consumer that is socially active, then it needs to place a higher priority into making sure that they are satisfied with their service. These users are likely to express their service online and their users are likely to take the advice as coming from a relevant and trusted source. Users with large social networks are a great opportunity for CEC to create brand evangelist.

Another great opportunity for CEC to get involved with its consumers online is by incorporating widgets into the company website. These widgets can be used to allow for CEC’ site visitors to communicate their thoughts and share them on their favorite social networking websites with the click of a button.

 

Credits

Eikelmann, S., Hajj, J., Peterson, M. (2007). Web 2.0: profiting from the threat. Retrieved May 21, 2010, from http://www.strategy-business.com/article/li00037

Schmitt, G. (n.d.). Meet the connected consumer. Retrieved May 21, 2010, from http://www.slideshare.net/gschmitt/meet-the-connected-consumer

Welborn, J. (2009). The eight essential steps for successful social media marketing. Retrieved May 22, 2010, from http://www.indelibuzz.com/?p=362

Viral Marketing Plan – Case Study

The benefit of a viral marketing plan is to create a video that focuses on entertaining the consumer while providing valuable information on your brand and what it offers. The video should provide information on the benefits of the company. The concept of the video should be informative and intended for viewers to spread the video via word of mouth and websites they are members of.

After watching the video, the consumer should be inspired to visit your company, call, visit its website, and share the viral marketingvideo and information about your company to their friends.

viral marketing plan should be distributed on video uploading and social networking sites such as YouTube, Twitter, Facebook, and by using other multimedia embedding networks and websites.

Once consumers watch the video, the expectation should be for them to share it with their friends via social networking sites such as Facebook, Twitter, MySpace, YouTube and email. By uploading the video to social networking sites like Vimeo and YouTube, the video will have its own embed code and link so that consumers can watch the video and then either link to it from their social networking sites and email, or they can embed them directly onto their own websites.

The unique thing about marketing via a video on a media website is that those videos can also be viewed from a users’ cell phone. This is another way for users to find the video and view it. By having a computer with basic Internet access or by having a cell phone with media output, users can search for and view the promotional video.

Users may find this message by searching for it on multimedia sites, or searching through search engines video search for specific keywords. The main expected audience should come form word of mouth marketing and through social networking sites.

By providing consumers a viral marketing concept that is entertaining in value, they will natural be curious as to who created the video and what that company is all about. The video can attract new consumers that couldn’t normally be reached from graphic animations.  A viral marketing plan can easily create a positive image for your company while also providing valuable content for users to want to share with family and friends.

Company Online Pressroom

In planning a pressroom section, there are many different elements that we would be sure to include. Those elements consist of:

Company Background Info

This section will be included to give the background information on the company. This will include information on how the company was started, the mission of the company and the company’s work ethics and beliefs. This section would be great for building user confidence and comfort in the company.

Executive biographies

The biography section will include information on each of the company’s CEO’s and top leaders in each department. The purpose of this section is to help and build a relationship with the site users by providing the site with a humanistic feel and allowing the users to get to know the writers and executives.

Contact Info

The contact information will allow for users to be able to contact the company if they have questions or comments to articles, blogs or other personal input on the company or website.

Latest News/In the news

This section will include the latest information on the company’s success and changes. This will be used to keep users updated on what is going on within the company.

Multi-media content

This will allow for the company to post multimedia videos of conferences, events or other valuable content that can help or update the users on the industry and the company.

RSS feeds and social media links

Users who wish to stay updated with the company will use these tools. This is another way for users to stay updated and ask question or leave comments.

Search capability

While this tool is not always needed, it would be great to have on the site once we gain more content within the press release section. This allows for users to easily find information on what they are looking for within the site.

Calendar of Events

This section will keep users updated on what the company is doing, when they are doing it and where it is taking place. This is yet another avenue for users to use in order to follow the company. This could also be used as a way to invite users to events that the company may be attending.

There are other additional elements to use within a press release website, however, these tools and functions are what I deem most important based on what services our company offers and the type of business that we run. With all of our business involving direct and/or verbal contact with our customers, these tools and functions will create a great network and option for users to get involved with the company on a more personal level.

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