Strategic Marketing Management Naveed Ilyas Naveed.ilyas@hotmail.

com

 External

Analysis

Customer Analysis Competitor Analysis Market/submarket Analysis Environmental Analysis and Strategic Uncertainty

Setting

priorities for Businesses and Brands

Identification

Trends / future events Threats / Opportunities Strategic Uncertainties

Analysis

Information need areas Scenario analysis

Strategic Decisions

Where to compete How to compete

 Strategic

uncertainty is a particular useful concept in conducting external analysis

focuses on specific unknown elements that will affect the outcome of strategic decisions of these strategic uncertainties can in turn, generate another level of strategic uncertainties

It

Each

Strategic Uncertainties Will a major firm enter? Will a technology be replaced / Will the rupee strengthen against an offshore currency? How sensitive is the market to price?

Strategic Decisions Investment in a product market Investment in a technology Commitment to offshore manufacturing A strategy of maintaining price parity

The scope of industry external analysis can involve an industry broadly defined (transport industry), narrowly defined (luxury train coaches) or using a scope that may fall in between:

Railways Passenger trains Express trains

The level of analysis will depend on the organizational unit and strategic decisions involved One approach to defining the market is to specify the business scope. It can be identified in terms of the product market and in terms of the competition

Approach to External analysis

Customer analysis

Competitor analysis

Market analysis

Who are our Current and Potential Customers?

1. 2. 3. 4. 5.

What are the demographic, geographic and psychographic characteristics of our customers? Who actually purchase our products? Do these purchasers differ from the users of our products? Who are the major influencers of the purchase decision? Who is financially responsible for making the purchase?

What do customers do with our products?

1. 2. 3. 4. 5.

In what quantities and in what combinations are our products purchased? How do heavy users of our products differ from the light users/ Do purchasers use complimentary products during the consumption of our products? What do the customers do with our products after consumption? Are our customers recycling our products or packaging?

Where do customers purchase our products? 1. From what types of vendors are our products purchased?
2. Does e-commerce have an effect on the purchase of our products? 3. Are our customers increasing their purchasing from non store outlets?

When do customers purchase our products?

1.

2.
3.

Are the purchase and consumption of our products seasonal? To what extent do promotional events affect the purchase and consumption of our products? Do the purchases and consumption of our products vary based on physical surroundings, perceptions or the purchase task?

Why (and how) do customers select our products? 1. How do our products features compare with competitors? 2. What are the customers needs fulfilled by our products and our competitors products? 3. Are the needs of our customers expected to change in the future? If so, how? 4. What mode of payment do customers use when purchasing our product? 5. Is the buying behavior discrete or relationship building? 6. How can we develop, maintain and enhance customer relationship? 7. What are needs of the customers which are not met by our products? 8. What is the potential of converting noncustomers to customers of our products?

How the market segments

An analysis of customer motivations

Exploration of unmet needs

Can a competitive offering be developed and implemented?

Is the competitive offering sustainable?

Is the resulting business from the target segment worthwhile?

CUSTOMER CHARACTERISTICS Geographic Small per-urban communities for discount stores

Type of organization
Size of the firm Lifestyle Sex Age

Computer needs of banks vs retailers

Large hospitals were small sized ones for pharmacy purchases Metro sexual men prefer man saloon services Mother of young children Cereals for kids

PRODUCT RELATED APPROACHES User type Usage Benefits sought Competition Price sensitivity Brand loyalty Appliance buyers- home builders, homeowners Concerts: seasonal ticket holders, occasional patrons, nonusers Dessert eaters- calorie conscious versus convenience seekers For Mc donalds: KFC, Hardees, Burger King Economy driven Q mobile buyers versus prestige driven I Phone users Those who stick to Heinz ketchup versus price buyers

After segmentation, you need to answer questions such as:

What is behind the purchase decision? How does that differ by segment?

Newbie shoppers: need simple interface, and lot of hand holding and assurance Reluctant shoppers: need information, reassurance and access to live customer support Frugal shoppers: need to be convinced that price is good and they dont have to search elsewhere Strategic shoppers: need access to opinions of peers or experts and choices in configuring the products they buy Enthusiastic shoppers: need community tools to share their experiences as well as engaging tools Convenience shoppers: want superior customer service

Role of Qualitative Research Qualitative research is a powerful tool in understanding customer motivation It can involve:

Focus group sessions In-depth interviews Customer case studies

Buyer Hot Buttons

Hot buttons are motivations whose salience and impact on markets are significant and growing. e.g. retail food products hot buttons include:

Freshness Healthy eating Gourmet eating Meal solutions Low carb foods

 An

unmet need is a customer need that is not being met by the existing product offering Unmet needs represent opportunities to increase market share of firms, break into a market or create and own new markets They can also be a threat for established firms since they can be a lever enabling competitor entry The key is to stretch the technology or apply new technology in order to expose unmet needs

 Who

are the competitors? Against whom do we usually compete/ Who are our most intense competitors ? Less intense but still serious competition? Can these competitors be grouped into strategic groups? Who are the potential competitive entrants? What are the entry barriers

Public Trade Government Investors

 Evaluating

the competitors

What are their objectives and strategies? Their level of commitment? What is their cost structure? What is their image and positioning strategy? What are the strengths and weaknesses of each competitor?

Product Category

Brand Competitors

Product Competitors

Generic Competitors

Total Budget Competitors

Luxury cars (transportation)

Toyota Honda

Trucks Passenger cars Minivans Tea Orange juice Bottled water

Rental cars Motor cycles Bicycles Tap water

Vacation Home remodeling Candy Potato chips Gum

Soft drinks (refreshments)

Coca cola Pepsi cola

Movies (entertainment)

Harry potter The Matrix

Cable TV Video rentals

Athletic events Concerts

Shopping Reading Vacations

A strategic group is a group of firms that:

Over time pursue similar competitive strategies (e.g. use of same distribution channel, the same type of communication strategies, or the same price / quality position) Have similar characteristics (e.g. size, aggressiveness) Have similar assets and competencies (such as brand associations, logistics, capability, global presence and development)

Competitive analysis should progress through the following stages:

1.

2.

3.

4.
5.

Identification: Identify all current and potential brands, products, generics, and total budget competitors Characteristics: Focus on key competitors by assessing the size, growth, profitability, objectives, strategies and target market for each one Assessment: Assess each competitors strengths and weaknesses Capabilities: Focus the analysis on each key competitors marketing capabilities Response: Estimate each competitors most likely strategies and responses under different environment situations as well as its reactions to firms own marketing effort

It is also important to consider potential market entrants such as firms that might engage in: 1. Market expansion: e.g. a fast food chain should observe chains in other regions e.g. Hardees outlet opening in Karachi 2. Product expansions: Khaadi going into formal wear by introducing Khaadi Khas 3. Backward integration: Fruit orchids acquired by Mitchells 4. Forward integration: Apple opening its own outlets in Karachi 5. The export of assets or competencies: e.g. A weak competitor acquired by a big market player or strategic mergers

 Market

analysis builds on the customer and competitor analysis to make some strategic judgments about the market and submarket and its dynamics One if the primary objectives of market analysis is to determine the attractiveness of a market to current and potential participants The need is to identify emerging submarkets, key success factors, trends, threats, opportunities and strategic uncertainties

 Emerging

submarkets Actual and potential market size Market growth Market profitability Cost structure Distribution system Key success factors

 Important

questions to be answered:

Are submarkets emerging defined by lower price points, emergence of niches, new applications, a customer trend or new technology? What is the size and growth of the submarket? Can we make money in this submarket? What is the cost structure for operations? What are the dynamics of distribution system? What are the key success factors, assets and competencies needed in this submarket?

Threat of potential entrants

Competition among existing firms

Threat of substitute product

Bargaining power of suppliers

Industry profitability

Bargaining power of customers

KSFs are the assets and competencies that provide the basis for competing successfully
They are of two types:

Strategic necessities: do not necessarily provide and advantage because others have them, but their absence would create a substantial weakness Strategic strengths: firms assets and competencies which provide a base of advantage

Also it is critical to determine new and emerging KSFs of the industry e.g. for industrial firms technological innovation is important in introduction and growth phase but role of systems capability, marketing and services becomes important in maturity phase . For consumer goods, marketing and distribution is important in intro and growth phase while manufacturing and operations become crucial in maturity phase.

 Technology

trends

Technologies changing ? Maturing ?

Consumer

trends

Emerging consumer trends ? Life styles ? Fashion? Demographics and its impact on market size and submarkets

Government

/ economic trends

Regulation, political risks of operating in a government jurisdiction

General

Questions

Significant trends and future event s Uncertainty in the environment

Thank You