Cme Chapter 3

www.wessexlearning.
com
Managing Markets Strategically

Professor Noel Capon
R.C. Kopf Professor of International Marketing
Columbia Business School
New York, NY
© Noel Capon, 2017. All rights reserved. PRESENTATION 3 OF 20 / 1

Managing Markets Strategically
www.wessexlearning.com
Section 2: Marketing and the Firm

Section 3: Fundamental Insights for Strategic Marketing
Chapter 3: Market Insight
Chapter 4: Customer Insight
Chapter 5: Insight about Competitors, Company, Complementers
Transition to Strategic Marketing

Section 3: Strategic Marketing
Section 4: Implementing the Market Strategy

CHAPTER 3
Market Insight

Chapter Roadmap
What is Market Insight?

Market,
Market Structure Industry Forces Environmental Forces (PESTLE)
Product Evolution
The Market The Family of Life Cycles Current Direct Competitors Political
Products Serving the Market Product-Form Life Cycles New Direct Entrants Economic
Firm Products Indirect Competitors Sociocultural
Factors Affecting Market Size Suppliers Technological
Buyers Legal/Regulatory
Environment (Physical)
Market,
Market Structure
Product Evolution
Market Insight
Industry Forces Environmental Forces

Insight for Strategic Marketing
Market Insight
Customer Insight Competitor

Company Insight
Complementer

Market Insight
Market insight is critical for:

• Anticipating market changes
• Identifying potential opportunities
• Opportunity sizing
• Identifying areas to differentiate from competitors
• Laying a foundation for developing the market strategy

Market Insight
Core Focus
• State of nature
Example: What competitors does the firm face now?
• Trends
Example: What competitors will the firm face in three years?
What trends are affecting the industry?
What will be their impact on the firm?

Building Blocks for Securing Market Insight
Market,
Market Structure
Product Evolution
Define the market Assess how products

and markets are
evolving
Market Insight
Good market insight

leads to better
opportunities
Competitive, supply-chain PESTLE – Impact the firm

pressures of each market and other industry players
Market,
Market Structure
Product Evolution
Define the market Assess how products

and markets are
evolving
Market Insight
Good market insight

leads to better
opportunities
Competitive, supply-chain PESTLE – Impact the firm

pressures of each market and other industry players
Market Insight
Session Roadmap
• Market structure
• Market, product evolution
• Industry forces
• Environmental forces

Market Insight
Session Roadmap
• Market structure
• Industry forces

Market,
Market Structure
Product Evolution
Market Insight
Environmental Forces Industry Forces

Market Structure
• Market definition
A market comprises customers — people and organizations — who require products and
services to satisfy their needs … and have sufficient purchasing power – and interest to
buy what firms are offering.
• Market size factors
• Population size and growth
• Population mix
• Geographic population shifts
• Income and income distribution
• Age distribution
• Beware marketing myopia

Market, Sales Potentials/Forecasts
• Market potential — what market sales could become

• Sales potential — what the firm’s sales could become
• Market size forecast — expected market sales in a given time period

• Sales forecast —the firm’s expected sales in a given time period

Market Structure
Definitions and Distinctions

Product class: A group of products offered by competing suppliers that serve a
subset of customer needs in a roughly similar manner.
Product form: Several product forms comprise each product class. Products
within a product form are more similar in how they meet customer
needs than products in other product forms.
Product line: A group of related products that a single firm offers.
Product item: A subset of the product line that is uniquely identified.

Market Insight
Defining a Market: Class Discussion

• Think of Zara — define Zara’s market at different levels
• How much more broadly could you make your definition, but still
maintain focus?

Market Insight
Session Roadmap
• Market Structure
• Industry forces

Market,
Market Structure
Product Evolution
Market Insight

Market, Product Evolution
Life Cycles
• The life-cycle framework is a good vehicle to explain market and product evolution.
• Life cycles help firms understand and predict market conditions.
• Five life-cycle stages are: introduction; early growth; late growth; maturity, decline
• Life cycles require a long-term view of demand.
• Product-class and product-form life cycles are shorter than the market life cycle.

Life-cycle Stages
Life-cycle Stages
• Introduction — Products are new; suppliers struggle to build profitable volume (failed
pioneer Apple Newton led to BlackBerry and iPad).
• Early Growth — High growth and high profit margin. Examples: hybrid cars, tablet
computers.
• Late Growth — Many product and supply chain uncertainties resolved; sales increase
but growth rate slows. Firms seriously differentiate products from competitors — aka
competitive turbulence.
• Maturity — Slow growth — most sales to repeat/loyal customers. Examples: FMCGs
like detergents, milk.
• Decline — Sales turn down; decline can be fast or slow. Overcapacity leads to price
competition. Examples: payphones, carbon paper.

Market and Product Evolution
Maturity
Concentrated
fragmented

Sales and Profit Margin Life Cycles

Truncated Life Cycle

Market Insight
Session Roadmap
• Industry forces

Market,
Market Structure
Product Evolution
Market Insight

Industry Forces
Suppliers
Current Direct
New Direct Indirect
The Firm
Entrants Competitors
Competitors
Buyers

Industry Forces
Direct Competitors
• Traditional direct competitors — offer similar customer benefits from similar products as
the firm offers; differential advantage may be difficult to achieve.
• Acquisitions and divestitures — If a competitor acquires a competitor firm/business unit,

or similarly divests, the competitor changes.
• Mergers — Two entities combine as equal partners to create a stronger competitor by

pooling strengths and reducing risks.
• Private equity — Some firms incur significant debt. To satisfy owner goals, they cut
costs and become more competitive.

Industry Forces
Suppliers
Current Direct
New Direct Indirect
The Firm
Competitors
Buyers

Industry Forces
New Direct Entrants — enter from a different arena; offer similar

products and services
• Firm employees — potential threat as competitors
• Geographic expansion — strengths in different geographies
• Networks — group of firms collaborate and pool resources
• New sales and distribution channels — like online presence; Alibaba.com
• Startup entry — flexibility; lack of legacy issues can provide an edge
• Strategic alliances — can strengthen two individual firms by combining resources

Industry Forces
Suppliers
Current Direct
New Direct Indirect
The Firm
Competitors
Buyers

Industry Forces
Suppliers
Current Direct
New Direct Indirect
The Firm
Competitors
Buyers

Industry Forces
Suppliers
Current Direct
New Direct Indirect
The Firm
Competitors
Buyers

Market Insight
Session Roadmap
• Industry forces

Market,
Market Structure
Product Evolution
Market Insight

Environmental Forces
PESTLE
P – Political
E – Economic
S – Sociocultural
T – Technological
L – Legal/Regulatory
E – Environmental (physical)

Political
Policy Variable General Goal

Competition policy Enhance competition
Employment law Protect employees
Government spending Implement government policy
Multinational agreements Enhance trade and investment
Political stability Enhance investment
Privatization Enhance competition
Regulation of financial markets Protect investors
Taxation policy Redistribute income

Economic
Economic Variable Impact on Economic Well-Being
Balance of payments Negative balance of payments means government must borrow – increased
pressure for higher taxes
Exchange rates Value of national currents. Low exchanges rates help exports; high exchange
rates are better for purchasing foreign goods.
Disposable income An individual’s income after paying taxes – available for spending and saving.
Higher is better.
GDP or GDP per capita The measure of a nation’s output, or output per person. Higher is better.
Inflation Rate of price increases. Lower is better, but too lows means deflation.
Interest rates Affect customer spending – especially for durables and business investment.
Lower is better, but too low may fuel deflation.
Savings rate Affects interest rates and consumer spending. Higher is better, but too high means
insufficient consumption.
Unemployment Population out of work. Lower is better, but too low and labor costs increase.

Sociocultural
Cultural Dimension Elements of Cultural Dimensions
Aesthetics Beauty, good taste, color, music, brand names, architecture
Education Formal, vocation, primary, secondary, higher, literacy, human resources planning
Language Spoken, written, official, linguistic pluralism, hierarchy, international, mass media
Law Common, code, foreign, home country antitrust policy, international, regulation
Politics Nationalism, sovereignty, imperialism, power, national interests, ideologies, political risk
Religion Sacred objects, philosophical systems, beliefs and norms, prayer, taboos, holidays, rituals
Social organization Kinship, institutions, authority structures, interest groups, mobility, stratification, status
systems
Technical and material Transportation, energy systems, tools and objects, communications, urbanization,
science, invention
Values and attitudes Time, achievement, work, wealth, change, scientific method, risk-taking, community
involvement

Technological Innovations since World War II
synthetic and
cellular telephone optical fibers ATMs virtually all
plastics
dry copiers
antibiotic drugs
color television computers

digital video
passenger recorders (DVRs)
jet aircraft
integrated circuits
microwave ovens communication

satellites

Technology: Select innovations since World War II

Technological
• Sustaining technologies: improve performance for current products on dimensions
existing customers value
• Disruptive technologies: bring new and very different value propositions
• Firms often ignore or reject disruptive innovations
• inferior performance
• firm rewards – potential cannibalization

Industry Forces
Suppliers
Current Direct
New Direct Indirect
The Firm
Competitors
Buyers

The Augmented Industry Environment

Market Insight
Session Roadmap
• Industry forces

Market,
Market Structure
Product Evolution
Market Insight

CHAPTER 3
Market Insight

Cme Chapter 3

Hochgeladen von

Dokumentinformationen

Originaltitel

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

Cme Chapter 3

Hochgeladen von

Copyright:

Verfügbare Formate

www.wessexlearning.

Managing Markets Strategically

© Noel Capon, 2017. All rights reserved. PRESENTATION 3 OF 20 / 1

Section 2: Marketing and the Firm

Transition to Strategic Marketing

© Noel Capon, 2017. All rights reserved. PRESENTATION 3 OF 20 / 2

© Noel Capon, 2017. All rights reserved. PRESENTATION 3 OF 20 / 3

What is Market Insight?

Industry Forces Environmental Forces

© Noel Capon, 2017. All rights reserved. PRESENTATION 3 OF 20 / 4

Customer Insight Competitor

© Noel Capon, 2017. All rights reserved. PRESENTATION 3 OF 20 / 5

Market insight is critical for:

© Noel Capon, 2017. All rights reserved. PRESENTATION 3 OF 20 / 6

© Noel Capon, 2017. All rights reserved. PRESENTATION 3 OF 20 / 7

Define the market Assess how products

Good market insight

Competitive, supply-chain PESTLE – Impact the firm

Define the market Assess how products

Good market insight

Competitive, supply-chain PESTLE – Impact the firm

© Noel Capon, 2017. All rights reserved. PRESENTATION 3 OF 20 / 10

© Noel Capon, 2017. All rights reserved. PRESENTATION 3 OF 20 / 11

Environmental Forces Industry Forces

© Noel Capon, 2017. All rights reserved. PRESENTATION 3 OF 20 / 12

© Noel Capon, 2017. All rights reserved. PRESENTATION 3 OF 20 / 13

• Market potential — what market sales could become

• Market size forecast — expected market sales in a given time period

© Noel Capon, 2017. All rights reserved. PRESENTATION 3 OF 20 / 14

Definitions and Distinctions

© Noel Capon, 2017. All rights reserved. PRESENTATION 3 OF 20 / 15

Defining a Market: Class Discussion

© Noel Capon, 2017. All rights reserved. PRESENTATION 3 OF 20 / 16

© Noel Capon, 2017. All rights reserved. PRESENTATION 3 OF 20 / 17

Environmental Forces Industry Forces

© Noel Capon, 2017. All rights reserved. PRESENTATION 3 OF 20 / 18

• Life cycles help firms understand and predict market conditions.

• Life cycles require a long-term view of demand.

© Noel Capon, 2017. All rights reserved. PRESENTATION 3 OF 20 / 19

© Noel Capon, 2017. All rights reserved. PRESENTATION 3 OF 20 / 20

© Noel Capon, 2017. All rights reserved. PRESENTATION 3 OF 20 / 21

Sales and Profit Margin Life Cycles

© Noel Capon, 2017. All rights reserved. PRESENTATION 3 OF 20 / 22

Truncated Life Cycle

© Noel Capon, 2017. All rights reserved. PRESENTATION 3 OF 20 / 23

© Noel Capon, 2017. All rights reserved. PRESENTATION 3 OF 20 / 24

Environmental Forces Industry Forces

© Noel Capon, 2017. All rights reserved. PRESENTATION 3 OF 20 / 25

© Noel Capon, 2017. All rights reserved. PRESENTATION 3 OF 20 / 26

• Acquisitions and divestitures — If a competitor acquires a competitor firm/business unit,

• Mergers — Two entities combine as equal partners to create a stronger competitor by

© Noel Capon, 2017. All rights reserved. PRESENTATION 3 OF 20 / 27

© Noel Capon, 2017. All rights reserved. PRESENTATION 3 OF 20 / 28

New Direct Entrants — enter from a different arena; offer similar

© Noel Capon, 2017. All rights reserved. PRESENTATION 3 OF 20 / 29

© Noel Capon, 2017. All rights reserved. PRESENTATION 3 OF 20 / 30

© Noel Capon, 2017. All rights reserved. PRESENTATION 3 OF 20 / 31

© Noel Capon, 2017. All rights reserved. PRESENTATION 3 OF 20 / 32

© Noel Capon, 2017. All rights reserved. PRESENTATION 3 OF 20 / 33

Environmental Forces Industry Forces

© Noel Capon, 2017. All rights reserved. PRESENTATION 3 OF 20 / 34

© Noel Capon, 2017. All rights reserved. PRESENTATION 3 OF 20 / 35

Policy Variable General Goal