2-Market Analysis

Dr. Zhiyong Yang

International Marketing

Action Plan

segmentation–targeting–positioning

Marketing Objectives

Marketing Strategy

Product

Marketing Mix

Promotion Price

Distribution

Control

International

Marketing

Plan

Market Analysis

2-1: Creating a Marketing Plan (Harvard

book chapter)

2-2: Marketing Plan (Textbook p. 579-

587)

Macroenvironment Microenvironment

S.L.E.P.TCompetitive analysis

Customer analysis

SLEPT

- Social

- Legal

- Economic

- Political

- Technological

Strongly held enduring beliefs

National culture influence (Hofstede 1991)

▪ Individualism/collectivism

▪ Power distance

▪ Masculinity/femininity

▪ Uncertainty avoidance

▪ Long/short term orientation

Gender Role Identity

Traditional Sex Role Attitude

Egalitarian Sex Role Attitude

Gender Role and Marketing Strategy

“Real men don’t cry!”

Barbara K tools – cushioned

handles

Smith & Wesson – redesigned to

“fit” women’s hands

Product Strategy

Homedepot targeting at women

Example: Today,

women influence 80%

of all vehicles sold.

Implications for

dealerships and sales

training?

Marketing Communication

Rising incomes

Stock market

Interest rates

Purchasing power

Inflation and interest

rates

Recession

E.g., U.S. house-market

Income Distribution

Diamond-shape

Pyramid-shape

Income

Distribution

E.g., US,

Japan

15%, more

than 100K

15%, less

than 15%K

Emerging Markets: Opportunity or threat?

China’s stock market (Shanghai stock exchange)▪ 2006 Gain – 130%

▪ 2007 Gain (January to May) – 50%

Emerging markets▪ Botswana: 1-year 100%, 5-year 226%

▪ Romania: 1-year 17%, 5-year 612%

▪ Pakistan: 1-year 15%, 5-year 574%

A “dual” economy coexists.

Developing nations are growing at faster rates

than developed nations – 7.3% vs. 3.1% in 2006

(WB).

Greater growth is partially due to increased commodity

prices, e.g., metals prices leapt by 57% last year (IMF).

Face hypercompetitive yet high-growth

domestic markets

Able to make profits at low prices

▪ E.g., Ranbaxy sells $1-a-day generics AIDS treatments.

Ciprofloxacin (US price = $51; India price = $.63).

Cost efficient

▪ E.g., Embraer wages 1/3 of those at Boeing.

Access to low cost, high quality “knowledge”

▪ E.g., Huawai employs 7,000 engineers.

Ideas from Prahalad and Lieberthal (1998)

Western multinationals in the 80’s viewed emerging markets as “marginal” – new markets for “old” products.

▪ Targeted high-end consumers

▪ Non-responsive adaptation

▪ Differences in distribution systems were ignored

“Growth” in EM is in the middle-class. They are brand loyal and have a greater concern for value. This market is not “marginal” any more. Population (in millions) with annual purchasing power above $5,000 in 2,002: China (392), India (195), Brazil (51), Mexico (40).

Consumers in EM with annual PP of $6,000 or more buy durable goods, high-end electronics, and some “branded” products.

Common law English root - tradition/precedent

Code law Roman root – written

Theocracy Islamic law

Hebrew law

International Law? International Court of Justice (The Hague)

Extraterritoriality

Common Law vs. Code Law

Olga Romero vs. McDonalds Corporation in Ecuador

(and the Andean Group) – who owns the name? Mrs.

Romero registered the name first (1974) – 27-years of

legal battle.

Degree of litigiousness

Lawyers per 10,000 people (BW 2002) ▪ United States 307.4

▪ UK 102.7

▪ Germany 82.0

▪ Japan 12.1

▪ China 1.0

China – Piracy Markets Video

Black market incentives

Enforcing challenges

▪ Legal aspects

▪ Ethical aspects

Enforcement – winners and losers

Why are IPR fiercely protected?

Think of new mobile technologies introduced in past 2–3 years. Examples:

WAP (Wireless Application Protocol)

▪ enable access to the Internet from a mobile phone or PDA

4G (4 Generation)

▪ incorporate high-speed internet access and video telephony

MMS (Multimedia Messaging Service)

▪ allow sending messages that include multimedia objects (images, audio, video, rich text) and not just text as in Short Message Service (SMS)

What issues do these raise for managers?

1. Early adopter

2. Intermediate

3. ‘Wait and see’

Diffusion-Adoption

SMS/text messaging

Wi-Fi services

Mobile commerce

Some digital technologies directly

related to marketing activities

Interactive/digital TV

Digital radio

A mobile phone can be used as:

SMS

Music playing system

E-mail reading platform

Camera

Personal organizer

Internet access device

Global positioning system (GPS)

One of the Wi-Fi

applications:

Voice over Internet

Protocol (VoIP)

Figure 3.10 Components of an interactive digital TV system

NAFTA (3)

EU (27)CHINA

JAPAN

ASEAN (10)

Video – Trade Wars Discussion

Rationale behind tariffs

Winners and losers

Short-term and long-term effects

▪ Unemployment

▪ Retaliation

Micro-environmental factors:

▪ Demand analysis

▪ Customer research

▪ Competitor analysis

▪ Intermediary analysis

The Micro Environment

Substitute

Products and Services

Bargaining Power of Supplies

Potential New Entrants

Bargaining Power of Buyers

Rivalryof

Firms

Industries that are hard to enter are cozy for insiders, but also often attractive to outsiders longing for the value being shared by so few.

The threat of new entrants is large if,

The barrier of entry to the industry is high/low.

Economies of scale has not been built up/has been built up.

Access to distribution is easy/difficult.

Industries with few substitute products are

more/less attractive than those with many

substitutes.

The threat of substitutes is large if,

Relative price performance of substitutes is high/low.

Switching cost to new products is high/low.

Buyer propensity to substitute is high/low.

Attractive industries feature disorganized, small customers, with little purchasing and negotiating power.

A buyer has bargaining power if,

It has large, concentrated buying power that enables it to ____________.

What it is buying is customized/undifferentiated and there are few/many alternative resources.

It could integrate backwards/forwards and so take over a supplier.

Attractive industries feature small and disorganized suppliers.

Suppliers gain power when: They are small/large, relative to the buyers (e.g., Alcoa).

It is difficult for buyers to switch to competing suppliers (e.g., customized/undifferentiated products).

They pose a credible threat of integrating forward/backward and taking over the buyers’ functions.

Attractive industries are controlled by monopolies or gentlemanly oligopolies.

Rivalry is intense if: Competitors are numerous or are roughly equal in size

and power.

Industry growth is slow, precipitating fights for market share.

The product or service lacks differentiation or switching costs.

The SWOT acronym stands for:

Strengths (of the organization, now and in the future)

Weaknesses (of the organization, now and in the future)

Opportunities (in the environment, now and in the future)

Threats (from the environment, now and in the future)

Consider from both the view of the organization

(product) as well as from customers and competitors

Realistic and not modest

One’s strength is another’s weakness

Questions:

▪ What are the organization’s advantages over others?

▪ What does the organization do well?

▪ What makes you stand out from your competitors?

marketing expertise

location of your business

innovative product

unique product or service

company image

any other aspect that adds value to your

product or service

Consider from internal and external viewpoint

Be truthful so that weaknesses may be overcome

as quickly as possible

One’s strength is another’s weakness

Questions:▪ What is done poorly?

▪ What can be improved?

▪ What should be avoided?

lack of marketing expertise

undifferentiated products and service (i.e. in

relation to your competitors)

poor brand recognition or not understood

location of your business

damaged reputation

An OPPORTUNITY is a chance for organizational

growth or progress due to a favorable juncture

of circumstances in the business environment.

Possible Opportunities:▪ Emerging customer needs

▪ Quality Improvements

▪ Expanding global markets

▪ Vertical Integration

a developing market such as the Internet

mergers, joint ventures or strategic alliances

a new market

a market vacated by an ineffective competitor

any external factor that may create demand or

the possibility for increased profitability

A THREAT is a factor in your company’s external

environment that poses a danger to its well-

being.

Possible Threats:▪ New entry by competitors

▪ Changing demographics/shifting demand

▪ Regulatory requirements

a new competitor in the market

price wars with competitors

a competitor has a new, innovative product or

service

competitors have superior access to target

customers

competitors with a strong brand

poor relationships with various stakeholders

SWOT analysis uses a matrix that has two axes

(strength/weakness & opportunity/threat), and so has

four cells in which appropriate strategies are identified

Opportunity

Threat

Weakness Strength

Macro

Micro

MAXI-MINI

How to take advantage

of opportunities by

reducing weaknesses?

Threat

Opportunity

Weakness Strength

MINI-MAXI

How to avoid threats by

using strengths?

MINI-MINI

How to avoid threats by

reducing weaknesses?

MAXI-MAXI

How to take advantage

of opportunities by

using strengths?

Possible strategies

WT Strategies

Counter weaknesses and

threats

= Build strengths for

defensive strategy

ST Strategies

Leverage strengths to

minimize threats

= Defensive strategy

Threats

WO Strategies

Counter weaknesses through

exploiting opportunities

= Build strengths for

attacking strategy

SO Strategies

Leverage strengths to

maximize opportunities

= Attacking strategy

Opportunities

WeaknessesStrengths

The organization

2-3: Carvel Ice Cream (Ivey case)