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WEEK 3
Marketing Management
External and Customer Analysis
STRATEGIC ANALYSIS
PPT 3-2
External and Customer Analysis
PPT 3-3
“To be prepared is half the victory.”
- Miguel Cervantes
The Role of External Analysis
External
Analysis
Strategic Decisions
• Where to compete
• How to compete
Strategic Decisions
• Where to compete
• How to compete
Analysis• Information-need areas
• Scenario analysis
Identification• Trends/future events
• Threats/opportunities
• Strategic uncertainties
Figure 3.1
External Analysis
Should be• Directed and Purposeful
Should NOT be• an End In Itself
Should be• Motivated by a Desire to Affect Strategy, Generate, Evaluate and Select Strategic Options
Should• Contribute to the Investment Decision
Is• an Exercise in Creative Thinking from the Perspectives of Customer, Competitor, Market and Environment
Often• Needs to be Continuous
Strategy funnel – industry side
Customer &Benefits
CompetitiveDynamics
CompetitiveSpace
Segment Size Channels
Strategic Positioning
ValueProposition
IndustryStructure
Environmental Trends
IndustryMarket
PerceptualSpace
I. Environmental Scanning: STEEP analysis
Macro-environment
EconomicForces
EcologicalForces
Socio-culturalForces
TechnologicalForces
PoliticalForces
Firm/OrganizationStructureCultureCompetencies Resources
OperatingEnvironment
Trade Association
Regulators
Union/employees
Competitors
Creditors Suppliers
Customers
Communities
Stockholders
Stakeholders shape the operating environment
Macro-environment
Firm/OrganizationStructureCultureCompetencies Resources
OperatingEnvironment
Trade Association
Regulators
Union/employees
Competitors
Creditors Suppliers
Customers
Communities
Stockholders
EconomicForces
EcologicalForces
Socio-culturalForces
TechnologicalForces
PoliticalForces
Company competitive analysis
How does each firm compete? Quality, service, low price, something else?
How effective is each? How well designed are they to compete as they
do? How powerful?
What resources do they control? Money, people, influence...
How aggressive? How hard do they compete? What’s their
trajectory?
Competitor response profile
Future GoalsVision statementManagerial behavior
Critical AssumptionsKey beliefsBlind spots
Response ProfileSatisfied or ambitious?Likely next moves?Vulnerabilities?Sensitive spots? (What will provoke retaliation?)
Current StrategyPrice, quality, distribution, resources
CapabilitiesStrengths & weaknesses
Drivers Abilities
Competitors table
Organizes competitors using crucial dimensions of competition, plus effectiveness, power, trajectory, likely changes...
Market Share
Quality Cost Effective-ness
Aggres-siveness
Competitor1 15% H H M
Competitor2 25% L L H very
Competitor3 5% M M L
Competitor4 20% L L H slipping
Competitor5 15% M M H
Power
M
H
L
H
L
Strategic groups
Groups of firms that pursue similar strategies with similar resources
Pri
ce
Selection
Fast Food
Upscale Chains
Diners/Family Style
Example: Variation on Gartner’s Magic Quadrant
Dynamic competitor analysis
While useful, the competitor table and the strategic groups are essentially static.
It is critical to make guesses about the future -- especially about when trends might stop and the ground might shift, and when new competitors might rise, or existing ones die.
Exercise: Competitor analysis
Make a competitors table, including: market share how they stack up on crucial dimensions of
value effectiveness (star the most competent ones) resources (underline richest ones) aggressiveness (arrows to indicate
trajectories) Note any natural groupings Note any likely changes
New entrants, mergers, exits?
Investment DecisionFour Sound Questions
1. Should existing business area be liquidated, milked, maintain, or a target for investment?
2. What growth directions should receive investment?
3. Should there be market penetration, product expansion, or market expansion?
4. Should new business areas be entered?
Strategic Options
1. What are the value propositions?2. What are the key success factors (KSF)?3. What assets and competencies should
be created, enhanced or maintained?4. What strategies and programs should
be implemented in functional areas?5. What should be the positioning
strategy, segmentation strategy, distribution strategy, brand-building strategy, etc.
External and Customer Analysis
Strategic Uncertainties
PPT 3-18
Focus on specific unknown elements that will affect the outcome of strategic decisions.
Most strategic decisions will be driven by a set of these strategic uncertainties.
“On what does that depend?” will usually generate additional strategic uncertainties.
Strategic Uncertainties
What will the future demand?
Performance improvements?
Competitive technological
developments?
Financial capacity of industry?
Strategic Uncertaintiesvs. Strategic Decisions
Strategic Uncertainties
Will a major firm enter? Will a tofu-based dessert
product be accepted? Will a technology be
replaced? Will the dollar strengthen
against an off-shore currency?
Will computer-based operations be feasible with current technology?
How sensitive is the market to price?
Strategic Decisions Investment in a product
market Investment in a tofu-based
product
Investment in a technology
Commitment to off-shore manufacturing
Investment in a new system
A strategy of maintaining price parity
Customer Analysis
Segmentation
Who are the biggest customers? The most profitable? The most attractive potential customers? Do the customers fall into any logical groups based on needs, motivations, or characteristics?
How could the market be segmented into groups that would require a unique business strategy?
Figure 3.2
Judging a Segmentation Strategy
1. Can a competitive offering be developed and implemented that will be appealing to the target segment?
2. Can the appeal of the offering and the subsequent relationship with the target segment be maintained over time despite competitive responses?
3. Is the resulting business from the target segment worthwhile, given the investment required to develop and market an offering tailored to it?
How Should Segments be Defined?
Customer Characteristics Geographic Type of organization Size of firm Lifestyle Sex Age Occupation
Figure 3.3
How Should Segments be Defined?
Product-Related Approaches User type Usage Benefits sought Price sensitivity Competitor Application Brand loyalty
Figure 3.3
The Loyalty Matrix: Priorities
LowLoyalty
ModerateLoyalty
Loyal
Customer
Non-customer
Medium
Lowto
Medium
High
Highest
Zero
High
Figure 3.4
Customer Analysis
Customer Motivations
What elements of the product/service do customers value most?
What are the customers’ objectives? What are they really buying?
How do segments differ in their motivation priorities?
What changes are occurring in customer motivation? In customer priorities?
Are there any “Hot Buttons” whose salience and impact on the market are significant and growing?
Figure 3.2
Customer Motivation Analysis
IdentifyMotivations
Group andStructure
MotivationsAssess
MotivationImportance
Assign StrategicRoles to Motivations
Figure 3.6
The Customer as Active Partner
Encourage Active Dialogue Mobilize Customer Communities Manage Customer Diversity Co-creating Personalized Experiences
Customer Analysis
Unmet Needs
Why are some customers dissatisfied? Why are some changing brands or suppliers?
What are the severity and incidence of consumer problems?
What are the unmet needs that customers can identify? Are there some of which consumers are unaware?
Do these unmet needs represent leverage points for competitors?
Figure 3.2
Identifying Unmet Needs
Conduct Market Research Use The Ideal Experience Use Creative Thinking
1. Separate ideation from evaluation.2. Approach the problem from different
mental and physical perspectives.3. Have a mechanism to take the most
promising ideas and improve them until they turn into potential winners worth trying.
Relevant Assets and Competencies
Chapter 3 - Competitor Analysis
PPT 3-31
1) -What businesses have been successful over time?
-What assets or competencies contributed to their success?
-What businesses have had chronically low performance?
-Why?
-What assets or competencies do they lack?
Relevant Assets and Competencies
Chapter 3 - Competitor Analysis
PPT 3-32
2) -What are the key customer motivations? -What is needed to be preferred?-What is needed to be considered?-What is really important to the customer?
3) What assets and competencies represent industry mobility (entry and exit) barriers?
Relevant Assets and Competencies
Chapter 3 - Competitor Analysis
PPT 3-33
4) -What are the significant value added components in the value chain?
-Do any provide the potential to generate a competitive advantage?