MARK4210, 2014 Spring, L1/L2
[Class #4]
Situational Analysis
MARK4210: Strategic Marketing
2014 Spring, Section L1/L2
2 MARK4210, 2014 Spring, L1/L2
Overview
Effective marketing strategies are based on solid understanding of internal and marketing environments
Frameworks to collect & analyze information: • 5 C’s Analysis
• Porter’s Five Forces Analysis
• Other Analysis Tools
Information organized, prioritized and synthesized via SWOT Analysis
Source: Marketing Analysis Toolkit: Situation Analysis, Steenburgh & Avery, Harvard Business School, February 4, 2010.
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5 C’s Analysis
Allows managers to understand themselves,
customers, external players and forces that affect
business
• Customers
• Company
• Competitors
• Context (Climate)
• Collaborators/Complementers
Source: Marketing Analysis Toolkit: Situation Analysis, Steenburgh & Avery, Harvard Business School, February 4, 2010.
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5 C’s: Customers – Needs Analysis
Understanding the physical, functional, symbolic, emotional and social needs the products fulfills for consumers • Includes both rational and irrational needs
• As well as subconscious or unconscious needs
Analyze direct and indirect product benefits to assess which attributes are important to consumers
Distribution of consumer needs/preferences provides important input into segmentation and targeting decisions
Source: Marketing Analysis Toolkit: Situation Analysis, Steenburgh & Avery, Harvard Business School, February 4, 2010.
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5 C’s: Customers – Types of
Customer Benefits/Values
Economic
• Concerns financial aspects such as price and credit terms
• Price is often primary purchase driver, but, prices can be higher
by providing more functional benefits that lower overall costs
Functional
• Products and services that provide benefits and values that meet
basic expectations and serve specific functions; utility
• Physical and tangible
Psychological
• Typically satisfy status, affiliation, reassurance, risk and security
needs – both individually and socially
• Generally transcends functional benefits and appear higher in
the benefit/value ladder Source: Capon’s Marketing Framework, Capon, Wessex Publishing, 2009
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5 C’s: Company
Business Model – how the company makes money
• Components/structures
• Product/service offerings
• Costs/expenses
• Prices/revenues/margins
Competitive Strategy (e.g., Porter’s ‘generic strategies’)
• Low cost (cost leadership)
• Unique differentiation
• Niche (focus)
Competitive Advantage
Core Competency
Source: Marketing Analysis Toolkit: Situation Analysis, Steenburgh & Avery, Harvard Business School, February 4, 2010.
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5 C’s: Company – Core
Competency Company
Traits
Operational
Excellence
Product
Leadership
Customer
Intimacy
Core business
processes that
Sharpen distribution
system and provide no
hassle service
Nurture ideas,
translate them into
products; market them
skillfully
Provide solutions and
help customers run
their businesses
Structure that Has strong, central
authority and a finite
level of empowerment
Acts in an organic,
loosely knit and ever-
changing way
Pushes empowerment
close to customer
contact
Management
systems that
Maintain standard
operating procedures
Reward individuals'
innovative capacity
and new product
success
Measure the cost of
providing services and
of maintaining
customer loyalty
Culture that Acts predictably &
believes “one-size-
fits-all”
Experiments and
thinks "out-of-the-
box"
Is flexible and thinks
"have it your way"
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5 C’s: Competitors
Firms that deliver similar products or alternative
solutions
Analysis of their business models, competitive
strategies, competitive advantages, marketing
strategies
Source: Marketing Analysis Toolkit: Situation Analysis, Steenburgh & Avery, Harvard Business School, February 4, 2010.
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5 C’s: Competitors – Identifying
Competition
Source: Product Planning Essentials, Kahn, M.E. Sharpe, 2011
Types Description
Brand (aka
product form,
direct)
Products or companies in the same product
type/category, going after same segment, with same
product features
Product Category
(aka indirect)
Broader view of competition to include products in
different categories with similar features and provide
the same basic function
Generic Refers to existing substitutable product categories;
products that fulfill same need
Competency Companies & products with core capabilities that can
be leveraged to meet the basic customer need
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5 C’s: Competitors – Illustration of
Types of Competition
Competency
Generic
Category/indirect
Market: Affordable,
independent transpo.
Brand/direct
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5 C’s: Context (Climate)
External factors & environment impacting business model
Six external environments
• Demographic (e.g., age, family structure, race, ethnicity, social
class, gender, education, geography)
• Economic (macroeconomic and microeconomic; e.g., consumer
confidence, inflation, unemployment)
• Socio-cultural (e.g., prevailing worldviews, political/social
ideologies, values, traditions, fashion)
• Political/Legal (e.g., laws, consumer advocacy, safety groups)
• Technological
• Natural
Source: Marketing Analysis Toolkit: Situation Analysis, Steenburgh & Avery, Harvard Business School, February 4, 2010.
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5 C’s: Collaborators &
Complementers
Collaborators help the firm market products; include
suppliers, distributors, retailers, key influencers
Complementers benefit from firms selling products;
includes complementary product firms
Source: Marketing Analysis Toolkit: Situation Analysis, Steenburgh & Avery, Harvard Business School, February 4, 2010.
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Porter’s Five Forces Framework
Analyzes industry
dynamics
Five forces that determine
long run attractiveness of
an industry
Highlights profitability
potential for the industry
and competing firms
Source: Marketing Analysis Toolkit: Situation Analysis, Steenburgh & Avery, Harvard Business School, February 4, 2010.
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Other Analysis Tools
Scenario Planning
Market Structure Analysis
Timeline Cause & Effect Analysis
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Other Analysis Tools: Scenario
Planning – Decision Trees
Reduce Price
Reduce Price
Maintain Price $
$
Maintain Price
Reduce Price
Maintain Price $
$
Company
Action
Competitive
Response
Outcome (Financial,
Qualitative, etc.)
Source: Strategic Marketing Problems – Cases & Comments, 13e, Kerin & Peterson, 2013
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Other Analysis Tools: Scenario
Planning – Payoff Table
Uncertainties
Competitors Maintain
Price (Probability?)
Competitors Reduce
Price (Probability?)
Alternatives
Reduce
Price $ $
Maintain
Price $ $
Source: Strategic Marketing Problems – Cases & Comments, 13e, Kerin & Peterson, 2013
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Other Analysis Tools: Market Structure
Analysis
Total Market (size, market share)
Sub-market (size, market share)
Sub-market (size, market share)
Sub-market (size, market share)
Sub-layer (size, market share)
Sub-layer (size, market share)
X% Y% Z% = 100%
X1% X2% = X%
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Other Analysis Tools: Timeline Cause &
Effect Analysis
Timeline
Period 1 Period 2 Period 3 Period 4 Period 5 Period 6 …
Metrics (e.g.,
Sales,
Trends)
Events/actions/activities
Company
Customers
Competitors
Context
…
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Synthesis – SWOT Analysis
Framework to analyze and interpret information from
5 C’s Analysis, Porter’s Five Forces Analysis, and
other analyses
Extracts the strategic implications for the business
Should identify critical factors affecting the firm –
goal is not simply to list, but to prioritize and pinpoint
Source: Marketing Analysis Toolkit: Situation Analysis, Steenburgh & Avery, Harvard Business School, February 4, 2010.
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SWOT Analysis Model
Strengths
• Unique resources,
competencies, capabilities
superior to competition AND
relevant to consumers
• NOT a long list, but the most
customer-relevant and
competitively distinct
Weaknesses
• Resources, capabilities,
competencies, inferior to
competition
• Based on understanding
customer needs/
requirements and
distinctive competencies
Opportunities
• Summarizes favorable trends
or developments that lead to
higher sales, profits or new
business opportunities
• Describe external situation,
not desired action/strategy
Threats
• Summarizes unfavorable
trends or developments
that threaten sales, profits
or limits new business
opportunities
• Recognize threats to
avoid or limit impact
Internal
Focus
External
Focus
Source: Marketing Analysis Toolkit: Situation Analysis, Steenburgh & Avery, Harvard Business School, February 4, 2010.
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Strengths & Weaknesses Matrix –
Prioritization Tools
Source: Adapted from Marketing Management, Kotler & Keller, Pearson, 2012
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Opportunity & Threat Matrix –
Prioritization Tools
Source: Adapted from Marketing Management, Kotler & Keller, Pearson, 2012
MARK4210, 2014 Spring, L1/L2
In-class Case Study
IN-CLASS DISCUSSION ONLY, NOT FOR CIRCULATION, TAKE NOTES AS NECESSARY
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What customer benefits does
McDonald’s provide? Why?
Customer Benefits
IN-CLASS DISCUSSION ONLY, NOT FOR CIRCULATION, TAKE NOTES AS NECESSARY
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What is the business model of
McDonald’s corporation?
Product Offering
• Fast food
• Consistent quality
• Affordable
• Accessible locations
• Clean (safe)
Components/structures
• Franchisees
• Suppliers
• Management
• Training
• Quality Control
• R&D
Revenues
• Franchise fees (% of sales)
• Marketing fees (% of sales)
• Rental fees (from franchisee
locations, McDonald’s owns/leased
the location; usually % of sales)
Costs
• No direct purchase of food/materials,
but organizes supply of
food/materials to restaurants via
approved third parties
• Structural costs
IN-CLASS DISCUSSION ONLY, NOT FOR CIRCULATION, TAKE NOTES AS NECESSARY
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What are the competitive advantages of
McDonald’s? Why?
IN-CLASS DISCUSSION ONLY, NOT FOR CIRCULATION, TAKE NOTES AS NECESSARY
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Who are the competitors of McDonald’s,
Why?
Businesses 1. Brand 1. Product
Category
3. Generic 4. Compe-
tency
IN-CLASS DISCUSSION ONLY, NOT FOR CIRCULATION, TAKE NOTES AS NECESSARY
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What are the SWOT for McDonald’s
Strengths
•
Weaknesses
•
Opportunities
•
Threats
•
IN-CLASS DISCUSSION ONLY, NOT FOR CIRCULATION, TAKE NOTES AS NECESSARY