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Professor Noel CaponR.C. Kopf Professor of International Marketing Columbia Business SchoolNew York, NY, U.S.A.
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© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved.
Managing Markets Strategically
Professor Siddharth Shekhar SinghDirector Fellow Programme in Management & Associate Professor of MarketingIndian School of BusinessHyderabad & Mohali, India
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Managing Markets Strategically
Section I: Marketing and the Firm
Section II: Fundamental Insights for Strategic MarketingChapter 3: Market InsightChapter 4: Customer InsightChapter 5: Insight about Competitors, Company, and ComplementersChapter 6: Marketing Research
Transition to Strategic Marketing
Section III: Strategic Marketing
Section IV: Implementing the Market Strategy
Section V: Special Marketing Topics
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CHAPTER 3
Market Insight
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Insight for Strategic Marketing
Market Insight
Customer Insight CompetitorCompany
ComplementerInsight
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What Is Insight?
Source: Impact Planning Group, by permission
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Market Insight© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved.
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Market insight is critical for:
Anticipating market
changes
Identifying potential
opportunities
Laying a foundation
for developing
Identifying areas to
differentiate
Opportunity sizing
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Building Blocks for Securing Market Insight© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved.
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Market Insight
Market Structure
Market and Product
Evolution
Industry Forces
Environmental Forces
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Market Structure
• Market definitionA 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
• Approaches• Build up• SAM, TAM, PAM• Hierarchical decomposition
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Market Structure
Build Up: Illustration – Treating Aneurysms
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Market Structure
SAM, TAM, PAM
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Market Structure
Hierarchical Decomposition: Illustration – Entertainment Market
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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.
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Market and Product Evolution© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved.
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Market and Product Evolution
Product Class and Product Form Life Cycles
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Market and Product Evolution
Sales and Profit Margin Life Cycles
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Market and Product Evolution
Truncated Life Cycle
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Industry Forces© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved.
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Direct
THE FIRM
Competitors
Suppliers
Indirect Competitors
Buyers
New Direct Entrants
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Industry Forces© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved.
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Direct Competitors
Traditional direct
competitors
Acquisitions and
divestituresMergers Private
equity
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Industry Forces© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved.
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New Direct Entrants
Firm employees
Geographic expansion Networks
New sales and
distribution channels
Start-up entry
Strategic alliances
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Environmental Forces© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved.
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Political
Economic
Sociocultural
Technological
Legal/Regulatory
Environmental (physical)
P
E
S
T
L
E
PESTLE
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Environmental Forces
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
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Environmental Forces
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.
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Environmental Forces
SocioculturalCultural 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
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Environmental Forces
Sociocultural• Cultural and subcultural groups
• Localization and globalization
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Environmental Forces© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved.
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Technological
Innovations since
World War II
dry copiers
color television
integrated circuits microwave
ovens passengerjet aircraft
synthetic and
optical fibers
ATMs virtually all
plastics
computers
antibiotic drugs
digital video
recorders (DVRs)
communicationsatellites
cellular telephonet
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Environmental Forces
Technological ForcesIllustration – Bank Transactions
Mode Cost/Transaction
Branch teller $2.50
Telephone $1.00
ATM $0.40
Quasi-personal response $0.24
Internet $0.10
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Environmental Forces
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
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Environmental Forces
Industry Forces
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Direct
THE FIRM
Competitors
Suppliers
Indirect Competitors
Buyers
New Direct Entrants
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Environmental Forces
The Augmented Industry Environment
Direct
CompetitorsThe Firm
Suppliers
Buyers
New Direct Entrants
Indirect Competito
rs
Political
Economic
Sociocultural
Technological
Environmental (physical)
Legal/Regulatory
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Market Insight
One Final Item
• The managerial process environment: concepts, framework, ideas, and tools to lead and manage organizations
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The Managerial Process Environment
experience curve benchmarking
value chain
core strategy
best-practice sharing
product portfolio
six marketingimperatives
core competence
marketing auditbrand equity
re-engineering
synergyprice waterfallbalanced
scorecardkey accountmanagement
crossing thechasm
positioning
© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved.
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